NEW YORK (TheStreet) -- Chiquita Brands International Inc. (CQB) announced on Thursday afternoon that it finds the joint $14 per share offer from Brazilian companies Cutrale Group and Safra Group "to be inadequate and not in the best interest of Chiquita shareholders."
The banana and fresh produce distributor said its board of directors consulted with legal and financial advisors and unanimously determined the offer made by the two companies on October 15 to purchase all outstanding Chiquita stock was not enough.
"Chiquita believes, as previously announced, that the implied present value of future share price range of ChiquitaFyffes is $15.46 to $20.01, based on a range of EBITDA growth during 2015 of 5% to 15% and an LTM EBITDA multiple range of 7x to 8x," the company said.
Cutrale and Safra made the offer to take over Chiquita in order to halt the company's planned acquisition of Fyffes Plc. (FYFFF) , which would create the world's largest banana company, Bloomberg reported.
Separately, 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, increase in stock price during the past year 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 0.8%. 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.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of 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