* Europe and Asia's top banana distributors to join forces
* Japanese firm offers 49 pct premium to share price
* Says hopes deal completed early in 2017
(Adds analyst comment, recasts)
By Conor Humphries
DUBLIN, Dec 9 Japan's Sumitomo Corp has
agreed to buy Fyffes for 751 million euros ($798
million) in a deal that will merge the largest banana
distributors in Asia and Europe and provide a windfall to
shareholders in the Irish company.
Sumitomo agreed to pay 2.23 euros per Fyffes share, 49
percent above Thursday's closing price, which analysts said
reflected the relatively weak valuation of the Irish company in
recent months and Sumitomo's desire to avoid being beaten in a
The transaction comes two years after Dublin-based Fyffes
tried and failed to buy U.S. rival Chiquita in order to create
the world's largest banana company. Brazil's Cutrale and Safra
groups scuppered the deal by offering 20 percent more.
Sumitomo said it had secured acceptances from 27 percent of
shareholders, including Farringdon Capital Management and the
Balkan Investment Company owned by Ireland's McCann Family,
which established Fruit Importers of Ireland which merged with
Fyffes in the 1980s.
Fyffe's shares were trading at 2.229 euros at 1540 GMT. The
offer is more than double its share price when it attempted to
buy Chiquita in 2014.
The Japanese firm said it hoped to close the deal before the
end of March subject to regulatory approval. Unlike U.S. rivals
such as Chiquita, Fresh Del Monte Produce Inc and Dole
Food, Sumitomo has very little geographical overlap with Fyffes.
Investec said the deal at 11.1 times Fyffes' forecast 2017
earnings before interest, tax, depreciation and amortisation
compared favourably to the 10.4 times paid by Cutrale for
"It has been trading at a discount to its true value for
quite some time," said Investec analyst Ian Huggard, citing its
low liquidity and small size.
"But this is a good price Sumitomo has paid. Maybe that is
to forestall any thoughts of anyone else coming in" with a
counterbid, he added.
The deal also represents the latest example of Japanese
companies moving away from their home market, which is
struggling with an ageing population and slow economic growth.
JAPANESE BUSINESSES BRANCH OUT
Sumitomo, which controls 30 percent of the Japanese import
market and has banana plantations in the Philippines and a
retail distribution network across Asia, said the deal would
give it greater scale and diversity and help it to expand its
"Sumitomo is paying an attractive price for a business in
which they see good long term growth potential and significant
revenue synergies within the enlarged group," said Goodbody
analyst Patrick Higgins.
While Asia is the fastest-growing region for sales of
bananas, the world's most popular fruit, demand in Europe is
growing for organic and fair trade bananas.
Other Japanese companies are looking for growth beyond their
Brewer Asahi is currently bidding for its second
European acquisition this year, while Ajinomoto
recently agreed to take a stake in African drinks form
A source close to the situation predicted that this trend
would continue, as Japanese entities take advantage of a strong
currency to put capital to work overseas.
Fyffes was founded in London by food wholesaler Thomas Fyffe
in the 1880s. It moved to Ireland a century later after merging
with Fruit Importers of Ireland. Aside from being Europe's
largest banana importer, it is a leading seller of pineapples,
melons and mushrooms.
J.P. Morgan advised Sumitomo in the deal, while
Lazard and Irish stockbroker Davy advised Fyffes.
(Additional reporting by Martinne Geller and Dasha Afanasieva
in London; editing by Jane Merriman and Keith Weir)