Fyffes slips up on short-lived bid: Banana group shares soar on potential purchase but discussions end quickly

FYFFES, the Dublin-based fruit and vegetable wholesaler best known for bananas, raised shareholders' hopes by announcing a bid approach early yesterday and dashed them by teatime when it said that the bid talks had ended after a boardroom discussion,

writes Lisa Vaughan.

Fyffes shares soared 30 per cent to a high of Ir130p (130p) after the announcement to the Stock Exchange in Dublin that it had received an approach that could lead to a bid at Ir115p per share. The shares finally closed at Ir120p, up Ir17p.

'The board has determined that the proposals involved in the approach are not in the best interest of the company or its shareholders and accordingly the discussion has terminated,' Fyffes said in a statement.

Irish stockbrokers' analysts believed that the US Dole Food Group was the most likely candidate to make a bid. Last month it was rumoured to have looked at Geest, another large UK fruit and vegetable distributor.

The big US fruit companies have been studying possible European acquisitions before the July introduction of the new EC banana market regime, which will restrict imports from Latin America.

Dole and Chiquita, another big US- based multinational banana distributor, obtain bananas from Latin America.

Fyffes and Geest are the main quoted companies in Europe that will benefit from the new regime, as they will receive a quota of Latin American bananas to sell to the EC market.

'Dole would find that strategically appealing,' said Liam Igoe of Goodbody Stockbrokers.

In 1992, Fyffes' profits were up 5 per cent to Ir pounds 28.5m.

Controversy still surrounds the new agreement for an EC banana regime. Germany has complained to the European Court; the Latin Americans consider the scheme unfair and a General Agreement on Tariffs and Trade panel is considering the matter.

Dame Eugenie Charles, Prime Minister of Dominica, a country with preferential access to the EC market, visits London next week to lobby against the German and Gatt challenges.