Chiquita Brands International, owner of the banana label of the same name, has agreed to acquire Fyffes, Plc in a transaction that is all stock valuing the distributor of fresh produce based in Dublin at around $526 million.
The new deal creates an entity with revenues annually of more than $4.6 billion, the two companies announced in a joint statement. Shareholders at Chiquita will own 50.7% of the new entity with investors at Fyffes holding the rest.
The deal, said one analyst based in Dublin, is logical and a good fit for both companies going forward.
The new transaction forms the biggest banana company in the world, which will also be the producer of packaged salads, pineapples and melons.
The new company, named ChiquitaFyffes Plc, will target a minimum of $40 million in cost savings annually by the start of 2017 through purchasing that is more efficient.
The deal gives the share price of Fyffe at $1.69, which is 37% higher than the company’s close of business stock price as of March 7. That is nearly double the value of the stock one year ago.
Shares of Fyffes were up 36% at noon in Dublin on Monday. That is the highest the stock has been priced in over seven years. The stock price gives the company a market capitalization of close to 354 million euros.
On March 7, Chiquita dropped by 0.2% to close at $10.84 valuing the company in Charlotte, North Carolina at $508 million.
Chiquita at this time has operations in 70 countries that include the U.S. with brands likes Fresh Express and Chiquita Bananas. Fyffes operates in Asia, Europe and South and Central America.
The companies are planning to complete this transaction during 2014 pending the approval of shareholders as well as the Irish High Court.
The combined entity will target a fresh food business that is growing and trends health and wellness.
Fyffes shareholders receive 0.1567 ChiquitaFyffess shares for every one share they currently own, while holders of Chiquita stock will receive a one for one conversion. Ed Longergan the CEO of Chiquita will serve as the company chairman and the executive chairman of Fyffe’s David McCann will be the new CEO of the company.