Chiquita, the American banana provider joined forces with Irish rival Fyffes and formed the world’s largest banana company named ChiquitaFyffes, which aims at boosting the annual cost savings at minimum $40 million by 2016. The stock-for-stock deal values the newly made enterprise at $526 million and, apart from bananas, it will also focus on packaged salads, pineapples and melons. The deal favors Chiquita, which will receive the majority of shares, 50.7, while Fyffes is offered 49.3. However, both brands will continue, so the market will enjoy bananas from both Chiquita and Fyffes.
The world’s largest banana company is currently formed thanks to Chiquita’s initiative and the merge was announced Monday morning. The newly formed company, ChiquitaFyffes will have its headquarters in the United States, but it will be based in Dublin. The new enterprise has a market value of over $1 billion, $4.6 billion in annual revenues and 32,000 employees. The management also changed; Chiquita’s boss, Ed Lonergan, is set to become the chairman of the largest banana company in the world and Fyffes’ executive chairman, David McCann will occupy the position of chief executive. Chiquita is the larger and wealthier of the two companies, valued at $507.7 million or £303.7 million, while Fyffes stands at £264.7 million. The way in which the two executives perceive the merge is also different; while Lonergan stated this is a “milestone transaction,” McCann considered it “transformative.”
However, the common denominator between the two executives is that they both wish to join forces, knowledge and assets in order to expand the business and satisfy their suppliers and customers.
Before they merged and became the world’s largest banana company, both enterprises were important distributors in their geographic areas. Chiquita, along with rivals Dole and Del Monte holdsapproximately half of the global banana exports, while Fyffes is Europe’s number one distributor with a market share of 16 percent. Patrick Higgins, analyst at Goodbody Stockbrokers in Dublin believes that, after the official merge, the newly formed company, ChiquitaFyffes will have approximately a 14 percent share of the worldwide banana market.
The largest banana company will also have the chance to negotiate better deals with clients, since its sales have been estimated to exceed 160 million boxes of bananas per year. Separately, Chiquita’s annual revenues top $3 billion, while Fyffes only makes $1.1 billion.
Although the largest banana company could finalize the paperwork until the end of this year, the United Nations raises the eyebrow with regard to the antitrust issues, given the fact that over 80 percent of the worldwide banana market is controlled by only four multinationals, namely Chiquita, Fyffes, Dole and Del Monte and the first two are in the middle of a merge.
The United Nations estimated that, in 2012, global banana exports’ value was $7 billion, but concerns regarding this business have been recently raised since a virulent disease has hit the plantations in the Caribbean and another one has caused damage in southeast Asia.
When talking about the upcoming largest banana company in the world, Higgins also stated that the combined forces could also stabilize the market’s volatility, since overcapacity has been characterizing the industry for the past few years. Regardless of the antitrust issues and the diseases that threat the banana cultivations, Chiquita and Fyffes, two of the most important multinationals in this market have merged and formed the world’s largest banana company.
By Gabriela Motroc