NEW YORK (TheStreet) -- U.S. banana company Chiquita Brands International (CQB) reached an agreement to merge with Ireland's Fyffes in a deal that would catapult the world's second-largest banana producer into the top spot.
The merger values Fyffes at about $526 million. The all-share deal will give Chiquita stockholders one share of the new company -- ChiquitaFyffes -- for each share of Chiquita they own. Fyffes stock holders will receive a fraction of a share for theirs.
Chiquita is currently No. 2 in market share behind Dole in the banana producing market share and ahead of Fresh Del Monte (FDP) . Fyffes is fourth with a 7% market share.
The new banana distributor will have about $4.6 billion in annual revenue and a combined work force of more than 30,000 employees.
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 its 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 impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CQB's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 1.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 90.61% and other important driving factors, this stock has surged by 72.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Net operating cash flow has significantly decreased to -$0.74 million or 106.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- 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 0.88, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: CQB Ratings Report