Chiquita’s decision to accept a $1.3 billion takeover bid from Brazilian juice maker Grupo Cutrale and investment firm Safra Group, rather than merge with fellow banana-producer Fyffes, created waves in the agribusiness sector this week.
The competition for the business was seen as both a good and bad thing for the wider agri investment market but also underlined the increasing presence of Brazilian companies in the international market.
Kevin Schwartz, president and founder of agribusiness private equity firm Paine and Partners, is positive about the market dynamics surrounding the deal.
“I think this deal underpins that agribusiness is a segment where there is a lot of interest right now from sources of capital beyond the traditional large multinational companies that have dominated it for many years,” he told Agri Investor. “We have seen a number of transactions where these types of outcomes have occurred recently. And it is evidence of the continuing and increasing interest in international agribusiness companies.”
Fernando Aftalion, founding partner at consultancy Grupo Agrarius, presented a different view about the market’s potential.
“I really don’t think that the agribusiness sector will be influenced by this; on the contrary, it’s showing the fight for valuable companies,” he said.
Taking a slightly wider view, Roberto Viton, founder of consultancy Valoral Advisors, highlighted the interesting partnership of a strategic player and a financial player joining forces to beat Fyffes.
“It shows that financial companies are willing to invest in food and agriculture related deals,” he said. “It also demonstrates interest in some niche or specialised businesses like fresh fruits and fruit juice. And that Brazilian companies are continuing to diversify away from their local market due to weak economic conditions at home.”
The potential $1.1 billion all-share merger between Fyffes and Chiquita was first announced in March and could have created the world’s largest banana supplier. But Ed Lonergan, Chiquita’s chief executive, decided it would be better to maintain the competition between Fyffes and Chiquita, according to BBC News.
Cutrala-Safra has offered $14.50 a share in cash to shareholders, it said in a press release. Chiquita is expected to be taken private early next year, according to reports.