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New bidders aim to swoop for Chiquita

Chiquita-Fyffes deal could be in doubt after juice specialist Cutrale and investment firm Safra make new takeover proposal

New bidders aim to swoop for Chiquita

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The landmark tie-up between US fresh produce giant Chiquita Brands International and Irish group Fyffes could be in doubt after a US$610.5m offer for Chiquita was submitted jointly by juice and agribusiness specialist Cutrale Group and Brazilian investment organisation Safra Group.

In a letter released today (11 August), the two companies revealed that they had sent a notice to Chiquita's board of directors (see below) that they were looking to acquire 100 per cent of the outstanding stock of Chiquita Brands at a price of US$13 per share in cash to Chiquita shareholders.

Michael Rubinoff of Safra, who penned the letter, noted that the joint bid offered a "highly compelling" premium of 29 per cent to the market's valuation of the proposed transaction with Fyffes, based on Chiquita's closing share price of US$10.06 as of 8 August, 2014.

The letter also said that the companies could be in a position to close the transaction by the end of the year, within the same timeframe as the Fyffes merger but without the "execution risk and uncertainty" that deal would bring.

Any deal would offer Chiquita a "backdrop of world-class, established industry expertise and significant financial resources", the proposal outlined.

In closing, Safra and Cutrale said that they hoped to hear a response from Chiquita by 12.00 EDT on Friday 12 August.

Chiquita and Fyffes first revealed their merger plans in March – a move that would potentially create the world's largest supplier of bananas with combined annual revenue of around US$4.6bn – and at the end of July, Fyffes called an extraordinary general meeting for 17 September in order to seek approval from shareholders for the proposed merger.

See below for the full Safra and Cutrale proposal sent to Kerrii Anderson and Edward Lonergan, chairwoman of the board of directors, and president and CEO, respectively.

Dear Ms. Anderson and Mr. Lonergan:

We would like to express our interest in pursuing an all cash acquisition (a "Transaction") of Chiquita Brands International, Inc. ("Chiquita") by an entity (the "Acquiror") newly formed by an affiliate of the Cutrale Group and an affiliate of the Safra Group. The Cutrale Group is one of the world's most highly regarded agribusiness and juice companies, and the Safra Group is a leading global financial services firm with a strong track record of successful investments in major industries, including banking, real estate and agribusiness. Together, we are confident that this Transaction offers compelling and more certain value for Chiquita shareholders as compared with the proposed transaction with Fyffes plc and significantly enhances Chiquita's business potential.

We therefore are pleased to propose to acquire 100% of the outstanding stock of Chiquita at a price of $13.00 per share in cash to Chiquita shareholders. This proposal represents a highly compelling premium of 29% to the market's valuation of the proposed transaction with Fyffes plc ("Fyffes"), based on Chiquita's closing share price of $10.06 as of August 8, 2014. Moreover, if we are able to proceed on a timely basis with due diligence and discussions, we will be in a position to close the Transaction before the end of the year, within the same timeframe you have indicated for the Fyffes transaction, without the execution risk and uncertainty inherent in that transaction.

Our proposal also offers a superior valuation compared to Chiquita's historical trading multiples.  The proposed price, including the assumption of Chiquita net debt, represents an 11.8x multiple of Chiquita's last twelve months reported Adjusted EBITDA.

The Cutrale and Safra Groups complement one another in this proposed endeavor, providing Chiquita a backdrop of world-class, established industry expertise and significant financial resources. The Cutrale Group's global business operations include oranges, apples, peaches, lemons and soybeans. This platform offers Chiquita extensive experience in all aspects of the fruit and juice value chain. After the acquisition, Chiquita will benefit from the vast experience and knowledge of farming, processing, technology, sourcing, distribution, logistics, and marketing of the Cutrale Group.  The Safra Group, with assets under management of over $200 billion and aggregate stockholder equity of approximately $15.3 billion, operates banks and invests in other businesses across North and South America, Europe, the Middle East and Asia. Throughout these markets, Safra has deep, long-term relationships with major market participants, enabling it to greatly enhance the value of the competitive position of the businesses in which it invests.

We believe discussions of a potential transaction are now particularly timely and appropriate as a result of the dismissal of the civil claims relating to Chiquita's alleged involvement in the actions by the United Self-Defense Forces of Colombia, the results from your recent second quarter earnings announcement, and the market's valuation of the Fyffes transaction.

Our Transaction would be financed with equity provided by the Cutrale Group and the Safra Group. If the holders of Chiquita's 7.875% Senior Secured Notes due 2021 elect to exercise their right to put their Notes and/or holders of Chiquita's 4.25% Convertible Senior Notes Due 2016 elect to require redemption at par, the Safra Group and/or the Cutrale Group will provide the necessary additional capital. Our proposal will therefore not be subject to any financing conditions.

We are prepared to complete our due diligence and negotiate a definitive agreement with your cooperation expeditiously in light of your proposed transaction with Fyffes.  Based on our review of the terms of your transaction agreement with Fyffes (the "Fyffes Transaction Agreement"), we are confident that we can reach a definitive agreement with you on substantially similar terms.  We are also confident that with your timely engagement we will be in a position to consummate a Transaction before the end of this year. We do not believe there are regulatory obstacles which would prevent us from closing a Transaction in this time frame.

We are aware of the restrictions imposed under the Fyffes Transaction Agreement on your ability to consider our proposal. Section 5.4(b) of the Fyffes Transaction Agreement explicitly contemplates the Chiquita board of directors engaging in negotiations and providing diligence if it receives a "bona fide unsolicited written Chiquita Alternative Proposal" and it determines in good faith that not taking such actions would be "reasonably likely to be inconsistent with the directors' fiduciary duties under applicable law". Our proposal to acquire 100% of Chiquita common stock constitutes a "bona fide unsolicited written Chiquita Alternative Proposal" under the terms of the Fyffes Transaction Agreement.  In addition, the Chiquita board of directors, in our opinion, must and will conclude in good faith that our proposal constitutes a "Chiquita Superior Proposal" because it is clearly more favorable to the Chiquita shareholders than the proposed merger with Fyffes, taking into account all financial, regulatory, legal and other aspects of our proposal.  Accordingly, the Chiquita board of directors will be permitted under the Fyffes Transaction Agreement, and will be required by its fiduciary duties, to (x) furnish information to us and (y) engage in discussions and negotiations with us with respect to our proposal.  We are prepared to execute a confidentiality agreement that satisfies the requirements of Section 5.4(b) of the Fyffes Transaction Agreement to facilitate these discussions and negotiations.

This letter sets forth a non-binding proposal. It does not create or constitute any legally binding obligation, liability or commitment by Cutrale Group, Safra Group or their affiliates (including the Acquiror) regarding the proposed transaction, nor will there be any legally binding obligations whatsoever unless and until a definitive agreement is executed by Chiquita and the Acquiror. 

Our proposal is subject to satisfactory completion of customary business, legal, financial and other due diligence, including with respect to management matters, negotiation of mutually acceptable definitive agreements as well as receipt of final Board approvals and the termination of the Fyffes Transaction Agreement.       

Our senior management team, led by Mr. Rubinoff, and our legal counsel are available at your convenience to discuss any aspect of the terms and structure of our proposed transaction.

We are confident that our proposal will be highly attractive to Chiquita and its shareholders. We are ready to meet with you in person to discuss this matter in detail at any time.  We look forward to hearing back from you by 12:00 noon (EDT) on Friday, August 15, 2014.

Yours sincerely,

Michael Rubinoff
on behalf of the Cutrale Group and the Safra Group

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