CHARLOTTE, N.C. - Charlotte-based Chiquita Brands International said Monday that it plans to merge with Irish fruit company Fyffes, raising questions about the company’s multimillion-dollar incentives package for moving its headquarters from Cincinnati.
The companies plan to combine in an all-stock deal, with the resulting company to be called ChiquitaFyffes. After the merger, the company’s senior executives will be split between Charlotte and Dublin. But the company will be based in Ireland, which has a substantially lower corporate tax rate.
The deal is to close later this year, after approval from shareholders and an Irish court.
Ed Lonergan, the chief executive brought in to turn Chiquita around, will become nonexecutive chairman of the combined company, while Fyffes Chief Executive Officer David McCann has been named chief executive of ChiquitaFyffes.
Senior leadership roles at the combined company will be split between the current top executives at Chiquita and Fyffes. The chief financial officer and the head of the biggest business segment for the company will be Irish: Tom Murphy and Coen Bos, of Fyffes, were named chief financial officer and chief operating officer for fresh fruit.
“The appointment of McCann and Bos to Chiquita-Fyffes’ two most crucial commercial roles suggests the balance of operational power will be very much on the European side of the Atlantic,” wrote America Fruit, a trade magazine covering the fresh fruit industry.
McCann, the Fyffes CEO who will head ChiquitaFyffes,told the Charlotte Observer that decision-making will be split between the company’s locations. He said the company will have operations throughout the world and won’t use narrow geographic definitions to determine where decisions are made.
“We don’t think of it in those terms. We’re able to communicate over phone and video,” McCann said. “It’s going to be hard to define exactly where decisions will be made.”
From the Chiquita side, Brian Kocher will be chief operating officer for salads and healthy snacks, Kevin Hollandwill be chief administrative officer, James Thompson will be chief legal officer and Manuel Rodriguez will be corporate responsibility officer.
The board of directors at the combined company will be made up of directors from both companies, and stockholders will split the equity in the combined company about 50-50.
Chiquita was lured to Charlotte in 2011 with about $23 million worth of state and local incentives. The company committed to bring more than 417 jobs to the city, roughly half of them local hires while the other half relocated from its former headquarters in Cincinnati. The biggest portion of incentives, more than $16 million, is from a 75 percent state rebate on payroll taxes for the Charlotte employees.
The company also received a $2.5 million state grant and $2.5 million worth of incentives from Charlotte and Mecklenburg County, N.C.
As a condition of the incentives, Chiquita committed to keep its headquarters in Charlotte for 10 years and to maintain at least 90 percent of the promised jobs in Charlotte for 10 years. Failing to meet the terms of the deal would require Chiquita to pay back the incentives.
Charlotte Mayor Patrick Cannon said the deal likely won’t affect Chiquita’s incentive package, which has payments to be distributed for more than a decade.
Business, Pages 23 on 03/11/2014