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HomeFT SelectSumitomo agrees takeover of banana producer Fyffes

Sumitomo agrees takeover of banana producer Fyffes

December 9, 2016

Irish fruit distributor Fyffes has agreed to a takeover by a subsidiary of Sumitomo, a deal that will value the London-listed company at €751m and allow the Japanese conglomerate to dramatically expand its European food business.

The two companies said on Friday that Swordus Ireland Holding, a wholly-owned subsidiary of Sumitomo, would acquire the entire share capital of Fyffes at a price of €2.23 per share. The price represents a 49 per cent premium to Fyffes’ closing share price of €1.50 on Thursday.

Fyffes shareholders will also receive a final dividend for the current year of €0.02 per share in cash.

Shares in Fyffes jumped to €2.22 per share in the first hour of trading on Friday.

Fyffes, which is best known for its banana business, also produces and distributes pineapples, melons and mushrooms. As one of the world’s largest fresh produce distributors, the company has an annual turnover of more than €1.2 billion.

Sumitomo, which has more than 800 companies in its portfolio and a market capitalisation of around $15bn, is already a leading fruit distributor in Asia. Through its Sumifru subsidiary, the group imports nearly one-third of all bananas into Japan.

“Sumitomo Corporation has long admired Fyffes for its outstanding track record and market leading position, and we are delighted that the Fyffes Directors have unanimously agreed to recommend our offer to shareholders,” said Hirohiko Imura, a managing executive officer of Sumitomo. “We believe that our offer represents a great reward for Fyffes’ shareholders.”

David McCann, chairman of Fyffes, said the deal “represents a compelling proposition for our shareholders and crystallises the substantial value created in recent years through the various strategic developments and the strong operating performance of our group”.

Fyffes has broadened its business in the last year, acquiring two Canadian mushroom groups. In April, Fyffes bought Highline Produce, Canada’s largest mushroom producer, for C$145m (€98m). In September, Fyffes announced it had acquired All Seasons Mushrooms, another Canadian mushroom producer, for €41m.

The acquisitions were seen as a boon for Fyffes, which in 2014 failed in its bid to acquire Chiquita, the US banana company. Chiquita shareholders voted against a proposed merger of the two groups, which would have created the world’s biggest banana group by sales. Chiquita shareholders ultimately approved a $1.3bn deal that handed the company to Brazil’s Cutrale and Safra families.

The deal with Sumitomo is still subject to approval by Fyffes shareholders. However, the two companies said on Friday that they had received the irrevocable support of shareholders representing just under 25 per cent of Fyffes’ issued share capital.

Via FT