MIDAS SHARE TIPS: Thanks a bunch! Banana share recommendation Fyffes rises 45%

By

Joanne Hart, Financial Mail On Sunday

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Yellow fever: Fyffes soared on news of the deal

Banana company Fyffes announced last Monday that it is to merge with US rival Chiquita to create the world’s largest banana group, with annual sales of almost £3billion.

Midas tipped Fyffes last November, when the shares were 69p and last week they closed 45 per cent higher at 100p as investors responded enthusiastically to the merger.

The deal will take months to complete as competition authorities and other regulators pore over the fine print, but big shareholders on both sides of the Atlantic are hoping it goes through.

Bananas are the most popular fruit in the world, but suppliers are under pressure from supermarkets, so margins are being squeezed. Chiquita Fyffes, as the new group will be called, should be able to cut costs and flex its muscles harder with the retailers, so boosting profits.

UK shareholders who stick with the company will gain 0.16 new shares for every Fyffes share they hold. 

However, this is an  all-share merger and the new group will be listed in New York, where Chiquita’s stock is traded.

Midas verdict: Shareholders who bought following our tip last November have had a lucky break.

They should sell now.

Chiquita Fyffes may have long-term growth plans, but the next few months could be tricky and swapping London-listed shares for US stock creates extra hassle and currency risk.

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MIDAS SHARE TIPS: Thanks a bunch! Banana share recommendation Fyffes rises 45%