(Adds closing share price in paragraph 6)
By Guillermo Parra-Bernal
SAO PAULO, Oct 15 (Reuters) - Juice maker Grupo Cutrale and investment firm Safra Group on Wednesday unveiled a definitive offer to acquire Chiquita Brands International Inc, in a new attempt to scuttle the U.S.-based company’s plans to combine with Irish rival Fyffes Plc.
Cutrale-Safra is offering $14 in cash per Chiquita share, valuing the company at $658 million, or 12.4 times annual earnings before interest, tax, depreciation and amortization. Cutrale-Safra had initially bid $13 per Chiquita share in an unsolicited proposal presented on Aug. 11.
A successful bid would turn billionaires Joseph Safra and José Luis Cutrale into the global kings of breakfast by expanding their share of the world’s tropical fruits market and their negotiating clout with supermarkets. Chiquita and Fyffes agreed to merge in April to create the world’s biggest banana supplier.
Cutrale-Safra’s definitive offer represents premiums of about 40 percent to Chiquita’s Aug. 8 closing share price and 19 percent to Chiquita’s price based on revamped terms of the tie-up with Fyffes. Both companies will pay for Chiquita with equity from some of their subsidiaries, with Safra-controlled bank J. Safra Sarasin AG extending a buyback of Chiquita’s senior secured notes due in 2021.
“Unlike the proposed combination with Fyffes, the superior Cutrale-Safra offer provides Chiquita shareholders complete certainty with respect to the value of their investment,” the consortium said in a statement.
Chiquita jumped 5.1 percent to $13.83 in New York, extending gains to 36 percent since Cutrale-Safra unveiled their proposal. Fyffes shed 1.7 percent to 0.985 euros.
Shares of the Charlotte, North Carolina-based fruit producer have shed two-thirds of their value over the past decade in the wake of geopolitical instability in Latin America, price volatility and uneven demand for fresh produce around the world. Chiquita, Fyffes, Fresh Del Monte Produce Inc and Dole Food Co control the $7 billion banana market.
Chiquita’s board plans to review Cutrale-Safra’s definitive offer, according to a company statement.
The definitive offer was submitted along with a merger agreement form for Chiquita’s board. In the statement, Cutrale-Safra said investors recognize “the significant risks and issues inherent in the Chiquita-Fyffes combination,” and that available financial data indicates Chiquita could miss some operational goals for the year.
Investors such as Dublin-based Merrion Capital Group, which oversees $1.6 billion in assets, questioned whether the offer could persuade Chiquita’s board and shareholders to side with Cutrale-Safra.
Cutrale-Safra’s definitive bid “is significantly below an offer in excess of $16, which we felt would be required to match the economics of the Fyffes-Chiquita deal,” Merrion said on Wednesday. Efforts to reach Merrion representatives for comment were unsuccessful.
“The agreed merger between Chiquita and Fyffes remains superior to today’s unsolicited takeover offer from Cutrale-Safra,” Fyffes Chairman David McCann said in a statement, adding that the implied present value of the ChiquitaFyffes deal ranges from $15.46 to $20.01 a share.
Known as a tough negotiator for the banking and real estate assets he buys, Safra, a Lebanese-Brazilian financier who is the world’s richest banker, has struggled to convince Chiquita’s board to accept his and Cutrale’s offer, bankers with knowledge of the deal recently told Reuters. That was partly because potential cost synergies from the deal were not immediately clear for investors.
Faced with declining orange juice consumption globally, Grupo Cutrale is expanding into new regions and products after venturing into grain trading in recent years. The Cutrale family, who migrated from Italy in the first half of the last century, rose to prominence by massively exporting orange juice concentrate to the United States after frost destroyed most of Florida’s citrus crop in the 1960s.
Chiquita said in a U.S. securities filing on Wednesday that the City of Birmingham Firemen’s and Policemen’s Supplemental Pension System, a minority shareholder, filed a motion in a New Jersey federal court aimed at postponing the Oct. 24 vote on Cutrale-Safra’s proposed takeover of Chiquita.
“Chiquita and its board of directors believe that the claims asserted against them by the plaintiff are without merit and will defend this case vigorously,” the filing added. (Additional reporting by Conor Humphries in Dublin and Nate Raymond in New York; Editing by Meredith Mazzilli, Todd Benson, Richard Chang and Alan Crosby)