Chiquita ditches Fyffes and turns to Brazilian firms

Chiquita Brands Inc. has decided to abandon its merger agreement with Dublin-based Fyffes plc and turn to two Brazilian companies, Cutrale and Safra, that have been attempting to acquire the banana firm since August.

On Friday, Chiquita shares jumped 2.9% to $14.16.

News update October 27, 2014: Cutrale-Safra have clinched a $682 billion deal to acquire Chiquita.

Chiquita shareholders voted to ditch the Fyffes takeover, which would have resulted in the creation of the largest banana company in the world. This is one of many tax inversion merger deals that have been cancelled since the US Treasury Department cracked down on their tax advantages last month.

The Cutrale-Safra bids were repeatedly turned down by the Chiquita board, even the $14.50 per share one sent on Thursday that would have valued the company at $742 million. The two Brazilian firms said the Charlotte-based banana seller had until Sunday to respond.

The Chiquita-Fyffe merger plan, which was announced in March 2014, seemed a definite deal. Chiquita would have moved its headquarters to Dublin, where corporate tax is much lower than in the United States.

The US government has taken measures to reduce the tax inversion benefits. Tax inversion is when, for example, a US-based company merges with a foreign company and the new entity moves its HQ abroad, where corporate tax is lower.

Now that the tax inversion benefits have vanished, Chiquita is more interested in the Brazilian option.

On Thursday, AbbVie Inc. announced it had decided not to go ahead with the $54 billion acquisition of Dublin-based Shire plc, saying that the new Treasury Department tax rules have made the planned merger less advantageous for shareholders.

Cutrale and Safra

The Cutrale Group: is one of the largest suppliers of orange juice globally. It is the leading orange-juice concentrate supplier to the Simply Orange and Minute Maid brands, and also owns several juice brands in Florida and Brazil.

Jose Luis Cutrale, the company’s owner, is a board member of Mexico’s Coca-Cola Femsa SAB, Coke’s largest franchise bottler.

Approximately one-third of the global orange juice market ($5 billion) is controlled by Cutrale.

The Safra Group: is an international network of companies controlled by Joseph Safra. It is a conglomerate of real estate firms, financial institutions, industrial operations, and agribusiness concerns.

It operates in Latin America, Europe, the US, the Middle East, and the Caribbean. The company, which has more than $200 billion under management, employs more than 8,000 workers.

Mr. Safra is Brazil’s second richest person, and has a net worth of $13.2 billion.

Cutrale is partnering with Safra-controlled banks in its quest to acquire Chiquita.