Shares in Fyffes (LSE: FFY) jumped 45% today after the group announced that it hadagreed a 751.4m takeover by Japanese group Sumitomo, which will pay 2.23 (188p) per share in cash, a premium of 49% to the companys closing price on Thursday.
This isnt the first time shares in the companyhave spiked on the prospect of a merger. Fyffes was last involved in a takeover battle back in 2014 when it unsuccessfully attempted to merge with Chiquita Brands International Inc, a US-based bananas producer.At the time this merger was announced,shares in Fyffes jumped around 40%, but the deal fell apart when Chiquitas board voted against the merger. Chiquita was ultimately acquired by Cutrale-Safra, a joint venture between two Brazilian food companies.
Keeping busy
Since that deal fell apart, Fyffes has been beefing up its operationsacquiring extra capacity for its US melon business in October 2015, along with another banana farm in Costa Rica. In early 2016, Fyffes brought Canadian mushroom grower Highline Produce Ltd for C$145m and soon after the company acquired another Canadian mushroom business All Seasonal Mushrooms Inc.
By chasing these deals, management has made up for the failed Chiquita merger. Shares in the companyhad hit a high of 110p during 2014 after the merger was announced but had fallen back down to 71p by the end of the year. Before todays offer became public, the shares had risen to 126p and at the time of writing, theyre trading at 187p, a full 70% above the Chiquita spike high, which is greaat news if you bought some earlier this week.
End of the road
But will they fall back again? Hopefully not. It looks as if this time around its the end of the road for Fyffes as an independent company. Sumitomos offer has been accepted and the board has recommended the deal to shareholders.
Commenting on the deal, Fyffeschairman David McCann said:We believe this transaction represents a compelling proposition for our shareholders and crystallises the substantial value created in recent years through the various strategic developments and the strong operating performance of our group.
Still, before the deal can go ahead itsshareholders still have to vote on the offer although the two companies have stated that theyve already received the irrevocable support of shareholders representing just under 25% of theissued share capital.
Its easy to see why as the groups look like a good fit. Sumitomo has more than 800 companies in its portfolio and a market capitalisation of about $15bn. The company is already a leading fruit distributor in Asia and is responsible fornearly one-third of all the bananas imported into Japan.
So overall, it looks as if this deal will go ahead and Fyffes shareholders are set to receive an impressive payout for their patience over the past few years.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.