Saturday, June 12, 2004

Chiquita sells Colombia unit

Move is from harvester to marketer

By Cliff Peale
The Cincinnati Enquirer

Chiquita Brands International Inc. reached an agreement Friday to sell its Colombian operations to a Colombian company in a deal valued at $51.5 million.

Under the agreement, Cincinnati-based Chiquita will continue to purchase bananas and pineapples from the buyer, C.I. Banacol S.A. The deal comes the day after banana workers in Colombia ended a 15-day industrywide strike with a new agreement on wages.

Colombian farms produced about 11 million boxes of bananas for Chiquita in 2003, about 9 percent of its worldwide volume.

The deal, which the companies expect to close within a month, will not stop a Justice Department investigation into payments Chiquita has acknowledged making to rebel groups in Colombia to protect its employees, a Chiquita spokesman said. Chiquita notified federal authorities of the payments after the recipients were placed on the State Department's Foreign Terrorist Organizations list.

Chiquita has said the payments are isolated to its Colombian unit.

The deal continues the trend toward Chiquita becoming less of a harvester and more a marketer of bananas under its new chief executive officer, Procter & Gamble Co. veteran Fernando Aguirre.

In 2003, it sold its unprofitable Armuelles division in Panama to a consortium of workers.

After the newest deal, Chiquita will get about 36 percent of its bananas from its own farms, compared to 45 percent before, company spokesman Mike Mitchell said.

"We think a range around a third or so is probably the right proportion," he said.

The purchase price for Banacol includes $28.5 million cash, $15 million in notes and deferred payments, and the assumption of $8 million in pension liabilities.

Chiquita said it would take a $5 million after-tax loss on the deal, which may increase after the costs from the strike are resolved.

Privately held Banacol will become Colombia's largest banana company with the purchase, nearly doubling in volume.



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