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Ireland-headquartered banana importer Fyffes (FFY) has been snapped up by Asian global trading group Sumitomo Corporation for €751m (£635m).
The two companies have reached agreement on the terms of a unanimously recommended cash offer worth €2.23 per Fyffes share.
Sumitomo said Fyffes was a “natural fit” with its organisation and it planned to expand the various produce offerings and expand into new geographies.
The offer is a 49% premium to the €1.50 closing price of Fyffes last night and a 53% increase to the average share value in the past month. It is also 37% higher than Fyffes’ all-time high share price of €1.62 earlier this year when it acquired mushroom business Highline Produce.
Fyffes chairman David McCann said: “We believe this transaction represents a compelling proposition for our shareholders and crystallises the substantial value created in recent years through the various strategic developments and the strong operating performance of our group.
“Our employees, customers, suppliers and joint venture partners will benefit from Fyffes being part of an enlarged group with greater scale, reach and resources to broaden and accelerate delivery of Fyffes’ strategic objectives. We look forward to working with the Sumitomo team to develop and enhance our Group’s strategy and to build on its long track record of successful growth.”
Fyffes is an international grower, importer and distributor of bananas, pineapples, melons and mushrooms with revenues of more than €1.2bn.
It has expanded this year with the acquisition of two mushroom growers, All Seasons and Highline Produce, picked up in September and April respectively.
Hirohiko Imura, managing executive officer of Sumitomo, added: “Sumitomo Corporation has long admired Fyffes for its outstanding track record and market leading position, and we are delighted that the Fyffes Directors have unanimously agreed to recommend our offer to shareholders.
“We believe that our offer represents a great reward for Fyffes’ shareholders. We are grateful that the McCann family has provided an irrevocable commitment of support and is entrusting us to continue with them the rich Fyffes heritage. Sumitomo will provide Fyffes with experience, support and investment to continue to build on the tremendous Fyffes skills and experience and reach greater potential.
“We have significant experience in the produce sector and look forward to working with Fyffes’ executive directors, senior management and employees, customers and other stakeholders to strengthen Fyffes’ already impressive market position through continued investment. We look forward to working with the Fyffes team to further develop the business over the longer-term and to expanding into new markets to better serve customers.”
Shares in Fyffes (FFY) have shot up 43.4% to 185p this morning – equivalent to the €2.23 offer price.
Morning update
Supermarket deflation has fallen to its lowest level in close to two years as the post-Brexit decline in sterling continues to put pressure on shelf prices.
The Grocer Price Index, collated by Brand View from over 60,000 individual SKUs across the big four, moved to -1.41% year on year in the month to 1 December, having been -1.71% the previous month.
The overall GPI figure reveals a marked but gradual easing of deflation since it hit -3.1% in the month to 1 June 2016 – the last GPI before the UK voted in the EU referendum.
The lessening of price cuts over recent months is shared by each of the big four. Sainsbury’s moved back to being the biggest year-on-year price cutter this month, with its annual deflation edging back out to -1.75% from -1.6% last month, while Asda’s prices fell -1.2%, and all are reporting notably lower annual price cuts since the summer.
Inflationary pressures were clearest at Waitrose, which is not included in the overall GPI calculations. Its prices fell by just 0.2% year on year, having been -2.1% in the month to 1 August 2016.
For the full story see thegrocer.co.uk/finance later today.
Howard Buffet – the son of billionaire investor Warren Buffet – is set to retire from The Coca-Cola Company board of directors. The 61-year-old will not stand for re-election to the board at the AGM in April 2017. Buffett plans to focus more time on his work as chairman and CEO of the Howard G. Buffett Foundation, which focuses on advancing sustainable agricultural practices and conflict mitigation across the world.
“I’ve enjoyed my more than 17 years of combined service to the boards of Coca-Cola Enterprises and The Coca-Cola Company and have the utmost respect and admiration for the work the Company is doing to sustainably grow its business around the world,” Buffett said.
“Under the long-time leadership of Chairman and CEO Muhtar Kent, joined recently by President and COO James Quincey, the Company has exciting plans for the future and is poised to deliver even greater value to its many stakeholders in the years to come.”
Yesterday in the City
Ocado (OCDO) investors had another miserable day as the Q4 trading showed slowing growth, customers spending less and no signs of an international deal. Shares slumped 5.5% to 262.5p on the back of 13.1% rise in gross retail sales to £351.8m in the 16 weeks to 27 November – down from a 13.6% jump in Q3. Average orders per week grew by 17.6% to 241,000, while average order size decreased by 2.9% in the period to £105.61 as deflation continued to bite.
DS Smith had much more to cheer about, with the share price up 6.3% to 421p as group revenues in the first half increased 21% to £2.36bn.
Other risers included Dairy Crest (DCG), up 2.6% to 571.5p, and B&M European Value Retail (BME), up 2.5% to 250.1p.
PureCircle (PURE), Britvic (BVIC) and Tesco (TSCO) also had good days, with stevia producer rising 7.9% to 232p, the soft drink producer climbing 3.6% to 541p and the supermarket up 1.8% to 217.2p.
Joining Ocado in the red were Greencore (GNC), AG Barr (BAG) and Unilever (ULVR), down 1.7% to 218.5p, 1.6% to 480.6p and 0.7% to 3,089.5p respectively.
The 100 leading shares index edged closer to 7,000 points as the European Central Bank extended its quantitative easing programme. The FTSE 100 finished 28 points higher (0.4%) at 6,930.45 – up 3% for the week.
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