Japanese Banana Bid Sends Fyffes Shares Soaring
Japan’s Sumitomo Corp. agreed to buy banana importer Fyffes Plc for 751 million euros ($798 million) in cash, expanding its reach in the global fruit market and sending the Irish company’s shares soaring.
Founded in 1888, Fyffes will become a small part of a group with operations on all corners of the globe spanning steel trading and shipbuilding to cable television and nickel mining. The purchase will give Sumitomo a business that distributes about 46 million cases of bananas in Europe annually, and also markets pineapples, melons and mushrooms.
For Fyffes shareholders, the takeover represents a “superb, albeit unexpected outcome,” said David Holohan, chief investment officer at Merrion Capital in Dublin. The bid brings “a positive conclusion to several years of impressive share price performance.”
The deal comes just over two years after Chiquita Brands International Inc. shareholders rejected a proposed takeover of Fyffes that would have created the world’s largest banana producer.
Fyffes is small fare for Sumitomo. The deal will add annual annual sales of about $1.3 billion for the Japanese company, which in its last financial year had revenue of about $66 billion. Fyffes’ 17,000 workers compares with more than 65,000 employed by Sumitomo.
Sumitomo has been active in the fruit industry since the 1960s, and imports about 30 percent of bananas into the Japanese market. The proposed takeover has secured irrevocable undertakings from investors owning about 27 percent of Fyffes’ shares.
Funding for the transaction will come from a new bank facility or Sumitomo’s existing cash resources, which stood at $8 billion as of its March year-end, the Japanese company said.
JPMorgan Chase & Co. acted for Sumitomo, while Fyffes was advised by Lazard and Davy Corporate Finance.
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