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Sumitomo gobbles Europe's top banana giant Fyffes

Bananas are the world's best-selling fruit, according to recent data from research consultancy Euromonitor, with sales volumes totalling 78.4 million tonnes in 2015

Japanese conglomerate Sumitomo agreed Friday to swallow European banana king Fyffes for 751 million euros in a takeover of one of Ireland's biggest companies. The Dublin-based fruit importer and distributor, best known for its Fyffes-branded bananas, accepted Sumitomo's bid worth the equivalent of $804 million, it said in a statement to the Irish Stock Exchange. "We believe this transaction represents a compelling proposition for our shareholders and crystallises the substantial value created in recent years," said Fyffes chairman David McCann, whose family has agreed to sell its 12-percent stake. Bananas are the world's best-selling fruit, according to recent data from research consultancy Euromonitor, with sales volumes totalling 78.4 million tonnes in 2015. Fyffes is the top importer of bananas to Europe and also specialises in pineapples, melons and mushrooms. It has more than 17,000 employees. Trading titan Sumitomo Corporation, which comprises 800 different businesses with more than 65,000 staff, is the top banana player in Asia, having been active in the industry since the 1960s. - Global player - "Main motivations (for the deal) are that Fyffes has been investing in vertical integration by way of buying upstream (production) assets. They are now a grower as well as marketer," Merrion Capital analyst Darren McKinley told AFP. "Recent acquisitions in Latin and North America make Fyffes a global player in many fruit and fungus categories. "By buying Fyffes, Sumitimo has added a distribution network, upstreams assets, history in the industry and serious expertise in the McCanns." Fyffes traces its roots back to 1888 when tea trader Edward Wathen Fyffe began shipping bananas from the Canary Islands into London. The Dublin-listed group now distributes some 46 million cases of bananas per year in Europe, and it also operates in North, Central and South America. Fyffes added Friday that 27 percent of its shareholders have already approved the offer, which is expected to be formally ratified at an extraordinary general meeting. The takeover bid was pitched at 2.23 euros in cash and represented a premium of almost 50 percent over the closing price on December 8. Fyffes has annual revenues of 1.2 billion euros and a market capitalistion of 736 million euros. The company was originally British-owned before it was acquired in 1986 by Fruit Importers of Ireland, founded and operated by the McCann family. The McCanns, who are the biggest shareholders, have given an irrevocable commitment of support to Sumitomo. - Boost to European exposure - Cantor Fitzgerald analyst David Donnelly added that the takeover would hand a major "boost" to the Japanese conglomerate. "Sumitomo already has a dominant position within Asia, providing 30 percent of Japan's bananas," Donnelly told AFP. "Roughly 30 percent of Fyffes' revenue stems from Europe, and a further third comes from the UK, which would clearly boost Sumitomo's exposure to the region." Donnelly noted that Fyffes was trading "at an attractive discount to the sector despite having a strong earnings outlook and a solid business". He added that ultra-low interest rates provided an "ideal time" for companies with spare cash to consider merger and acquisition activity. Friday's news comes two years after US rival Chiquita failed to buy Fyffes in a takeover that would have created the world's biggest banana producer. Chiquita was subsequently bought by Brazilian juice exporter Cutrale Group and investment bank Safra.