Fresh fruit producer Chiquita Brands South Pacific Ltd has rejected an increased takeover bid by Tradefresh Pty Ltd, saying it still undervalues the business.
Tradefresh, a joint venture between agribusiness Timbercorp and family-owned fresh produce marketer Costa Group, this week lifted its offer by 1.5 cents to 74.5 cents per Chiquita share, valuing the company at around $110 million.
But Chiquita said the revised offer, which Timbercorp said was final, did not reflect the benefits of strategic initiatives made by the company in recent years and which are yet to flow through to earnings.
It also said the benefits of the Queensland Mushrooms acquisition is not reflected in the offer.
An independent expert's report values Chiquita's shares between 84 cents and 99 cents.
Chiquita chairman Anthony Hartnell that because Tradefresh's offer is well below the independent expert's range, the company had no alternative but to reject it.
It is our responsibility as independent directors to maximise value for all our shareholders and we believe the Tradefresh's revised offer is inadequate and does not reflect the inherent value of the business, Mr Hartnell said.
Chiquita is forecasting a significant uplift in earnings in fiscal years 2007 and 2008.
Chiquita had a tough year in 2005/06, capped off in March by Cyclone Larry which wiped out its banana farms in Innisfail and Tully in Queensland, forcing it to issue its third profit downgrade of the year.
For the year to June 30, 2006, Chiquita posted a 21 per cent dip in earnings before interest, tax, depreciation and amortisation to $11.636 million.
Chiquita's shares on Friday closed up 0.5 cents at 74 cents.