Tuesday 27 June 2017

High Court wait as EU clears €751m deal for Fyffes

David McCann, executive chairman of fruit firm Fyffes
David McCann, executive chairman of fruit firm Fyffes
John Mulligan

John Mulligan

The €751m acquisition of Irish fruit firm Fyffes by Japan's Sumitomo has received competition clearance, after the European Commission said it will not oppose the transaction.

Completion of the takeover remains subject to sanction of the scheme of arrangement by the High Court on February 16.

Last month, Fyffes shareholders voted overwhelmingly to sell the company to Sumitomo.

A motion to back the €751m sale of the Irish company was backed by more than 99pc of Fyffes shareholders who voted at an extraordinary general meeting.

There's no overlap between Sumitomo's and Fyffes' businesses, which was anticipated to make securing regulatory approval relatively straightforward.

The European Commission made its decision last Friday.

It had analysed the planned takeover under its simplified rules procedures due to a lack of competition concerns.

Fyffes had sales in 2015 of more than €1.2bn, and earnings before interest and tax of €45.8m.

Sumitomo - a $15bn conglomerate whose interests span finance, transport, energy, food and resources - is paying €2.23 per Fyffes share.

Fyffes shareholders will also receive a two cent per share dividend.

Sumitomo also jointly owns Dublin-based aircraft leasing firm SMBC Aviation Capital.

The Japanese group's offer to buy Fyffes came more than two years after a planned $1bn (€0.93bn) merger between Chiquita and Fyffes was derailed after the Cutrale and Safra groups barged in on the deal, instead buying Chiquita for nearly $700m (€652m).

Sumitomo is one of the biggest players in the Asian fruit sector.

It imports 30pc of all bananas into the Japanese market, and owns a banana plantation in The Philippines.

Last month, the Irish Independent revealed that the McCann family - the dynasty behind Fyffes - boosted its stake in a property vehicle that was spun out of Fyffes, just weeks before the landmark acquisition is due to close.

Fyffes, whose executive chairman is David McCann, also owns a significant stake in the property vehicle, called Balmoral Land International.

Balmoral International Land finalised a €7.7m debt refinancing before Christmas.

Despite the McCanns taking part in the Balmoral refinancing, Fyffes did not, resulting in its stake in Balmoral being diluted from 40pc.

The latest available annual report for Balmoral - for 2015 - shows that the McCann family's investment vehicle, Balkan Investment, held a 6.38pc stake in Balmoral at the end of that year.

At the time, Fyffes owned 40pc of the property vehicle.

Filings in the Companies Registration Office in Dublin show that on December 23, 2016, 194.4million shares in Balmoral were allotted to an Isle of Man company called Scott Ltd, which is in turn owned by Balkan Investment.

Those 194.4 million shares represent 33pc of the issued share capital in Balmoral.

Balmoral was originally spun out of Fyffes in 2006 as a stock market-listed company called Blackrock International Land.

About half its property portfolio at the time was rented out to Fyffes. It was renamed Balmoral in 2010 and delisted in 2011. It now generates about a third of its rental income from Fyffes and Total Produce.

Irish Independent

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