NEW YORK (TheStreet) -- Shares of Chiquita Brands International (CQB) are up 1.13% to $14.32 in pre-market trade after Cutrale Group and Safra Group agreed to acquire the marketer and distributor of bananas and other fresh produce for about $681 million, Bloomberg reports.
The Brazilian bidders will pay $14.50 for each share of North Carolina-based Chiquita, the companies said today in a joint statement.
Talks about the deal began after Chiquita shareholders voted Oct. 24 to reject their company's proposed takeover of Irish banana producer Fyffes Plc, Bloomberg said.
Cutrale, a closely held fruit juice company, and banks controlled by Brazil's second-richest man, Joseph Safra, initially made an unsolicited offer of $13 a share to buy Chiquita in August. The bidders cited benefits for Chiquita from their farming, processing, logistics and marketing knowledge, Bloomberg noted.
TheStreet Ratings team rates CHIQUITA BRANDS INTL INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHIQUITA BRANDS INTL INC (CQB) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CQB's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 42.6% when compared to the same quarter one year ago, falling from $31.10 million to $17.84 million.
- Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, CQB maintains a poor quick ratio of 0.91, which illustrates the inability to avoid short-term cash problems.You can view the full analysis from the report here: CQB Ratings Report