27th Aug 2014 10:59
LONDON (Alliance News) - Fyffes PLC and Chiquita Brands International Inc Wednesday reaffirmed their commitment to merge and create the world's largest banana company, and said it will realise higher cost savings from the merger.
Earlier this month, doubts over the merger emerged after Chiquita was said to have rejected a takeover bid of USD611 million from Brazilian fruit juice company Cutrale and investment bank Safra, according to a report by the BBC, saying it would stick with its plan to merge with Fyffes, which it first announced back in March.
In a statement Wednesday, Fyffes and Chiquita reaffirmed their commitment to the merger.
"Chiquita and Fyffes remain committed to the transaction and are continuing to work together to complete the combination as expeditiously as possible," said Chiquiate Chief Executive Ed Loneran and Fyffes Executive Chairman David McCann in a joint statement.
The companies said the combined entity could save at least USD60 million in pre-tax synergies per year by the end of 2016, largely from the optimisation of sourcing and shipping logistics.
It said the additional USD20 million in synergies per year is expected to come from European and Mediterranean shipping benefits as well as IT efficiencies.
They also said around 50% of the USD60 million of synergies are achievable in the first year following the merger, with the remaining savings achieved by the end of the second year.
"These synergies will positively impact ChiquitaFyffes financial profile as the combined company is expected to generate significant and increased free cash flow," the companies said.
Ireland-based fruit seller Fyffes also released its trading results for the first-half of the year Wednesday, raising its earnings forecast for the 2014 and its interim dividend, after recording an increase in both profit and revenue.
Fyffes said its pretax profit for the six months to June 30 was EUR22.2 million, up from EUR20.7 million in the first-half of 2013, despite booking EUR8.2 million in costs associated with its merger with Chiquita, as revenue rose 3%.
Revenue from its own operations rose to EUR490.2 million, from EUR476.0 million. Revenue including its share from joint ventures rose 1.3% to EUR592.8 million, up from EUR585.4 million a year earlier.
"Based on its first half performance and continued positive trading conditions early in the second half, Fyffes is increasing its target adjusted EBITA [earnings before interest, taxes and amortisation] for the full year 2014 to the range EUR38 to EUR42 million, from EUR30 to EUR35 million previously, and compared to EUR32.7 million for the full year in 2013," the company said in a statement.
The company raised its interim dividend by 5% to 0.714 euro cents per share.
Fyffes shares were up 3.6% at 77.70 pence before midday Wednesday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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