1
Chiquita used to own Fyffes but sold it in the 1980s
Indeed, this is not the first time the Fyffes brand has been owned by Chiquita, albeit under different names and circumstances. Chiquita's original commercial incarnation United Fruit Company purchased 45 per cent of the capital in London-based banana importer Elders & Fyffes way back in 1902. Then, in 1986, Fruit Importers of Ireland (led by Neil McCann) purchased Fyffes Group from United Brands, which subsequently became Chiquita Brands International.
2. The merger is a good deal for both parties
Fyffes' sales are half those of Chiquita, but it will have a near-equal share in the new company. Chiquita's turnover was more than US$3bn in 2013, Fyffes was over US$1.5bn. However, last year Chiquita incurred a net loss of US$16m, an improvement on its US$405m loss a year earlier. Fyffes recorded a net profit of US$35.9m in 2013, up from US$32.9m in 2012.
3. The alphabetical order of 'ChiquitaFyffes' is misleading
The new ChiquitaFyffes board of directors will be weighted in Fyffes' favour. Fyffes executive chairman David McCann is set to be its new chief executive, while chief financial officer Tom Murphy will inherit the same role at the merged company. Coen Bos, the Dutchman who oversees Fyffes' operations from Rotterdam, will be COO of the ChiquitaFyffes fruit division.
4. Ultimately, the Fyffes guys have more industry experience
Chiquita's current leadership is arguably being relegated. Chiquita president and CEO Ed Lonergan is moving into a non-executive chairman role, while the US group's COO and former European boss Brian Kocher has been asked to focus on running the salads and healthy snacks unit. There is apparently no place on the new board for Chiquita CFO Rick Friers.
5. Opportunity knocks for ChiquitaFyffes in Asia
Asia represents the next big frontier for ChiquitaFyffes as it looks to extend its reach into new markets. With new container shipping technology allowing the group to send its fruit further, the region is increasingly within reach. Chiquita has begun trial shipments to China in the past 18 months, while Fyffes is busy establishing a new office in the country.
6. The deal is a complicated one
Twombly One is the official legal name of ChiquitaFyffes, which was incorporated in Ireland as a private limited company solely for the purpose of merging Chiquita and Fyffes. ChiquitaFyffes itself has set up an indirect, wholly owned subsidiary called Chiquita Merger Sub, incorporated in New Jersey. This will merge with Chiquita, with Chiquita continuing as the surviving corporation in the merger. Fyffes is run by the McCann family, but they only own 13 per cent of the group via their own company Balkan Investment. Other shareholders include the Jerry Zucker Revocable Trust (13 per cent) and Fidelity Investments (20 per cent).
7. As ever, financial context is important
The new entity will be listed on the New York Stock Exchange, but domiciled in Dublin. The Irish capital will be the international home of ChiquitaFyffes, although it will retain a sizeable presence in the US. The corporate tax rate in Ireland is currently set at 12.5 per cent, among the lowest in Europe. Recent legislative changes in North Carolina, where Chiquita Brands International is based, will see its corporate tax rate fall to 6 per cent in 2014, and 5 per cent next year. If the state's tax revenues reach a certain level, the rate could be as low as 3 per cent by 2017. Chiquita is also due to be rewarded with certain 'incentives' from city authorities for keeping its HQ in Charlotte. A spokesman for the group told Charlotte Business Journal that the new entity would comply with the incentives deal, despite the merged group's international centre being elsewhere.
8. Senior managers at both companies might want to polish their CVs (résumés)
Around half of the US$40m in 'operational efficiencies and cost savings' targeted by ChiquitaFyffes are set to come from 'integration of senior management and administration'.
9. The world's largest fruit business?
ChiquitaFyffes' combined annual banana sales will exceed 160m boxes, making it the largest banana company in the world. With US$4.6bn in sales, the group will be notably larger than Dole Food, which reported revenue of US$4.2bn for 2012 and has since sold off part of its business. Irish company Total Produce recently posted sales of US$4.4bn for 2013, Belgian giant Univeg's annual sales are also in excess of US$4bn and Fresh Del Monte's revenue was US$3.7bn last year.
10. Fyffes could find itself working more closely with Univeg
Univeg is the major distributor of Chiquita bananas in Europe, with a sizeable share of the German banana market. Fyffes has its own banana businesses in mainland Europe, including Inter Weichert (Germany). It also has a one-third share in Düsseldorf-based importer vanWylick and works closely with fellow Irish company Total Produce's network of European subsidiaries and partners.
11. This is big news for Belize
Fyffes handles the entire banana export deal in Belize. The Central American country's estimated revenue for 2014/15 is US$905m, less than 20 per cent of ChiquitaFyffes' own targeted revenue. Other suppliers such as Colombia, Costa Rica and Ecuador will be watching with interest too.
12. Fyffes' lawyer is a cultured fellow
Fyffes' main legal advisor on the deal is Tim George of Lazard, who also works as the treasurer and a director of the New York Philharmonic Society. In addition, he is a director of American baby food company Sprout Foods.
