Chiquita shares fall ahead of key investor vote
Chiquita shares fell after a top shareholder rejected the firm’s plan to buy an Irish rival.
Shares of Chiquita Brands International (CQB) closed down sharply Monday after a major institutional investor in the banana market giant said it would not back Chiquita’s plan to buy Ireland-based rival Fyffes
Wynnefield Capital, which owns 3.5% of Chiquita, instead endorsed the $14-a-share revised offer for Chiquita announced last week by the Cutrale Group and Safra Group, a team of Brazil-based corporate suitors pursuing an unsolicited Chiquita takeover bid.
Chiquita shares closed down nearly 4.2% at $12.80 in Monday trading — despite newly announced support for its Fyffes acquisition plan from an influential shareholder advisory organization.
“In our analysis, the Cutrale-Safra Group proposal provides clearly superior shareholder value to the Fyffes transaction, and the Chiquita Board’s self-serving behavior threatens significant harm to shareholders,” said Wynnefield President Nelson Obus in a written statement.
“In contrast, Wynnefield’s analysis demonstrates that the all-cash Cutrale-Safra proposal would provide superior value and eliminate the risks associated with a merger. And, as a company analyzed on a cash-flow basis, rather than an earnings per share (EPS) basis, Chiquita Brands would be a better company for all stakeholders as a private enterprise,” said Wynnefield.
In response, Chiquita reiterated its Thursday statement in which the firm said the Fyffes deal would enable investors “to realize significantly greater value than $14.00 per share, without losing any control premium that shareholders may receive in the future.”
Charlotte, N.C.-based Chiquita initially announced its plan to buy Fyffes in March. The company structured the transaction as a so-called corporate tax inversion — a procedure that would enable Chiquita to reap the future benefit of Ireland’s lower corporate taxes by reincorporating in Dublin.
But the Obama administration on Sept. 22 announced new Department of the Treasury rules that would make corporate inversions less profitable and more difficult to complete. The rules, which took effect as of the announcement date, were aimed at closing what Treasury Secretary Jacob Lew called a “glaring loophole in the U.S. tax code” that enables U.S. companies to switch their citizenship to avoid paying future U.S. taxes.
Source: Usatoday- Chiquita shares fall ahead of key investor vote
