Market Overview

Chiquita Sends Letter to Holders

Related CQB
The Cutrale and Safra Groups Successfully Complete Tender Offer for Chiquita Brands International, Inc.
Top 4 Small-Cap Stocks In The Farm Products Industry With The Highest EPS Growth Forecast For Next Year

Chiquita Brands
International, Inc. (NYSE: CQB) ("Chiquita") today will be mailing a letter to
its shareholders which highlights key parts of a presentation the Company
filed with the U.S. Securities and Exchange Commission ("SEC") regarding
Chiquita's proposed merger with Fyffes plc
("Fyffes") and the upcoming special meeting of Chiquita shareholders to vote
on the proposed merger.

Chiquita's Board of Directors unanimously recommends that shareholders vote
"FOR" the proposed transaction with Fyffes. The Board firmly believes that the
unsolicited offer from the Cutrale Group and the Safra Group ("Cutrale /
Safra") announced on August 11, 2014, to acquire all of the outstanding stock
of Chiquita for $13.00 per share in cash, is inadequate and not in the best
interests of Chiquita shareholders. The Board determined that, at this time,
ChiquitaFyffes is the best alternative for Chiquita shareholders and that
engaging in discussions in response to an inadequate and highly conditional
offer is unlikely to lead to a superior proposal.

The full text of the letter is below:

August 27, 2014

Dear Fellow Chiquita Shareholder,

We are writing to you today regarding Chiquita's upcoming Special Meeting of
Shareholders, which will be held September 17, 2014. At this meeting, you will
be asked to make an important decision regarding the future of your Company by
voting on the pending proposed merger with Fyffes, which would create a global
banana and other fresh produce company with approximately $4.2 billion in
annual revenues.^1

In connection with this meeting, Chiquita has filed a presentation with the
U.S. Securities and Exchange Commission ("SEC") that details the many reasons
why your Board of Directors unanimously recommends that Chiquita shareholders
vote "FOR" the proposed transaction with Fyffes. Chiquita has a strong,
capable, and experienced Board that understands its fiduciary duties and is
committed to, and focused on, enhancing shareholder value. Over the last two
years, the Board has broadened its management, initiated and presided over a
significant and successful shift in business strategy, and has also
consistently and thoroughly reviewed value-maximizing opportunities, and in so
doing unanimously determined that a combination with Fyffes is in the best
interest of Chiquita shareholders.

Highlights of the presentation are outlined below.

^1 Figure represents pro-forma combined 2013 revenue (excluding share of
revenue of Fyffes joint ventures of $326 million) and is not a projection of
how the combined group will trade.


The Chiquita Board has unanimously reaffirmed its recommendation that Chiquita
shareholders vote to approve the definitive merger agreement between Chiquita
and Fyffes. The Chiquita Board has studied numerous alternatives over the last
few years and believes that the Chiquita and Fyffes combination is the most
realistic and compelling.

The combination with Fyffes accelerates Chiquita's "Return to the Core"
strategy and should enable Chiquita to achieve higher, more predictable cash
flow and to immediately deleverage, further improving the Company's financial
profile. Benefits of the transaction include:

* Combining two strong companies with complementary skills, a recognized
portfolio of brands and global capabilities: The Chiquita and Fyffes
combination would create a leading global produce company with the #1
position in bananas and a significant presence in packaged salads, melons
and pineapples. The combination unites U.S. and European platforms and
creates a more diverse company with a more stable end market and
risk-improved sourcing portfolio.
* Highly complementary tropical fruit businesses offer significant and
achievable potential cost synergies: Since the announcement on March 10,
2014, Chiquita and Fyffes have identified an additional $20 million of
synergies for a total of at least $60 million in annualized cost synergies
by the end of 2016.^2 The updated synergy estimates reflect additional
information which has become available regarding optimization of sourcing
and shipping logistics, as well as the output of the information
technology integration planning work stream that was established after the
proposed Combination was first announced. Importantly, these are synergies
that could only be achieved through a strategic combination.
* Successful operators with proven track-record: Chiquita and Fyffes have
deep benches of talent at the senior management level, with common
management mentality regarding success in the banana industry and
operational experience across key functions. By joining forces, Chiquita
and Fyffes will be able to leverage the combined expertise of two
management teams with highly complementary skills and views on cost
efficiency and industry dynamics.
* Generating increased financial flexibility and a more efficient capital
structure: The combination has the capacity to generate significant free
cash flow and a combined 2014E pro forma EBITDA of $252-$272 million for
ChiquitaFyffes, including estimated synergies.^^3 In addition, the Fyffes
transaction enables immediate deleveraging, as Chiquita's net debt to
EBITDA ratio in 2013 was 4.9x, whereas pro forma with synergies, the 2013
net debt to EBITDA ratio for ChiquitaFyffes would have been 2.5x.

