The merger of Charlotte, N.C.-based Chiquita and Dublin, Ireland-based Fyffes creates a new top banana, as headlines writers around the world can’t resist telling us, by reuniting two brands that once co-existed under the umbrella of United Brands but have squabbled at other times in their colorful histories.
“The banana is the king of fruit, outselling apples, oranges and all the rest,” write David Gelles and Stephanie Strom in the New York Times. “And now the king of bananas will be Chiquita Brands International.” ChiquitaFyffes, to be precise.
The all-stock deal is valued at $1.07 billion and Chiquita shareholders will control 50.7% of the stock, which will be based in Ireland but will pay U.S. taxes (at least in the short term; there is a lot more here for number crunchers). Fyffes' executive chairman, David McCann, will be CEO.
“Chiquita's chief executive, Ed Lonergan, said the two companies would discuss any antitrust issues with authorities in the European Union and the U.S., but he said the geographies of the companies don't overlap and he didn't expect competition concerns to affect the deal,” report the Wall Street Journal’s Peter Evans and Vanessa Mock. “We've been well advised going into this transaction on a regulatory perspective, and we don't think there are any issues we can't address,” says Lonergan, who will be chairman of the combined company.
“More than 20 years ago, a nasty banana war broke out between Chiquita and Fyffes, when a major supplier in Honduras defected to Fyffes,” Evans and Mock write.
It’s “a merger of equals,” Lex’s Oliver Ralph tells Lex’s Joseph Cotterill, who in turn tells Cotterill in a sit-down chat about the deal that the combined company will have a 14% share of the global banana market. Chiquita has about twice as much earnings but carries a lot more debt than Fyffes, Cotterill points out, which has none. The deal is all about the savings that can be had in the low-margin business, and expanding both the product and distribution of each brand.
The companies have colorful, if sometimes controversial, histories tied up in the volatile politics of the tropics.
“Chiquita’s founding dates back to 1870, when Lorenzo Dow Baker brought Jamaican bananas to Jersey City, N.J.,” reports Fox’s Matthew Rocco, and it “expanded its footprint after [World War II]…. Fyffes was born in 1888 when Edward Wathen Fyffe sold bananas from the Canary Islands in London.”
“Fyffes was once owned by United Fruit, the company that became associated with corruption and regime change in Central America and the Caribbean before emerging after a restructuring as Chiquita. But Fruit Importers of Ireland bought Fyffes in 1986,” report the Financial Times’ Andy Sharman, Emiko Terazono and Peter Chapman.
“According to Banana Link, a not-for-profit organization campaigning for a fair and sustainable banana trade, the big fruit companies are relocating to countries in search of cheaper labor and weaker social and environmental legislation,” Rebecca Smithers and Dominic Rushe write in the Guardian. “… But Alistair Smith, Banana Link's international coordinator, said both Fyffes and Chiquita had better reputations in the banana industry than many of their competitors.”
Chiquita has its own niche in the can’t-get-that-jingle-out-of-my-head wing of advertising history, as every American of a certain age can attest. It all started with the birth of Miss Chiquita in 1944. “She was drawn by artist Dik Browne, who also drew her cousins, the Campbell Soup ‘kids’ and ‘Hagar the Horrible,’” the brand’s website informs us.
Fyffe is the “hero” of “Banana Comic Week 2013,” a promotion that ran in nine countries last year that “aims to show children just how much power is packed into bananas.” The campaign from Serviceplan, Munich, positions the banana against fast foods and sweets in the battle against childhood obesity in industrialized nations.
In a :20 spot from 2010, a somewhat plump and totally grating young man throws a banana into a monkey cage. The simian takes a look at the label — “Generica,” it says — and tosses it back. “As every expert knows,” an earnest voiceover confides, “if it’s not Fyffes, it’s not worth having.”
Indeed, one of its taglines is: “Fyffes bananas — they're Fyffe times better than your average banana!”
Fyffes also imports pineapples and melons. And that may be just as important to the long-range thinking behinds the deal as some suggest the tax situation might be. Fyffe has be “investing pretty heavily” in the other fruit, as Quartz’ Gwynn Guilford points out.
The worlds’ most valuable fruit is frantically looking to stem the advance of two diseases — Black Sigatoka and Foc Tropical Race 4 — that threaten its very existence.
“The race is now on to find a banana that is both resistant to the two diseases and commercially viable. Consumers might turn their noses up at pungent varieties. Thin-skinned ones would not survive weeks in a ship’s hold,” The Economistreported last week.