Fyffes & Chiquita Merge to Make Super Banana Company
Two of the oldest fruit merchants in the world will be joining forces in a merger to create a super banana company, worth $1.1 billion, which is about £600 million.
Fyffes started off way back in the late 1870s with Thomas Fyffe in London before being taken over by Fruit Importers of Ireland (FII) in 1968, and is often labelled the oldest fruit merchant in the world. Chiquita, on the other hand, can trace even further back to 1871 through the merging of many different companies – and name changes – over the years.
The merged company, which is going to be called ChiquitaFyffes, will be listed in New York and is expected to become the biggest banana company in the world, shifting a whopping 160 million boxes of bananas every year, resulting in around $5 billion revenue (just over £3 billion).
According to the United Nations, there are two companies controlling the global banana market other than Fyffes and Chiquita Brands, which are the Dole Food Company and Fresh Del Monte, all of which covering around 80% of global banana trade. With Fyffes and Chiquita joining forces, they will have around a 14% share of it to themselves.
David Holohan from Irish financial services firm Merrion Capital, explained that Dole Foods, Fresh Del Monte and Chiquita Brands are not very far away from each other on a global scale, and now that one merger has happened which has created an obvious “number one”, more deals are expected to be motivated by the merger.
Shareholders in both companies will be receiving shares in both companies as well, meaning that Fyffes’ shareholders will be owning just over 49% of ChiquitaFyffes, with Chiquita shareholders owning the remaining 50.7%.
On Monday, after the announcement was made, Fyffes’ shares increased by almost 30%, bringing them roughly in line with Chiquita’s.
“The industry has been suffering from overcapacity for the past few years,” said Patrick Higgins, an analyst from Dublin’s Goodbody Stockbrokers. “A combination of the two major players should resolve some of the volatility in the market.”
The deal is still going to be subject to competition authorities, but should be going ahead sometime this year. Holohan said that because Chiquita operates mainly in North America, and Fyffes is Europe’s biggest distributor, it isn’t likely that there will be any problems when it comes to the review.
Ed Lonergan, Chiquita Brands International CEO, said the deal will save costs for the two companies and for the customers, and means that both companies can trade to a bigger area. “This is a milestone transaction for Chiquita and Fyffes,” he added, “that brings together the best of both companies.”