Source: http://www.guidetobelize.info/de/reisen/belize-zug-eisenbahn-guide.shtml

Chiquita Brands International of the US and Fyffes of Ireland said today they have agreed to combine in an all-stock transaction valued at about $1.07bn, that will be the world’s largest banana company.

Chiquita shareholders would own 50.7% of the new company, ChiquitaFyffes, which would have $4.6bn in annual revenue and 32,000 employees globally, Fyffes said.

Wikipedia says Chiquita is the final name in a long list of companies whose ultimate origin was the United Fruit Company, formed in 1899 by the merging of the Boston Fruit Company and various fruit exporting concerns controlled by Minor C. Keith. In 1970 it became the United Brands Company when it was purchased by Eli Black. He outbid two other conglomerates, Zapata Corporation and Textron, for a controlling interest in the company. In fact, that is a condensed version of what has actually happened to United Fruit Co., famed in the U.S. for Chiquita bananas, but known to generations of Latin Americans as "el Pulpo" (the Octopus). In 1990 the company became Chiquita Brands International.

The original “Banana Republic” was Honduras: United Fruit Company had many banana plantations, practically controlled the country economically and got involved in politics as well. Since the term was coined, the word has grown to be applied to any country with unstable, non-democratic governments, and abundant foreign influence, especially in economics. The many countries in Latin America that were dominated by United Fruit Company (UFCo) in the first half of the 20th century certainly fit that definition.

The New York Times wrote in 2008: [Today, “the banana is the world’s fourth major food, after rice, wheat and milk.” But when a Brooklyn-born twentysomething named Minor Keith planted a few banana cuttings next to a railroad track in Costa Rica in the early 1870s, it was virtually unknown outside its native environs. Keith and his partners soon realized how great the potential profits were — especially if, along with growing bananas, they could control railroads, shipping and Central American governments (to that end, Keith married the beautiful daughter of a Costa Rican president). Only then did they set out to turn the banana into a product for the masses. Until its demise a hundred years later, United Fruit controlled as much as 90% of the market.]

Fyffes Announces merger with Chiquita, FY13 numbers in-line: Patrick Higgins of Goodbody comments - - "Fyffes announced this morning that it will combine with Chiquita in a stock for stock transaction. This will result in Fyffes shareholders holding 49.3% of the new entity, ChiquitaFyffes plc. The group will be listed on the New York Stock Exchange and domiciled in Ireland. The merger will create the largest player globally, with c.14% market share. The transaction values Fyffes at €1.22, a 38% premium to current levels.

The new company will have an equity value of c. $1.1bn and net debt of $576m. Combined EBITDA is $174m, with an additional $40m expected in synergies. Another synergy benefit from the transaction is on the balance sheet. Chiquita was highly leveraged at 4.7x EBITDA, the new entity will have a more manageable net debt / EBITDA of 2.7x. Fyffes management will have governance of the new entity also, with David McCann to be appointed the new CEO, Tom Murphy the new CFO and Coen Boss the new COO.

Fyffes reported FY13 results this morning with EPS in-line with our forecasts at 8.8c, +3.1% yoy. Sales came in at €839m, +7% , while adjusted EBITA was €32.7m (vs Goodbody €31.9m), at the top end of the guidance range of €29-€34m. Banana sales were up in the year as the group continued to grow volumes; however profits were down slightly due primarily to higher fruit costs. Pricing was weak in H1 although a significant pick up occurred during the summer months due a tightening of supply. Overall pricing increased but insufficiently to offset the continuing rise in fruit costs.

Melons, which is predominantly H1 weighted, performed strongly as the group continues to grow its market share in the key import season in the US. Profits in Fyffes pineapple business rose strongly benefitting from an improvement in market conditions and stability in supply volumes, particularly in H1.

Current trading has been satisfactory in the year to date, although pricing is behind year on year. As a result and given the potential for volatility in the core banana business over the course of the year, management has set a wide initial guidance range for adjusted EBITA of €30-35m (vs. Goodbody forecasts for €33.7m). At first glance, we are unlikely to change our forecasts."

The National Treasury Management Agency (NTMA) announced that it will hold a bond auction on Thursday, 13 March, the first such auction since 21 September 2010.

Speaking today, John Corrigan, NTMA chief executive said: “The resumption of scheduled bond auctions builds on the phased re-entry to the capital markets achieved by the NTMA over the past two years and marks the full normalisation of Ireland’s presence in the markets.”

The details of the bond auction on 13 March are as follows:

Bond to be auctioned: 3.40% Treasury Bond 2024

Auction size:  €1bn

The auction will be conducted on the Bloomberg Auction System and will be confined to recognised primary dealers.

Escher Group FY13 results statement highlights positive pipeline: Rachael of Goodbody comments - - "Escher Group has announced FY13 results this morning. Revenue of $24.7m had already been reported in the group’s trading statement in January while adjusted EBITDA came in at $4.2m (company definition), 5% ahead of the $4m guidance given in January. Adj. EPS came in at 4.8c versus our 5.6c forecast with a higher interest and tax charges the key differences.

