(Adds share performance, comment from Cutrale-Safra)
By Guillermo Parra-Bernal
SAO PAULO, Oct 16 (Reuters) - The board of Chiquita Brands International Inc on Thursday said a takeover bid by Brazilian juice maker Grupo Cutrale and investment firm Safra Group was “inadequate,” and again recommended shareholders back a tie-up with Irish rival Fyffes Plc.
The board of Charlotte, North Carolina-based Chiquita said in a statement that Cutrale-Safra’s definitive, $14 a share offer “is not in the best interests” of shareholders, who have no assurances that the takeover proposal would remain available past Oct. 24 should a vote on the Fyffes transaction fail.
“The Cutrale-Safra offer, in our judgment, is not a compelling alternative to ChiquitaFyffes as it limits the ability of Chiquita shareholders to realize the long-term value inherent in a combination,” the statement said.
Chairwoman Kerrii B. Anderson and Chief Executive Officer Edward Lonergan said they are “always willing to give fair consideration to an increased offer by Cutrale-Safra.”
Shares of Chiquita shed 1.6 percent to $13.60. Fyffes tumbled 3.8 percent to 0.9559 euros.
Chiquita estimates the present value of the future share price range of the combined company, which will be named ChiquitaFyffes, at between $15.46 and $20.01 under the assumption of growth in earnings before interest, tax, depreciation and amortization of 5 percent to 15 percent next year, and a valuation multiple to 7 to 8 times annual EBITDA.
On Wednesday, Cutrale-Safra offered $14 in cash per Chiquita share, valuing the company at $658 million, or 12.4 times annual EBITDA. 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.
Cutrale-Safra did not have an immediate comment on Chiquita’s board statement.
Anderson and Lonergan called on shareholders to vote for Chiquita’s merger with Fyffes in next week’s ballot. On Tuesday, 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 preventing the vote from taking place.
Cutrale controls one-third of the world’s trade of orange juice concentrate, while Safra Group is a global banking and investment conglomerate controlled by Lebanese-Brazilian financier Joseph Safra, the world’s richest banker. (Reporting by Guillermo Parra-Bernal; Editing by Alan Crosby and Andrew Hay)