December 12, 2016

Japan’s Sumitomo Corp. has agreed to acquire Dublin-based Fyffes Plc, one of the world’s top fruit distributors, through its wholly owned subsidiary, Swordus Ireland Holding Limited, for €751 million (US$794 million) in cash.

Fyffes is the top banana importer in the EU, however, it also markets pineapples, mushrooms, and melons, and is the top importer of off-shore melons and the third biggest importer of supersweet pineapples in North America. It is also the largest mushroom producer in Canada and one of the largest mushroom producers in North America. The company garnered international attention two years ago when its planned $500 million tax inversion merger with U.S.-based banana giant Chiquita Brands International fell through due to shareholder opposition.

Sumitomo has been involved in the fruit business since the 1960s and is now the market leader for bananas in Asia with control of 30 percent of the market. The group, however, is a mega-corporation with 800 companies, operations across 66 countries, a market value of $15 billion, and with $8 billion in cash on its balance sheet as of the end of March according to the Independent.

Under the terms of the agreement, Fyffes shareholders would receive a per share remittance of €2.23 reflecting a 38 percent premium over the company’s highest price per share on record of €1.62 on April 22 of this year, and a 49 percent premium over the company’s closing price on Thursday, December 8. Shareholders will also receive a final year-end dividend of two cents per share bringing the total remittance to €2.25 per share.

Although the deal will still need to be approved by shareholders at an extraordinary general meeting, the Irish Times reports that Goodbody stockbrokers state that 30 percent of Fyffes shareholders have already voiced their support of the deal indicating an expected smooth closing.

“We believe this transaction represents a compelling proposition for our shareholders and crystallises [sic] the substantial value created in recent years through the various strategic developments and the strong operating performance,” said Fyffes chairman, David McCann.

Although compelling for Fyffes, the deal is also beneficial for Sumitomo. The addition of Fyffes will add additional annual sales of €1.2 billion (US$1.27 billion) to Sumitomo’s sheet and will provide the corporation another channel for international expansion as Japanese businesses leverage their strong currency to look overseas for growth opportunities in the face of economic slowdown and an aging population at home.

—

Lynda Kiernan