Fyffes has announced its intention to send a circular to shareholders on the proposed demerger of its general produce and distribution business.

The business will be a separately quoted company and fully owned by the company's shareholders.

Total Produce plc, the new company, will be listed on the Irish Stock Exchange's IEX market in Dublin and the AIM in London, and begin trading on January 7, 2007.

If the proposals are approved at an extraordinary general meeting on December 5, all eligible shareholders on the Fyffes share register on December 29, will receive one new share in Total Produce for each existing Fyffes share held.

The Board expects the demerger to enable both businesses to pursue independent growth strategies.

A Fyffes statement said that if the demerger had taken place on December 31, 2005, its turnover would have been reduced by approximately €1.676 billion (£1.13bn), and its operating profit would have been lower by approximately €32 million (£21.5m).

If the demerger had taken place on June 30, 2006, Fyffes' total net assets at that date would have been reduced by €164m (£110.3m) to €262m (£177m).

Fyffes said it is intended that Total Produce will commence operations on December 31, 2006 with €10m (£6.72m) net debt.

The new company Total Produce will also pay the final consideration to buy the remaining 40 per cent of the Everfresh Group in May 2007, subject to a maximum payment of €49.6m (£33.4m). As at 30 June 2006, Fyffes said it had accrued €35m (£23.5m) in this regard.