The merger of banana giants Chiquita and Fyffes is expected to benefit significantly from cost synergies, according to the companies, with US$60m identified between now and the end of 2016.
Half of those synergies are achievable in the first year once the merger has been finalised, the companies said, with the remainder expected by the end of the second year.
The wide sourcing ability of the combined group is anticipated to lead to shipping synergies in Europe and the Mediterranean, while IT efficiencies are also foreseen due to the implementation of cloud computing.
'These synergies will positively impact ChiquitaFyffes' financial profile as the combined company is expected to generate significant and increased free cash flow,' a statement read.
Chiquita also announced a range of efficiency initiatives expected to lower its costs by US$14m-US$16m.Chiquita's current US-Gulf shipping rotation is set to be replaced with larger, more efficient vessels, with some costs and stowage capacity to be shared with a third-party shipping partner, resulting in lower per unit shipping costs.
Such synergies are a major reason behind Chiquita's recent rejection of a takeover bid by juice maker Cutrale and investment firm Safra Group.
'Chiquita and Fyffes remain committed to the transaction and are continuing to work together to complete the Combination [merger] as expeditiously as possible,” said Ed Lonergan, Chiquita’s chief executive officer, and David McCann, Fyffes' executive chairman.
