If I had to bet, I would say the deal is going through, as well. It's not certain by any means, and a lot could happen before Friday morning. I agree that the combined company wouldn't be sold right away. But, the possibility of a future sale is mentioned explicitly in the latest CQB press release, and it is well understood that Lonergan was brought in to monetize the asset. I would expect them to take ample time to realize synergies and establish a track record before peddling themselves. I see that as a 12 to 24 month project, assuming that is the direct they are taking. I would also not be completely surprised to see the salad business sold in order to increase focus and pay down debt.
As a very long term holder of Fyffes I have been following this board with interest. I think the deal will go through however I suspect it will be a while before the combined company is taken out. $20+ sounds good
Market seems to be saying that the Brazil Nuts are unable to marshal the votes they need to reject the merger, and that they aren't going to budge off their low ball offer. But the relatively low volume indicates that there is not much conviction around those views. Given the thin trading volumes and small float, the stock price can be easily manipulated. It has occurred to me that someone like Wynnefield could drop a couple hundred thousand shares onto the sell side and push down the PPS in a sort of "we'll show you how scary it can get" move. However, institutions are savvy enough to not get distracted by weird girations. Retail hokders, maybe not. If we get a strong enough dip I may add. I think the CQB-Fyffes combo would be successful and that company will very possibly be sold a year out for closer to $20. There definitely would be a gestation period, though.
I don't have a crystal ball. In fact I am out of ice cubes, too. Guess I'll have my bourbon neat this evening. Anyway, based on what I've seen, here's what I anticipate.
1) I believe that if the Brazil Nuts are going to increase their offer, it will happen by Thursday at latest. However, the chances of an increase is under 50%.
2) The press releases from both sides will continue. While institutions don't typically play activist in these situations, we've seen Wynnefield get very vocal. There are about 7 or 8 institutions that hold more than Wynnefield, some more than double. Most, such as Vanguard or JPMorgan, are simply not going to speak publicly about such things. But, someone like Blackrock might. If so, no telling what flavor it might take. I think silence is more likely to mean agreement with the BOD.
3) Ownership is very concentrated. The top 10 owners account for nearly half the float. So, you have to believe that both CQB-Fyffes and Cutrale - Safra are actively lobbying these handful of institutions. If they are showing their cards, then each may aalready have a strong sense as to how the voting will play out. If the tilt is strongly in favor of the merger, then you may see an increased offer. (See number 1 above). I have no idea whether they are willing to discuss how they are going to vote, though.
4) Retail investors own very few shares. It is something like 10 percent of the float. So, all of these press releases are kind of meaningless, unless the vote is very close. And it could be close. I suppose that anyone who jumped in attempting to make a quick buck is going to vote against the merger. However, because of the cut off date, that's probably a small number of shareholders. I skimmed the proxy material and for some reason didn't come across the part that explains what happens to shares that are not specifically voted by holders. If anyone has seen this part, please comment.
So ISS and Egan say yes and Glass says no. But Glass does not come out in favor of Cutrale, either. I noticed that in Chiquita’s latest press release they mention the possible future sale of the combined CQB-FYFFES.
Getting uglier by the minute. Wynnefield just spewed out another press release. Both they and Cutrale were silent about the ISS advisory.
Glass Lewis came out with a statement saying that shareholders should consider alternatives. What is somewhat confusing is that the Brazilians issued their own press release stating that Glass Lewis is against the merger. I'm not sure they actually said that. Further, the Cutrale press release quotes from the statement Glass Lewis made back in September, but does so in a way to make it appear current. At this point, it appears that there may be a belief that institutions could split their vote and retail share votes could matter (?) I don't much care for the disingenuous approach.
I was talking about the up and coming war of words and changes in positions which you so aptly called the banana rodeo!! And sure enough there was plenty of it.
Appears that we'll hear from Glass Lewis tomorrow, and possibly Egan Jones. If they all swing for the merger, then the Brazilians will have to either face the shame of losing the deal or raising the offer when they said they wouldn't. Neither would feel good to them. My hunch is that at least one proxy advisor will stick with their original thesis, if for no reason but to differentiate themselves. But, the ISS following is probably larger than the other two firms combined.
I'm fairly certain that the proxy vote is binding. If the merger vote is approved, the Brazilians are done and gone, unless they want to buy the merged entity. Shareholders will have spoken and even the BOD cannot undo that. If the merger isn't approved, then I think it's still possible that the BOD could reject the Cutrale offer, provided that Fyffes were to up the ante. Unlikely scenario, though.
Correct, the spreads are another indicator of people holding tight to what they have.
Question for you. If they vote for merger can the OJ boys come again with an a better offer and demand another vote? They seem to like it down and dirty. Thoughts?
California-based proxy firm Glass Lewis & Co. said it will also release a revised report after Chiquita’s rejection of Cutrale/Safra’s latest offer and a change in its deal terms with Fyffes.
“It doesn’t necessarily mean that we’ll change our recommendation,” said Warren Chen, head of merger and acquisition quantitative research at Glass Lewis. “Updates will include the new deal terms and our views on them.”
Like ISS, Glass Lewis discouraged a merger with Fyffes, saying Chiquita failed to prove that a merger with the Irish company would be superior to a buyout from Cutrale/Safra.
A revised report could be released as early as late Monday or Tuesday, Chen said.
Agreed! I looked at the options, too. Thought about rolling the dice on either an improved offer or general price recovery once the dust settles. But there's not enough volume and too much spread.
The absence of volume is interesting. Whatever the news, nothing happens with any volume behind it. Just a few weak hands from retailville. Hardly any options trade either. Big game of chicken!! It's giving me a headache. Lol
They state that they cannot support the Cutrale offer based on their own valuation criteria. To prevail, they would need to offer $14.90 plus a buyers premium. You can calculate that part however you want. In the current environment, unsolicited offers seem to range from 20% to 50%. I think $17 would have been reasonable if this had been a sophisticated publicly held multinational. But, hey, we're talking about an orange juice maker in Brasil. Nobody here ever heard of him before all of this ensued.