Two Brazilian companies made a $611 million offer for US banana giant Chiquita Monday that could derail Chiquita's merger with European rival Fyffes.
Cutrale Group, one of Brazil's largest juice exporters, and investment bank Safra Group offered $13 a share for all of Chiquita's stock, 29 percent higher than the shares traded on Friday.
The two said that they could bring Chiquita Brand International "extensive experience in all aspects of the fruit and juice value chain," and offered its shareholders "superior valuation" to where the company's stock has been trading.
The unsolicited offer challenged Chiquita's merger with Fyffes announced in March, which would create the world's largest banana company, with $4.6 billion in annual revenues. That proposal would allow Chiquita to avoid higher US taxes by relocating its statutory headquarters to Ireland.
The all-stock deal between Chiquita and Fyffes was to be weighed by shareholders in a special meeting on September 17.
But the offer by the Brazilian companies could jeopardize the merger by offering shareholders of Chiquita a quicker return. After the Fyffes deal was announced, Chiquita's shares slumped around 17 percent before Monday's offer.
Safra and Cutrale, which has a one-third share of the $5 billion world orange juice market, argued that their proposal "is clearly more favorable to the Chiquita shareholders than the proposed merger with Fyffes," and so the Chiquita board was obliged to take it up.
The two also said that there were no financial challenges to the deal and that it could be completed by the end of the year, the same timeline as the Chiquita-Fyffes tie-up.
Chiquita's board of directors acknowledged the proposal and advised shareholders to not take any action until the board has made its own recommendation.
"We continue to strongly believe in the strategic merits and value provided by the proposed transaction with Fyffes," they said.
"Chiquita will have no further comment on the Cutrale Group and the Safra Group's offer until the board has completed its review."
Chiquita shares jumped 30.9 percent to $13.17 in afternoon trade.