Chiquita Brands (CQB), Fyffes Highlight Expected Cost Synergies of Proposed Deal

Chiquita Brands (NYSE: CQB) and Fyffes plc announced updated anticipated annualized pre-tax cost synergies for the proposed combination of Chiquita and Fyffes (the "Combination"). Chiquita and Fyffes have identified an additional $20 million of synergies for a total of at least $60 million in annualized pre-tax cost synergies by the end of 2016, reflecting additional information which has become available regarding optimization of sourcing and shipping logistics, as well as the output of the information technology integration planning work stream that was established after the proposed Combination was first announced.

The $20 million of additional recurring annual synergies is anticipated to come from European and Mediterranean shipping benefits enabled by the broad geographic sourcing diversity of the combined company, as well as information technology efficiencies due to the implementation of cloud computing.

"As a result of our diligent and thorough integration planning efforts, Chiquita and Fyffes have identified an additional $20 million of synergies that will allow ChiquitaFyffes to deliver even more value for our shareholders and result in a combined company with stronger earnings power. Chiquita and Fyffes remain committed to the transaction and are continuing to work together to complete the Combination as expeditiously as possible," said Ed Lonergan, Chiquita's Chief Executive Officer, and David McCann, Fyffes Executive Chairman.

Chiquita and Fyffes believe approximately 50% of the $60 million of synergies are achievable in the first year following the close of the merger, with the remaining synergies achieved by the end of the second year. These synergies will positively impact ChiquitaFyffes financial profile as the combined company is expected to generate significant and increased free cash flow.

An updated merger benefit statement, which provides additional details regarding these synergies and Chiquita's basis of belief for them, is attached to this release as Appendix A. The updated merger benefit statement should be reviewed carefully, as there are various material assumptions described therein underlying the synergies estimate which may result in the synergies being materially greater or less than estimated.1

Fyffes has additionally announced today that it has delivered a strong result in the first half of 2014 with adjusted EPS 39.2% higher. Based on its first half performance and continued positive trading conditions early in the second half, Fyffes is increasing its target adjusted EBITA for the full year 2014 to the range €38 to €42 million, from €30 to €35 million previously, and compared to €32.7 million for the full year in 2013.2

Separately, Chiquita also announced a range of efficiency initiatives anticipated to reduce Chiquita's costs by approximately $14 to $16 million. In order to achieve these savings, Chiquita's current US-Gulf shipping rotation will be replaced with larger, more efficient vessels allowing for some costs and stowage capacity to be shared with a third-party shipping partner, resulting in lower per unit shipping costs for both. Chiquita anticipates that these savings will begin impacting Chiquita's results late in the fourth quarter of 2014 and will be fully implemented in 2015, helping ensure that Chiquita remains on track to achieve its long-term financial objectives.3 Chiquita confirms that the Chiquita profit forecast for the fiscal year ending December 31, 2014 contained in its proxy statement dated August 6, 2014 remains valid for the purpose of the Combination.

On August 14, 2014, Chiquita and Fyffes filed a Form CO with the European Commission in connection with its examination of the Combination under the EC Merger Regulation and, as a result, the European Commission's provisional deadline for its Phase I review of the Combination is September 19, 2014. Regulatory clearances for the Combination have already been obtained in the US and a number of smaller jurisdictions. Subject to EU Commission approval, it is possible that the merger could complete in October 2014.

As previously announced on March 10, 2014, Chiquita and Fyffes entered into a definitive agreement under which Chiquita will combine with Fyffes, in a stock-for-stock transaction that is expected to result in Chiquita shareholders owning approximately 50.7% of ChiquitaFyffes, and Fyffes shareholders owning approximately 49.3% of ChiquitaFyffes, on a fully diluted basis.

On August 14, 2014, Chiquita announced that its Board of Directors, after careful consultation with its legal and financial advisors, unanimously rejected an unsolicited offer by the Cutrale Group and the Safra Group (the "Group") to acquire all of the outstanding stock of Chiquita for $13.00 per share in cash. Chiquita's Board determined that the Group's unsolicited offer is inadequate and not in the best interests of Chiquita shareholders. Having made such a determination, Chiquita determined not to furnish information to, nor have discussions and negotiations with, the Cutrale Group and the Safra Group at this time.

Mr. Lonergan added, "Chiquita believes that the $13.00 per share offer from the Cutrale Group and the Safra Group is opportunistic and does not provide compelling value as compared to the combination with Fyffes. The offer is highly conditional and does not provide Chiquita shareholders full value for the ongoing turnaround and the synergies in a combination with Fyffes."

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