Chiquita Brands International Inc (NYSE:CQB) gets two competing acquisition offers- which one will it accept?

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By Mark Michaels on August 11, 2014 Consumer Staples

Safra Group, an investment firm, and Cutrale, a Juice maker company, announced on Monday, August 11, 2014 that they offered Chiquita Brands International Inc (NYSE:CQB) an acquisition deal worth $610.5 million in cash. The deal offered by Cutrale and Safra competed against the all-stocks offer made by Fyffes Plc (FFY.L), an Irish company that makes topical fruit juices.

Chiquita Brands International Inc (NYSE:CQB), in March 2014, announced its merger deal of Charlotte, located in North Carolina, with that of Fyffes Plc (FFY.L). The market value of both the companies (Fyffes and Chiquita) is estimated to be around $1 billion. Both the companies were trying to close the acquisition deal when Safra and Cutrale offered a rival acquisition deal.

Safra and Cutrale are both Brazil based companies and they have offered Chiquita’s shareholders a price of $13 for each share- a value that is 29 percent higher than the Friday’s closing price of the company. Just when Safra and Cutrale offered a rival deal, the share of Chiquita Brands International Inc (NYSE:CBQ) jumped by 30 percent. The stocks started changing hands at $13.30; above the offered premium amount of $13, signaling that the traders might see a bidding war for the acquisition of Chiquita Brands International Inc (NYSE:CBQ).

In the meantime, on August 11, the stocks of Fyffes Plc (FFY.L) tumbled down by 13 percent.

Safra and Cutrale announced on Monday that their proposal has been sent to the board of directors of Chiquita Brands International Inc (NYSE:CBQ). They also urged the company to start negotiations so that the takeover could reach a definitive agreement. Moreover, both the companies were confident that they would get a response from Chiquita Brands International Inc (NYSE:CBQ) by Friday, August 15, 2014.

As for Fyffes Plc (FFY.L), it planned on listing the acquired company on New York exchange but domiciling it in Ireland for Ireland has lower tax rates. Washington D.C. is trying to control the inversions as a number of companies are moving their domiciles to other countries with lower tax rates than that of United States.

Aroud $7 billion of banana market share is controlled by Chiquita Brands International Inc (NYSE:CBQ), Fyffes Plc (FFY.L), Fresh Del Monte Produce Inc (NYSE:FDP) and Dole Food Company (NYSE:DOLE).

Fyffes Plc (FFY.L) refused to comment on the offer of Safra and Cutrale whereas no spokesperson was available from Chiquita Brands International Inc (NYSE:CBQ) to comment on the premium rates.

On the last trading day, August 11, 2014, the shares of Chiquita Brands International Inc (NYSE:CBQ) opened at a price of $13 and closed at an increased price of $13.10, after hitting the highest figures of $13.56. The company has a market capitalization of $614.54 million. As far as the 52 week range of company’s stocks is concerned, the numbers are recorded to be around $9.24 to $13.67.

As for Fyffes Plc (FFY.L), the company stocks saw a change of -15 percent in its price on the last trading day, August 11, 2014.