News Column

Chiquita criticizes buyout offer from Brazilian companies

September 2, 2014

By Deon Roberts, The Charlotte Observer



Sept. 02--Charlotte's Chiquita Brands International is stepping up its efforts to persuade shareholders to reject an offer from two Brazilian companies to buy the banana giant, as a Sept. 17 vote to approve the deal draws closer.

Chiquita has previously said the companies' offer of $13 a share, or $611 million, undervalues it. In a letter to shareholders Tuesday, Chiquita reiterated that view while also taking aim at what it called "flawed" calculations underlying the companies' unsolicited offer.

The Cutrale and Safra proposal is "misleading, misrepresented and inadequate," the letter says.

Chiquita is hoping shareholders reject the Cutrale and Safra offer and instead approve Chiquita's planned merger with Irish produce company Fyffes.

That proposal, announced in March, is also up for a shareholder vote at the Sept. 17 meeting in Charlotte.

Chiquita calls the Fyffes merger a better deal for shareholders. About two weeks ago, Chiquita's board rejected the Brazilian companies' offer.

"Since then, Cutrale/Safra has had ample opportunity to submit a revised proposal, but has chosen not to do so," Chiquita's letter says. "Instead, Cutrale/Safra has dug in at $13 per share and made multiple inaccurate and misleading public statements attempting to discredit Chiquita's board and management team, as well as the highly compelling combination with Fyffes."

A spokeswoman for the Brazilian companies could not be immediately reached for comment.

Chiquita has been increasing its efforts to convince shareholders the merger with Fyffes is in their best interest. Last week, Chiquita and Fyffes increased the estimate of how much their merger will save by $20 million.

Cutrale, an orange-juice maker, and the Safra Group, a banking conglomerate, made their offer to buy Chiquita last month. The companies have said their offer would be better than a Fyffes merger because it would give shareholders an immediate payout, without the uncertainty of a merger.

Chiquita, in its letter Tuesday, said Cutrale and Safra have inaccurately said that there is no risk to Chiquita shareholders should the banana company enter into discussions with the Brazilian companies.

"In fact, there are many contingencies attached to the Cutrale/Safra proposal, and any delay in closing the Fyffes transaction will result in a deferral to Chiquita shareholders of the anticipated benefits of the transaction," Chiquita says in its letter. "Also, there is risk that Fyffes may walk away from the transaction, if its shareholders vote against the transaction as a result of our engaging in discussions regarding the Cutrale/Safra proposal."

Chiquita's letter also says the Brazilian companies are wrongly basing their offer on Chiquita's financial results from a 12-month period that ended in June.

That period is "an inappropriate reference point," because it does not give Chiquita credit for, among other things, improvements the company has implemented, the elimination of certain expenses and $18 million in weather-related costs reported in the first quarter of this year, the letter says.

The letter also reiterated Chiquita's view that the buyout offer from the Brazilian companies is "opportunistic" and based off a weak point in Chiquita's stock price.

Chiquita relocated to Charlotte from Cincinnati two years ago. State and local incentives worth roughly $22 million tied to job creation were used to lure the company.

It employs more than 300 people in uptown Charlotte.

Chiquita shares were trading at $13.69 at midday, down more than 1 percent.

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(c)2014 The Charlotte Observer (Charlotte, N.C.)

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Source: Charlotte Observer (NC)


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