Fyffes has agreed to an all-cash takeover offer from Japanese banana-to-transportation conglomerate Sumitomo Corp. that values the Irish produce group at around EUR751.4m (US$978m).
Sumitomo has offered EUR2.23 per share for Fyffes, representing a premium of 49% on the company’s closing share price of EUR1.50 yesterday (8 December) and 53% on the weighted average share price of EUR1.46 for the 30 days before that. Additionally, Fyffes shareholders will receive a dividend of EUR0.02 per share related to the 2016 calendar year.
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Fyffes said while it “continues to believe in the standalone prospects of the company”, the offer represents an “attractive premium in cash”.
Chairman David McCann said: “We believe this transaction represents a compelling proposition for our shareholders and crystallises the substantial value created in recent years through the various strategic developments and the strong operating performance of our group. Our employees, customers, suppliers and joint venture partners will benefit from Fyffes being part of an enlarged group with greater scale, reach and resources to broaden and accelerate delivery of Fyffes’ strategic objectives.”
Sumitomo said it has already received “irrevocable undertakings” and “other commitments” to vote in favour of the acquisition representing approximately 27.21% of Fyffes’ issued share capital. The company has been active in the banana industry since the 1960s and claims to be the “market leader” in Asia, with plantations in the Philippines and distribution across the region. The group imports approximately 30% of the bananas into the Japanese market and operates an import and domestic distribution business for a “wide range” of produce.
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The acquisition of Fyffes will enable Sumitomo to expand its produce business in Europe and North America, the Japanese group said. Headquartered in Ireland, Fyffes generates an annual turnover of EUR1.2bn from operations in Europe, the US, Canada, Central America and South America and Asia.
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By GlobalDataCommenting on the acquisition, Hirohiko Imura, representative director and managing executive officer of Sumitomo, said the company has “long admired Fyffes” for its “outstanding track-record and market-leading position”.
“Sumitomo will provide Fyffes with experience, support and investment to continue to build on the tremendous Fyffes skills and experience and reach greater potential,” he continued. “We have significant experience in the produce sector and look forward to working with Fyffes’ executive directors, senior management and employees, customers and other stakeholders to strengthen Fyffes’ already impressive market position through continued investment. We look forward to working with the Fyffes team to further develop the business over the longer-term and to expanding into new markets to better serve customers.”
Sumitomo said it expects the deal to close during its fourth quarter, which ends in March 2017. The deal remains subject to shareholder and court approval.
The Japanese group added that it will detail the expected financial impact of the acquisition “in due course”.
The agreement comes two years after a deal Fyffes’ had struck to merge with Chiquita Brands International was scuppered after the US produce group subsequently decided to accept a takeover bid from Brazilian juice group Cutrale and investment firm Safra.
