Chiquita Brands International Inc., a worldwide exporter of bananas and fresh-cut fruit, announced Wednesday it is buying Fresh Express, the nation’s top seller of bagged salads, from Performance Food Group Co. for $855 million in cash.
The announcement came a day after Cincinnati-based Chiquita reported its profit more than tripled in the fourth quarter.
Performance Food shares climbed $2.76, or 11 percent, to $27.76 in early trading on the Nasdaq Stock Market, while Chiquita shares rose 45 cents, or 2 percent, to $22.45 on the New York Stock Exchange.
Fresh Express is the No. 1 seller of packaged salads in the United States, with a 40 percent share of the market and about $1 billion in annual revenues.
Chiquita said the acquisition will make it the leader in the fast-growing value-added salads category. In addition to its wide variety of salad products, Fresh Express is a leading supplier of fresh-cut fruit.
The deal is expected to close in the second quarter.
“I believe this is the most important strategic and transformational move the company has made in decades,” said Fernando Aguirre, Chiquita’s chairman and chief executive officer.
“Fresh Express fits seamlessly into our sustainable growth strategy to become a world-class, consumer-driven leader of branded produce by building a high-performance organization, strengthening our core business and, most importantly, pursuing profitable growth.”
Chiquita has said it wants to reduce its dependence on bananas, which account for about half of its sales. This will be its first move into vegetables. Salads will account for about 20 percent of its sales once it buys Fresh Express.
Fresh Express, based in Salinas, Calif., is a wholly owned subsidiary of Performance Food Group. The company will remain headquartered there.
Chiquita estimates it will save about $20 million annually by consolidating facilities and through other cost-saving measures.
On Tuesday, Chiquita said it earned $25 million, or 61 cents a share, in the quarter ended Dec. 31, compared with $8 million, or 19 cents a share, in the same period a year ago. Sales rose 12 percent to $768 million from $686 million in the fourth quarter 2003.
The increase resulted from favorable European exchange rates, improved banana pricing in Europe, higher banana volume in North America and higher sales of other fresh produce, the company said