Boston, MA 03/10/2014 (wallstreetpr) – Chiquita Brands International Inc. (NYSE:CCQB) has announced it has struck an all-stock transaction agreement for the acquisition of Fyffes Plc, the deal estimated to be worth $526 million. The deal once complete is expected to result in total annual revenues of $4.6 billion. Chiquita shareholders will own 50.7% shares of the combined entity with the remaining percentage going to Fyffes investors.
The merger is expected to create the world’s largest banana company which will be more than capable to produce packaged salads, melons and pineapples known as Chiquita Fyffes Plc. The new business is expected to target annual cost savings amounting to $40 million as of the end of 2016.
The agreed price currently values Fyffes shares at $1.69 which is 37% more than the company’s March 7 market closing price. Fyffes stock rose by 36% after the news of the impending acquisition with the company currently commanding a market value of 353.9 million euros. The merger will be of most benefit to Chiquita as it strives to be a key player in the banana market that is estimated to be worth $7 billion.
Key players in the banana market
The global banana market is mainly controlled by Chiquita, fresh Del Monte Hawaii-founded Dole Food Company and Fyffes. Chiquita and Fyffes currently sell between them 180 million boxes of bananas against second placed Del Monte 117 boxes and third placed Dole 110. The merger is sure to make Chiquita the biggest player in the industry.
There will be no regulatory hurdles for the passing of the merger considering both companies operate in completely different markets of North America and Europe.
Chiquita ratings in the market
Chiquita stock has been the subject of recent research ratings in which analysts at Zacks downgraded the company’s stock from a neutral to an “underperform”. The firm has placed a price target of $10.30 on the company’s stock.
Chiquita last updated its stock on February 27 in which the company reported earnings per share of $0.67 for the fourth quarter. Revenue for the quarter came in at $748 million above consensus estimates of $723.7 million. The fourth quarter revenue was an increase of 1.4% compared to the same quarter a year ago. Analysts currently expect the company to report earnings per share of $1.07 for the current fiscal year