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Fresh Del Monte Produce Inc. Message Board

  • akos103 akos103 Jan 6, 2006 7:54 PM Flag

    Here is the article from thedeal #1

    Fresh Del Monte bids dwindle
    by Soma Biswas and Lisa Gewirtz
    Updated 11:24 AM EST, Jan-6-2006


    TOP DEAL HEADLINES

    Fresh Del Monte bids dwindle
    HP play for CSC risky
    GTCR sticks to its knitting
    CA plans more deals
    Movers & shakers: Jan. 6, 2006














    Abu-Ghazaleh

    A number of large private equity firms have put Fresh Del Monte Produce Inc. back on the shelf after taking a sniff and squeeze. But Chicago's Madison Dearborn Partners LLC and European produce company Fyffes plc continue to look at the publicly traded company. (For more on this auction and others, visit AuctionBlockDatabase.com.)

    Coral Gables, Fla.-based Fresh Del Monte's majority shareholder, IAT Group Inc., controlled by Fresh Del Monte chairman and CEO Mohammad Abu-Ghazaleh and his family, approached potential buyers with the help of J.P. Morgan Chase & Co. in December. IAT is looking to sell its 52% stake.

    Several financial buyers who took a look early on, including the Carlyle Group and Blackstone Group LP did not make first-round bids when they were due the week of Dec. 21, sources said.

    It could not be determined whether Kohlberg Kravis Roberts & Co. and Apollo Management LP, which were also in the lineup early on, are still interested.

    A deal might be a stretch for Fyffes. Though it is the biggest importer and distributor of fresh fruits and flowers in Europe, it has a market cap of just �832 million ($989 million). But it could turn to a private equity firm for additional capital, one source said.

    "We don't comment on speculation," said Brian Bell, a spokesman for Fyffes in Dublin.

    Fresh Del Monte, which is incorporated in the Cayman Islands, has a market capitalization of $1.32 billion and had net debt of about $250 million as of July 1. Some sources have predicted that IAT's stake could be sold based on an enterprise value of $1.8 billion, or about 8 times Fresh Del Monte's $230 Ebitda.

    The company's shares tumbled in early December, when it lowered its earnings forecast because of reduced demand for pineapples and increased competition from Asian banana producers, which has brought prices down by 40% in some markets.

    At midday, Thursday, Jan. 5, shares had traded up 1.2%, to $22.75, but were still well below the $26 level at which they traded most of the fall.

    Several factors scared off the private equity firms that looked at the company. For one, the company has little free cash flow because of high capital expenditures on shipping and manufacturing. In addition, fluctuations in fruit prices and the inherent risks to harvests complicate financing for a leveraged buyout. And the company's most profitable product� � extra sweet golden pineapple � lost value as rivals offered competing fruits.

    But the biggest issue may be the banana unit, which commands 15% of the world banana market. The European Union has proposed a new banana tariff to replace a quota system that the U.S. and banana-growing countries in Latin America have fought for years. The old quota system heavily favored fruit from former European colonies, many of them in Africa. Since the new rules have not been finalized, their impact on fruit from Latin America is not yet clear.

    One source said the new tariffs make it difficult, if not impossible, to predict Fresh Del Monte's cash flows. But a second source said the tariffs may not be a big problem and may even be positive.

    Meanwhile, the banana price cuts in Asia led to a $2 million loss on bananas in the last quarter, though the fruit had produced a $56.3 million gross profit in the first nine months of last year.

    There were bright spots, however. Sales of fresh-cut fruits sold in plastic cups exploded, with sales increasing from $60 million in 2000 to $360 million in 2005. But that is still a modest slice of its $3.19 billion in r

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    • Fresh Del Monte bids dwindle
      by Soma Biswas and Lisa Gewirtz
      Updated 11:24 AM EST, Jan-6-2006


      TOP DEAL HEADLINES

      Fresh Del Monte bids dwindle
      HP play for CSC risky
      GTCR sticks to its knitting
      CA plans more deals
      Movers & shakers: Jan. 6, 2006










      Bananas aside, the company could grow. In the deal books sent to potential buyers, the company projected its Ebitda will double from around $200 million in 2005 to $400 million in five years, according to one source.

      An official at Fresh Del Monte did not immediately return calls.

      One of the remaining bidders, Madison Dearborn, made another investment last year in a fresh produce business, buying Bolthouse Farms Inc., one of the biggest carrot farmers in the U.S., for more than $1 billion, or 9 times

 
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