Banana bonanza as Chiquita buys Fyffes

Banana producer Chiquita has bought its Irish rival Fyffes, creating the world's largest banana company. The top banana, you might say.

by Emma Haslett
Last Updated: 15 Aug 2014

Banana giants Chiquita (currently worth $507.7m, or £303.4m) and Fyffes (currently worth €264.7m, or £220m) have announced they’re going to merge, creating the world’s largest banana producer, worth a cool $1bn.

The new company, sensibly named ChiquitaFyffes, will be no banana republic: it will, it hopes, create $40m in pre-tax savings by the end of 2016. The deal’s being done strictly in shares, which means Chiquita shareholders will end up with 50.7% of the company, and Fyffes investors will have 49.3%.

Pleasingly, the merger won’t mean either banana boss has to split: Fyffes boss David McCann will take the reins as chief executive, while Chiquita boss Ed Lonergan will become chairman.

Puns aside, it hasn’t been an easy few years for Chiquita: in February it posted a $31m loss for its fourth quarter - admittedly down from $333m a year before, but still not massively encouraging to shareholders. The problem is that at the moment, the banana business isn’t very profitable: last year oversupply from Ecuador and Guatemala pushed prices down for Chiquita.

Fyffes, on the other hand, had a pretty good 2013, all things considered. Profit before tax grew 6.3% to €31.3m, with total revenue also growing 6.3% to €1.1bn.

So you can see why Chiquita is so keen to absorb Fyffes that it’s willing to give away half its shares for the privilege. The question now is whether adopting the practices of its smaller rival can create those savings it anticipates. If it doesn’t, shareholders could go bananas…

Find this article useful?

Get more great articles like this in your inbox every lunchtime