EU backs merger to create world's biggest banana company
(BRUSSELS) - European Union competition regulators gave the green light Friday for a merger between US banana giant Chiquita and Irish rival Fyffes to create the world's biggest producer.
Chiquita's merger with Fyffes was announced in March and would create a firm with $4.6 billion in annual revenues. The proposal would allow Chiquita to avoid higher US taxes by relocating its statutory headquarters to Ireland.
The deal still faces a slip-up as Brazilian companies in August made a counter-offer for Chiquita.
"While the merger brings together the number 1 and 2 suppliers of fresh bananas in Europe, the Commission's investigation found that healthy competition will be preserved in the relevant markets," the European Commission said in a statement.
But the Commission said that as a condition for winning approval, Fyffes would have to give up an exclusivity deal with shipping giant Maersk.
Both companies would also have to forgo any similar shipping exclusivity deals in the future.
The combined company would become the leading global banana and other fresh produce company, with sales of more than 160 million boxes of bananas a year, they said when the announced the merger.
Shareholders were supposed to weigh the all-stock deal between Chiquita and Fyffes in a special meeting in September.
But this was delayed to October 24 because of the Brazilian counter offer, which could offer Chiquita shareholders a quicker return.
Cutrale Group, one of Brazil's largest juice exporters, and investment bank Safra Group in August offered Chiquita shareholders better terms to where the company's stock has been trading.
The two also said that there were no financial challenges to the deal and that it could be completed by the end of the year, the same timeline as the Chiquita-Fyffes tie-up.
Chiquita's board of directors have acknowledged the proposal and advised shareholders to not take any action until the board has made its own recommendation after the October meeting.