The only surprise about the McCann family's decision to go into the market and buy Fyffes shares was that they didn't do it sooner.
The family company, Balkan Investments, bought 670,000 shares last Friday at 85 cents (67 pence) each, totalling €569,500 - if they'd moved a week earlier, they could have got the same shares for 68 cents each and saved themselves €114,000.
It's hard to know what to make of the share buying by the McCanns. No doubt if asked they would trot out the usual argument of the stock being undervalued and buying is a vote of confidence in the company's future. But the sad fact is that institutional investors are showing little interest and it's surely time for the family to consider taking Fyffes private.
At this stage, the unfortunate institutions that gobbled up DCC's 10 per cent stake at the beginning of the year, at prices of up to €3.90, have probably written off their investments. The fortuitous timing of DCC's share sale came at the height of dot.com mania and the launch of Fyffes' worldoffruit.com portal for the fresh produce industry. DCC made a killing, the investors who bought the shares have been badly stung and, no doubt, harbour bitter memories.
The question is whether institutions would go for a family buyout of Fyffes and what sort of price the McCanns could offer. Right now, Fyffes is valued at €248 million - down from €1.2 billion at the height of the dot.com frenzy - but is estimated to have about €64 million on its balance sheet.
At a valuation of €248 million, it is on an EBITDA (earnings before interest, tax, depreciation and amortisation) multiple of 9.5 times this year's earnings, based on Davy's estimates, but a multiple of not much more than four based on Davy's forecast for EBITDA next year of €60.6 million. But what's it really worth? It's impossible to say given the uncertainties that surround the EU banana regime and the attitude towards fresh produce companies worldwide.
It isn't just Fyffes that has felt the cold wind of investor disinterest. Its old adversary, Carl Lindner's Chiquita, is now worth an ignominious $92 million (€105 million) on the New York market, with the shares trading at $1.37, down from a 2000 high of $5.87.
Fresh Del Monte is worth $235 million, with its shares having halved from $9.94 to $4.75. Only Dole, which five years ago had a £1.15 (€1.46) a share bid spurned by Fyffes, has shown any resilience and is now worth more than $800 million. In contrast, Fyffes is worth only $212 million.
Early this year, when Fyffes had scaled the heady heights of billion-euro valuations, it was the biggest fresh produce company in the world (at least in terms of stock market value). At that time, it was widely mooted that it was an ideal opportunity to use its extraordinary valuations to take out one of its competitors.
That opportunity passed and now Fyffes is vulnerable to a move by Dole. If Dole felt that buying Fyffes was a good idea five years ago, it probably remains a good idea, as long as it doesn't end up paying too rich a price. Would the McCanns be able to swallow their pride and sell a company their family founded and developed to a rival such as Dole.
Certainly, if a significant offer came, the McCanns would have their work cut out to persuade shareholders to hold on and back the family. If the McCanns do want to hold on to their business, they might be better if they did so by taking Fyffes private. As things stand, there is little to suggest that shareholders can expect any good news for a long time to come.