^2 There are various material assumptions underlying the synergies estimate
which may result in the synergies being materially greater or less than
estimated. The estimates should therefore be read in conjunction with the
statement of bases and assumptions for these synergy numbers which are set out
in Appendix A of the announcement issued by Chiquita and Fyffes today. The
synergy and earnings enhancement statements in this press release should not
be construed as a profit forecast or interpreted to mean that the earnings of
ChiquitaFyffes in 2015, or in any subsequent period, would necessarily match
or be greater than or be less than those of Chiquita and/or Fyffes for the
relevant financial period or any other period.

^3 The combined figures are not projections of how the Combined Group will
trade. For illustrative purposes, 2014 estimated combined pro forma EBITDA is
stated as Chiquita's projected adjusted EBITDA for the fiscal year ending
December 31, 2014 of $130 to $150 million with Fyffes estimated 2014 EBITDA
stated as $62 million, being the mid-point of Fyffes projected adjusted EBITA
for the fiscal year ending December 31, 2014 as set forth in Fyffes
announcement dated on or about August 27, 2014 plus, for comparability
purposes, LTM depreciation of €7.1 million (converted to US$ at an exchange
rate of $1.3242 to €1.0000), and assumes run-rate synergies of $60 million per
revised merger benefits statement.

In addition to the significant benefits inherent in our combination with
Fyffes, Chiquita shareholders will benefit from the recent outperformance of
Fyffes' business.  Fyffes has announced that it has delivered a strong result
in the first half of 2014 with adjusted EPS 39.2% higher on a year-over-year
basis.  Based on its first half performance and continued positive trading
conditions early in the second half, Fyffes has increased its target adjusted
EBITA for the full year 2014 to the range €38 to €42 million, from €30 to €35
million previously, and compared to €32.7 million for the full year in 2013.^4


The Chiquita/Fyffes combination resulted from a lengthy and thorough process
that began in December 2010, when the Chiquita Board established a strategic
transaction committee, comprised solely of directors who are "independent" as
defined by the New York Stock Exchange, to assist in considering potential
strategic alternatives. Since that time the Company has engaged with multiple
industry participants regarding a potential transaction. As part of this
process, Chiquita's Board unanimously determined that a combination with
Fyffes is in the best interest of Chiquita shareholders and the Board
continues to recommend that shareholders vote "FOR" the proposed transaction
with Fyffes. To ensure that Chiquita is best positioned to drive value for
shareholders, Chiquita has initiated efficiency measures and pricing actions
in 2014 for its salads business. This business will remain under close focus.


Chiquita's Board and management team have been, and continue to be, focused on
driving strong performance and shareholder value. In the second half of 2012,
the Company developed and began to implement a transformation strategy,
'Return to the Core', with the intent to increase profitability in Chiquita's
core bananas and salads business, to drive costs out of the supply chain and
to be more competitive in its core markets. Since new management was appointed
in October of 2012, the Company has been successfully executing this strategy
and, as a result, Chiquita has become a more efficient operator and the
Company's financial results have dramatically improved. Under the new
strategy, Chiquita's EBITDA is set to double from approximately $70 million in
2012 to $130 to $150 million in 2014^5, and the Company's stock has
outperformed the market appreciating 105.3% from August 7, 2012, when Chiquita
announced its restructuring, to the announcement of the proposed Fyffes merger
on March 10, 2014.

Chiquita reports its financial results in accordance with generally accepted
accounting principles in the United States of America ("U.S. GAAP"). In an
effort to provide investors with additional information regarding Chiquita's
results and to provide more meaningful year-over-year comparisons of the
company's financial performance, as well as the measures that management uses
to evaluate the company's performance against internal budgets and targets,
Chiquita reports certain non-GAAP measures as defined by the SEC. Non-GAAP
financial measures should be considered in addition to, and not instead of,
U.S. GAAP financial measures, and may differ from non-GAAP measures that other
companies use.  For information regarding the reconciliation of non-GAAP
forecast numbers for 2014 to the most comparable GAAP numbers, reference is
made to pages 343-347 of the definitive Proxy Statement/Prospectus/Scheme
Circular dated August 6, 2014. 

^4 Fyffes reports its financial results in accordance with International
Financial Reporting Standards ("IFRS"). For information regarding the
reconciliation of EBITA to the most comparable GAAP numbers, as well as
additional other information regarding Fyffes results and updated forecasts,
reference is made to pages 346-347 of the definitive Proxy
Statement/Prospectus/Scheme Circular dated August 6, 2014 and to Fyffes
interim results which were also announced today.

Chiquita's turnaround has been the result of multiple initiatives to drive
value in our core operations and product offering. As part of the "Return to
the Core" strategy, Chiquita has restructured its value chain, achieved
significant SG&A savings, and taken key pricing actions. Selected measures

* SG&A rationalization that has reduced SG&A by $75 million, 220 basis
points 2011 – LTM 6/30/14;
* Exited non-core businesses, including avocados and grapes, smoothies,
fruit chips, fresh cut fruit and juice bars, that contributed negative
EBIT (earnings before interest and taxes);
* Implemented agronomic and tropical fruit value chain efficiency actions
and infrastructure improvements improving productivity per hectare 12% on
owned farms and contributing $35 million of combined efficiency benefits
in 2013;
* Consolidated and modernized the Fresh Express production infrastructure,
replacing four inefficient facilities with a single Midwest operation that
is now fully complete and performing to expectations;
* Successfully entered the private label value added salads space;
* Invested in quality, service and innovation actions and capabilities to
support our premium branded fresh businesses;
* Implemented banana pricing actions in Europe (2013) and North America
* Implemented value-added salads packaging efficiency and pricing actions
with effect from July, 2014; and
* Accelerated investment in Core R&D, including work on new banana varietals
and disease-resistant plants, and salads blends and kits innovations.

