Chiquita boards the Fresh Express

02/23/2005

Cincinnati, Ohio-based Chiquita Brands International, Inc. announced February 23 it had reached a definitive agreement to acquire the Fresh Express unit of Performance Food Group for $855 million in cash.

Fresh Express is the No. 1 seller of packaged salads in the United States, with 40 percent retail market share and approximately $1 billion in revenues. With this acquisition, Chiquita will immediately become the leader in the fast-growing value-added salads category. In addition to its salad products, Fresh Express is a leading supplier of fresh-cut fruit. Chiquita expects the Fresh Express business to continue to be based in Salinas, Calif.

The transaction is expected to close in the second quarter 2005, subject to satisfaction of customary closing conditions, including completion of the Fresh Express 2004 annual audit.

"I believe this is the most important strategic and transformational move the company has made in decades," said Fernando Aguirre, chairman and chief executive officer of Chiquita Brands International. "Fresh Express fits seamlessly into our sustainable growth strategy to become a world-class, consumer-driven leader of branded produce by building a high-performance organization, strengthening our core business and, most importantly, pursuing profitable growth.

"We continue to focus on satisfying the primary consumer needs of health, taste, freshness and convenience, and Fresh Express' products are a perfect fit," Aguirre said. "The acquisition announced today will combine two great companies and allow us to leverage our complementary strengths and experience in selling value-added fresh produce."

Aguirre remarked, "The Fresh Express acquisition, which we expect to be accretive to earnings in 2006, will help us diversify and improve the quality of our earnings." On a pro forma basis, the combined company will become much more balanced, as Europe and North America will generate 55 percent and 44 percent of total revenues, respectively. Today, 72 percent of Chiquita's revenues come from Europe.

"With a more balanced mix of earnings between Europe and North America and less dependence on bananas, we will be less susceptible to the risks inherent in our European business, such as pending changes to the E.U. banana import regime and foreign exchange," Aguirre said. 

"In addition, ...this transaction should accelerate our path to profitable growth, creating a unique opportunity to cross-sell our existing products, leveraging the excellent retail customer relationships of both companies and the foodservice expertise of Fresh Express," he continued. " By acquiring an established national infrastructure and state-of-the-art technology, we gain immediate scale and an effective platform to launch new products throughout North America, including the ability to accelerate national distribution of fresh-cut fruit." The company expects to promptly convert all fruit-based products to the Chiquita brand and retain the Fresh Express brand for value-added salads.