Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Chiquita Brands International, Inc. (NYSE: CQB) were looking ripe today, climbing as much as 19% after announcing a merger with Fyffes, a produce company based in Ireland.
So what: The merger will create a new company known as ChiquitaFyffes, 50.7% of which will be owned by Chiquita shareholders and the remaining 49.3% to be owned by Fyffes shareholders, though the two brands will continue to operate separately. The companies said the combination would create the No. 1 banana company globally, with a 14% market share, and would lead to $40 million in annual cost savings and synergies and allow further opportunities to improve operational leverage.
Now what: The deal will be subject to the usual regulatory scrutiny, but analysts expect the merger to go through as the companies primarily deal in different parts of the world, Chiquita in North America and Fyffes in Europe. Investors on both sides clearly seem to approve of the merger as Fyffes' shares jumped 44% on the news, but several analysts said the deal is reflective of weakness in the industry and could prompt further consolidation. Merging two corporate cultures is also sometimes rougher than expected. Chiquita and Fyffes expect the deal to close by the end of the year.
