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Shareholders in legal threat to Chiquita-Fyffes merger

Shareholders in legal threat to Chiquita-Fyffes merger

The proposed $ 1 billion banana company merger between Fyffes and its US rival Chiquita Brands faces a new threat, after shareholders in the US company this week lodged a class-action lawsuit attempting to scupper the merger.

A pension fund for firefighters in Birmingham, Alabama, which is a shareholder in Chiquita, is suing the US company’s directors for alleged breaches of fiduciary duty by accepting the terms of the merger, which would result in the bulk of management control of the enlarged entity going to Fyffes, led by Dublin businessman David McCann.

The pension fund alleges that the merger, which is due to be voted on by Fyffes and Chiquita shareholders later this month, is unenforceable because it favours Fyffes and it also wants an injunction to prevent the Chiquita vote that is scheduled for October 24th.

The pension fund is also claiming that Irish corporate law is inferior to US law in terms of the protections afforded to shareholders, and that the merger should be blocked on this basis. The merged entity that has been proposed, ChiquitaFyffes, would be domiciled in Ireland.

The proposed deal is already under threat from a rival all-cash bid for Chiquita from two Brazillian billionaires. Companies linked to the two men are preparing a final offer for the US company before the scheduled votes.

To head off the Brazillian bid, Fyffes and Chiquita, whose board prefers the merger with the Irish company, recently revised the terms of the deal to give Chiquita shareholders a bigger slice of ChiquitaFyffes, close to 60 per cent.

The termination fee payable to Fyffes in the event of the merger being ditched was also more than trebled to 3.5 per cent of Chiquita’s value, about €18.5 million. The firefighters’ fund says the Cutrale-Safra proposal is “clearly superior”. Fyffes said the lawsuit was a matter for Chiquita, which did not respond to a request for comment.

Source: irishtimes.com

Publication date: 10/9/2014


FreshPlaza.com

Shareholders in legal threat to Chiquita-Fyffes merger

Shareholders in legal threat to Chiquita-Fyffes merger

The proposed $ 1 billion banana company merger between Fyffes and its US rival Chiquita Brands faces a new threat, after shareholders in the US company this week lodged a class-action lawsuit attempting to scupper the merger.

A pension fund for firefighters in Birmingham, Alabama, which is a shareholder in Chiquita, is suing the US company’s directors for alleged breaches of fiduciary duty by accepting the terms of the merger, which would result in the bulk of management control of the enlarged entity going to Fyffes, led by Dublin businessman David McCann.

The pension fund alleges that the merger, which is due to be voted on by Fyffes and Chiquita shareholders later this month, is unenforceable because it favours Fyffes and it also wants an injunction to prevent the Chiquita vote that is scheduled for October 24th.

The pension fund is also claiming that Irish corporate law is inferior to US law in terms of the protections afforded to shareholders, and that the merger should be blocked on this basis. The merged entity that has been proposed, ChiquitaFyffes, would be domiciled in Ireland.

The proposed deal is already under threat from a rival all-cash bid for Chiquita from two Brazillian billionaires. Companies linked to the two men are preparing a final offer for the US company before the scheduled votes.

To head off the Brazillian bid, Fyffes and Chiquita, whose board prefers the merger with the Irish company, recently revised the terms of the deal to give Chiquita shareholders a bigger slice of ChiquitaFyffes, close to 60 per cent.

The termination fee payable to Fyffes in the event of the merger being ditched was also more than trebled to 3.5 per cent of Chiquita’s value, about €18.5 million. The firefighters’ fund says the Cutrale-Safra proposal is “clearly superior”. Fyffes said the lawsuit was a matter for Chiquita, which did not respond to a request for comment.

Source: irishtimes.com

Publication date: 10/9/2014


FreshPlaza.com

Chiquita-Fyffes revised agreement benefits Chiquita shareholders

Chiquita Brands International Inc. and Fyffes plc have approved a revised agreement for the proposed combination of the companies. Under the terms of the amended agreement, Chiquita shareholders are expected to own approximately 59.6 percent of ChiquitaFyffes, an increase from 50.7 percent under the previous agreement.

The companies have also increased the termination fee payable to Fyffes from 1 percent to a more customary 3.5 percent of the total value of the issued share capital of Chiquita. In addition, under the revised agreement, Fyffes will also have the right to terminate the transaction if Chiquita shareholder approval is not obtained on or prior to Oct. 24, 2014. In such event, Fyffes may be entitled to a termination fee if Chiquita enters into another transaction within nine months.

“We are pleased with the increased value that these enhanced terms for Chiquita bring to our shareholders,” Ed Lonergan, Chiquita’s chief executive officer, said in a press release. “The Fyffes transaction is a natural strategic partnership that brings together two complementary companies to create a combined company that is better positioned to succeed in a highly competitive marketplace, while driving strong performance and value for shareholders as well as immediate benefits for customers and consumers worldwide.”

“The combination of Chiquita and Fyffes is strategic and compelling, creating the No. 1 banana company globally, with synergies that can only be achieved by these companies coming together,” David McCann, Fyffes executive chairman, said in the release. “This revised binding agreement, along with the additional synergies recently announced, reinforces our conviction that the Combination is the value-maximizing opportunity for both companies’ shareholders.”

Chiquita’s board has reaffirmed its recommendation that Chiquita shareholders vote for the Fyffes transaction; however, on Sept. 8 Fyffes granted Chiquita a waiver that permits it to engage in discussions with the Cutrale Group and the Safra Group, which had previously offered Chiquita a $ 611 million buyout offer.

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