License revenue was $5.1m, -19% yoy, and -5% versus our forecast. The statement notes that the yoy performance was impacted by the fact that the group received licence revenue from Malaysia in the prior year but this was somewhat offset by the extension of the number of licences in the Saudi Post contract and ongoing payments received from USPS. In addition, this revenue was held back by the delay of the USPS licence fee in 2013. The group remains confident of recognising this revenue in H114 (c. $6m). Maintenance revenue was $5.4m, +6% yoy, driven by the full year impact of customers signed in 2012. Support revenue was -11% yoy to $2.5m, which reflected a contract renewal done during the year. In terms of services revenue, it was +35% yoy to $11.6m, versus our $10.3m forecast, driven by the group's work with the USPS and the Malaysian post office. Gross profit margin (61% v 66% in 2012) was impacted by the revenue mix which was more weighted towards the lower margin services revenue during the year.

On current trading and outlook, for the Riposte division (postal software) the statement notes that the group has been in contact with several postal organisations and is confident of signing new customers in 2014. Within Escher Interactive Services (digital mail and mobile wallet solutions), it notes that the pipeline of opportunities has expanded significantly over the last 12 months and Escher remains confident about the prospects for 2014.

Overall, we are unlikely to make any significant changes to FY14 forecasts following this morning’s announcement. It is encouraging to see the group note the pipeline of potential deals for both of its divisions. While we have c.3 wins in our forecasts per annum for its postal software division already, further traction in its interactive services division could see upside to group forecasts and our price target.

Banks: SME survey indicates uptick in loan refusal rate; Eamonn Hughes and Colm Foley comment - - "The latest Quarterly Bank Watch Survey at the end of February by ISME, the small and medium sized enterprises association, has shown that refusal rates by banks to lend to small businesses rose by 4 points to 54%. The survey of 924 owner-managers of SMEs also found that 60% of respondents had increased of bank charges imposed on them whilst 18% had incurred increased interest rates.

The uptick in refusals comes against the background of the improving economy and the previous quarterly survey which reported an improving refusal rate from 58% to 50%. Indeed, credit standards in the most recent Central Bank input to the EU Bank Lending Survey highlighted unchanged credit standards for the SME sector in Q413 whilst there was an expectation that standards in Q114 would also be unchanged.

The quick reversal in the refusal rate is surprising and something we’ll need to monitor, but ongoing evidence of an improving economy highlights that, on balance, conditions for the SME sector should be showing some signs of improvement. Evidence of higher charges is also likely to flow through to better income for the banks in due course.

Economic View: GDP data likely to confirm investment-led recovery; Dermot O'Leary of Goodbody comments - - "Positive momentum in the Irish economy is expected to be confirmed by this week’s Q4 2013 GDP data. A key feature of recent quarters, and indeed of our forecasts for the coming years, is that a rebound in investment is leading recovery in domestic demand. This should be a feature of the Q4 2013 data.

For 2013 as a whole, we are forecasting that GDP grew by 0.4%, following a 0.2% expansion in 2012. On first glance, therefore, describing Ireland as a “growth beacon” would be very much an exaggeration. However, the “patent cliff” in the pharmaceutical sector has played a significant role in depressing GDP growth over that period; we estimate 1.0% to 1.5%. More encouraging is the trend in domestic demand. In Q3 2013, domestic demand, excluding the volatile aircraft component, grew by 1.6%, its fastest rate of growth since 2007. Within this, investment grew by 8% yoy, with contributions from both business machinery and equipment and construction. Surveys over recent months suggest that trends in the former continued, while momentum in the construction sector has also been maintained (confirmed by this morning’s PMI). After falling for the first three quarters of the year, we expect consumer spending to make a small contribution to growth in Q4.

Another key aspect of the GDP data that we will be watching closely is the nominal data, as they will act as an input into the deficit and debt to GDP calculations. News on this front has been slightly disappointing of late, owing to very low inflationary pressures. The key theme of the data though should be one of an improving, and indeed better quality, economic recovery.

Irish and European industry continues to recover in 2014: Conall Mac Coille of Davy comments - - "European stock indices fell on Friday: the Euro Stoxx 50 fell 1.6% and the S&P500 rose 0.1%. On-going tensions over Crimea held back risk appetite despite better-than- expected US non-farm payrolls at 175,000. US Treasury yields jumped on the news to above 2.8% from 2.72%. The euro rose to a fresh high against the dollar, breaking through $1.39 in early trade, as investors weighed the ECB’s decision to keep rates on hold.

German industrial production grew by 5.0% in the year to January 2014, well above expectations. French data released this morning show manufacturing up 1.4% on the year. Italian figures will be released at 09.00 this morning. Given the strength of euro area manufacturing PMI surveys (53.2 in February) and the hard data on output, the consensus forecast for just 1.9% euro area industrial production growth in 2014 looks overly pessimistic.

In this context, Friday’s industrial production data for Ireland provided further evidence that the sector is benefitting from the improving cycle in Europe. Irish industrial production fell by 1.1% in the year to January but was split between a 5.3% fall in the modern sector and a 7.8% rise in traditional manufacturing.

Output in the labour-intensive traditional sector (accounting for two-thirds, or 137,100, of total industrial sector employment of 200,000), is gradually recovering, broadly in tandem with the broader European sector. In contrast, the pharmaceutical sector has been hurt by the patent cliff. However, pharmaceutical companies employ just 40,000 and have responded to the patent cliff by increasing investment in plant and R&D to bring the next generation of drugs to market. So, even within the pharmaceutical sector, there has been no evidence of aggregate job cuts.

Separately, new cars licensed in February were up 23% on 2013 levels and new goods vehicles licensed were up by 45%. This provides further evidence that the rebound in Irish consumer and business confidence has led households and companies to increase their spending. Indeed, the surge in Irish consumer confidence through H2 2013 was accompanied by a pick-up in surveys on households’ intentions to spend on big ticket items such as cars."