Fruit importer Fyffes (FFY:AIM) flies 25% higher to 93.5p as news of its all-share merger with salads-to-bananas group Chiquita Brands (CQB:NYSE) sets investors salivating. The tie-up creates the world's number one banana company with $4.6 billion in annual sales and a presence in key markets around the globe. Sadly, it means the end of Fyffes as a London-listed business as shares in the enlarged group will only be traded in the US.
North Carolina-based Chiquita's recommended all-share offer values Fyffes at around €379 million (£316 million) or €1.22 per share (101.6p), a very tasty 38% premium to Friday's closing share price. Shareholders in the Dublin-headquartered bananas-to-pineapples producer will receive 0.1567 shares in the enlarged 'ChiquitaFyffes' for each Fyffes share owned, giving them around 49.3% of the New York Stock Exchange-listed entity.
Scheduled to complete by the end of this year, the deal creates a global produce company with a major presence in everything from packaged salads to melons and pineapples. At over $3 billion per annum (£1.8 billion), healthy snacks, bananas and packaged salads marketer Chiquita has double the annual sales of Fyffes, a producer and distributor of high-quality, healthy tropical produce. Uniting the two forges a business better equipped to tap growth in the international fresh foods market, notably in emerging economies, as well as wider health and wellness trends, while the deal boosts positions in the melon and pineapple markets.
Investors should be wary of deals dubbed 'transformative' which take management outside of their circles of competence, yet this merger makes much strategic sense. Enhancing scale, scope and product diversity, the deal is expected to yield at least $40 million in annual cost savings by the end of 2016.
Now set to de-list from London's junior Aim exchange and Dublin's Enterprise Securities Market (ESM) markets, Fyffes today unveils strong full-year figures showing total sales and taxable profits up 6.3% to €1.1 billion and €31.1 million respectively. Growth mainly reflects organic progress in bananas and melons, while the total shareholder reward rises 4.8% to 2.17 cents, a payout covered more than four times by earnings up 3.2% to 8.82 cents.