Cutrale-Safra criticises ChiquitaFyffes revised merger proposition

Cutrale-Safra criticises ChiquitaFyffes revised merger proposition

Fyffes is attempting to "hoodwink" investors in proposed merger partner Chiquita Brands International, the Brazilian bidders for the US produce giant have claimed this afternoon (26 September).

Earlier today (26 September) Chiquita and Fyffes revised the terms of their agreement to merge. Under the new terms, Chiquita investors would hold 59.6% of the combined company, up from the 50.7% first put forward when the companies announced their plan to merge.

However, juice maker Cutrale Group and investment firm Safra Group have said the revised terms value the combined entity at US$11.82 per share, "well below" their $13 all-cash proposal for Chiquita alone, which the US company rejected.

Chiquita and Fyffes also decided to once again change the dates for their shareholders to vote on the plans. The votes had been scheduled for 3 October. However, Chiquita investors will now vote on the deal on 24 October, while Fyffes shareholders will be asked to approve the merger on 28 October.

Chiquita's move to push back its investor vote "intentionally ... disenfranchised a substantial number of present shareholders as they will not be able to vote at the October 24th meeting", Cutrale and Safra said in a joint statement.

A revised bid from Cutrale and Safra could be on the horizon. Two weeks ago, Chiquita granted Cutrale and Safra access to its books. Both sides had been critical of each other but Chiquita had seen shareholder advisory groups urge its investors not to back the merger with Fyffes, given the interest from the Brazilian suitors. It granted the bidders access to its books, while standing by its plan to combine with the Ireland-based firm.

Cutrale and Safra said today it was "moving forward with its due diligence" and expects to make an offer "as expeditiously as possible".

However, the bidders were critical of the revised terms to the agreement between Chiquita and Fyffes.

The firms added in a joint statement: "Fyffes continues to use a game plan of trying to hoodwink Chiquita investors with ongoing rejiggered information, ranging from suddenly found cost savings to "illustrative" stock price valuations to rescrambled combination terms. None of this can disguise the fact that the Chiquita-Fyffes combination is highly flawed and fraught with risks for Chiquita shareholders".

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Cutrale-Safra is moving forward with its due diligence and expects to make its offer as expeditiously as possible. The revised Chiquita Fyffes transaction values the combined entity at $11.82 per share, based on unaffected stock trading prices, which is well below the $13 all cash certain Cutrale-Safra proposal. 

Furthermore, by adjourning rather than postponing the special meeting of its shareholders to October 24, the Chiquita board intentionally has disenfranchised a substantial number of present shareholders as they will not be able to vote at the October 24th meeting. The board's action to revise the Fyffes transaction agreement, with a substantially increased break-up fee to Fyffes but without warning to Cutrale-Safra and before Cutrale-Safra has had the opportunity to submit a revised proposal based on its due diligence, will do nothing more than cost the Chiquita shareholders money.

Cutrale-Safra has made clear and the investment marketplace has recognized the significant risks and issues inherent in the Chiquita-Fyffes combination, all of which cast serious doubts about the potential business performance of the combined ChiquitaFyffes and the ability of Chiquita shareholders to realize enhanced value for their investment. Fyffes continues to use a game plan of trying to hoodwink Chiquita investors with ongoing rejiggered information, ranging from suddenly found cost savings to "illustrative" stock price valuations to rescrambled combination terms. None of this can disguise the fact that the Chiquita--Fyffes combination is highly flawed and fraught with risks for Chiquita shareholders.

Original source: Cutrale-Safra