Fyffes pays external advisors 14 million for failed deal

09 April 2015 Consultancy.uk 2 min. read
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The last year announced deal that would see Chiquita Brands International buy Fyffes for an estimated €403 million was later on called off, with Fyffes exercising its right to a 3.5% termination fee. That fee, coming to €18.6 million, has since been distributed, with a huge chunk of €14.3 million going to third party advisors – lawyers, consultants and accountants.

Last year it was announced that Fyffes, an Ireland based fruit distributor, would be bought by Chiquita Brands International. The deal, initially estimated to be worth around €403 million, would see the world’s two oldest fruit importers – and their global operations in far flung areas of the Americas and Asia – brought into union. According to Bloomberg, the all-stock offer at the time represented a bid premium of 35% on Fyffes’ stock.

Fyffes & Chiquita

It was announced near the end of last year however that the deal was blown off, after it was initially rejected by Chiquita’s shareholders, before an amended agreement was rejected by Fyffes – who exercised its right to terminate the revised transaction agreement with Chiquita. As part of the contract a termination fee of 3.5% of the total closing value of the issued share capital of Chiquita, the day prior to such agreement, was agreed. The termination fee came to €18.6 million. A fee that, as it turns out, was for the most part turned over to third parties.

While the deal has fallen through, a number of parties have managed to do well out of the failed proceedings. Within Fyffes for instance, a total of €525,000 was paid to its executives. The company’s executive chairman, David McCann, picked up a payment of €200,000 in recognition of the “exceptional additional commitment of time and effort” in his work toward closing the deal. Finance director Tom Murphy pocketed an extra €150,000, and the company’s operating chief, Coen Bos, received an extra €75,000.

Third parties advising the deal however, took the largest share of the spoil, with €14.3 million spent on fees for accountants, lawyers and consultants serving the stakes of Fyffes. While the distribution of funds is unclear, the advisors working on the deal for Fyffes include Lazard (financial adviser), Simpson Thacher & Bartlett and Arthur Cox (legal counsel), King & Wood Mallesons S.J. Berwin (antitrust adviser) and Davy Corporate Finance (corporate broker). Fees paid by Chiquita to its army of external advisors have so far not been uncovered.

Lazard - Simpson Thacher & Bartlett - Arthur Cox - King & Wood Mallesons SJ Berwin - Davy Corporate Finance

The rest of the sum, at €3.8 million, is to be distributed to shareholders of Fyffes. McCann comments of the decision: “We are confident Fyffes will remain at the forefront of the global produce industry. We will continue to focus on successfully developing our business for the benefit of all  stakeholders. We extend our gratitude to Ed Lonergan and the Chiquita team for their professionalism during the process and wish them well in the future. We would like to thank all our team and advisors who have worked tirelessly and diligently on this transaction."