As outlined above, Chiquita's Board and management team have delivered
tangible results and proven their ability to achieve cost savings as
demonstrated by the transformation of Chiquita into an efficient global
sourcing and logistics company providing premium quality bananas and salads to
consumers at the right value.

The Board and management continue to evaluate the business and look for ways
to further improve performance and drive efficiencies. To that end, Chiquita
announced today a range of efficiency initiatives anticipated to reduce
Chiquita's costs by approximately $14 to 16 million. In order to achieve these
savings, Chiquita's current US-Gulf shipping rotation will be replaced with
larger, more efficient vessels allowing for some costs and stowage capacity to
be shared with a third-party shipping partner, resulting in lower per unit
shipping costs for both. Chiquita anticipates that these savings will begin
impacting Chiquita's results late in the fourth quarter of 2014 and will be
fully implemented in 2015, helping ensure that Chiquita remains on track to
achieve its long-term financial objectives.^^6 Chiquita has confirmed that the
Chiquita profit forecast for the fiscal year ending December 31, 2014
contained in its proxy statement dated August 6, 2014 remains valid for the
purpose of the combination.

^5 See prior note.

^6 Chiquita's statement of anticipated savings in this press release should
not be construed as a synergy statement or other statement or estimate of the
anticipated financial effects of the combination.  


As previously announced, after careful consultation with its legal and
financial advisors, our Board unanimously determined that the Group's
unsolicited offer is inadequate and not in the best interests of Chiquita
shareholders. Having made such a determination, Chiquita determined not to
furnish information to, and have discussions and negotiations with, the
Cutrale Group and the Safra Group at this time. The Board firmly believes that
doing so in response to an inadequate and highly conditional offer is unlikely
to result in a superior proposal.  In reaching its decision, the Board took
into account, among others, the following factors:

* Board's belief that Chiquita/Fyffes could trade at prices in excess of
$13/share post-closing, once trading multiples reflect the synergies as
they begin to be realized
* Fact that the market is valuing Chiquita's stock at greater than

* Chiquita stock has traded above, and remained above, $13 since the
Cutrale / Safra's offer was made public on August 11, 2014

* Cutrale / Safra offer is conditional and uncertain. Cutrale / Safra:

* Submitted a highly conditional, non-binding proposal, including a
condition on due diligence, and have not provided any detail on
* Have no experience in the banana or salads industries which adds
significant uncertainty to the outcome and length of due diligence
* To our knowledge, do not have any significant history of successfully
completing M&A
* Had the opportunity to offer adequate value but did not

* Board's belief that offer is opportunistic and not reflective of inherent
value of ChiquitaFyffes, as described below

The Cutrale / Safra offer, in our judgment, is not a compelling alternative to
ChiquitaFyffes as it limits the ability of Chiquita shareholders to realize
long-term value and the offer itself is opportunistic, at a low premium and a
low multiple off a weak point in the stock price. Chiquita is in the midst of
a turnaround initiated by new management and  is also about to close on a
merger that would create a leading global produce company with financial
flexibility, significant cash flows and a more efficient capital structure.

Approving the ChiquitaFyffes merger maintains the option for shareholders to
secure a premium on the combined value, at the right price that give effect to
Chiquita's transformation plan and the benefits of the combination, whereas an
offer at $13 per share does not provide shareholders with adequate value for a
combined ChiquitaFyffes. Essentially, Chiquita shareholders are being asked to
vote down a value-creating merger vs. the alternative of Chiquita stand-alone,
as there is no deal for Chiquita at an adequate price. ChiquitaFyffes
post-merger is a better and more valuable business than Chiquita stand-alone
without the proposed merger.


Your vote is extremely important regardless of the number of shares you
own. Whether or not you plan to attend the Special Meeting, we urge you to
vote FOR the transaction by signing, dating and returning the enclosed proxy
card at your earliest convenience. Internet and telephone voting options are
also available and easy to follow instructions may be found in your proxy. The
method by which you vote does not limit your right to vote in person at the
special meeting.  We strongly encourage you to vote.

^7 Bloomberg

In addition to Alliance Advisors, LLC, whose contact information is contained
in Chiquita's Proxy Statement, shareholders may also contact MacKenzie
Partners Inc. with any questions or for assistance in submitting their
proxy. Contact information for MacKenzie Partners is set forth below.


Partners, Inc.

105 Madison Avenue
New York, NY 10016

Posted-In: News Press Releases


Related Articles (CQB)

View Comments and Join the Discussion!