Corporate History: Chiquita Brands International, Inc

Chiquita Brands International, Inc.

Lorenzo Baker sailed into Jersey City, New Jersey, in 1870 with 160 bunches of Jamaican bananas. Baker arranged to sell bananas through Boston produce agent Andrew Preston and, with the support of Preston's partners, the two formed the Boston Fruit Company in 1885. In 1899 Boston Fruit merged with three other banana importers and incorporated as United Fruit Company. Soon the company was importing bananas from numerous Central American plantations for expanded distribution in the US.

United Fruit entered the Cuban sugar trade with the purchase of Nipe Bay (1907) and Saetia Sugar (1912). It bought Samuel Zemurray's Cuyamel Fruit Company in 1930, leaving Zemurray as the largest shareholder. Zemurray, who had masterminded the overthrow of the Honduran regime in 1905 to establish one favorable to his business, forcibly established himself as United Fruit's president in 1933.

In 1954, when Guatemalan president Jacobo Arbenz threatened to seize United Fruit's holdings, the company claimed he was a communist threat and provided ships to transport CIA-backed troops and ammunition for his ultimate overthrow.

Diversifying in the 1960s, United Fruit purchased A&W (restaurants and root beer, 1966) and Baskin-Robbins (ice cream, 1967). Eli Black, founder of AMK (which included the Morrell meat company), bought United Fruit in 1970 and changed its name to United Brands. Through American Financial Group, Carl Lindner began acquiring large amounts of United Brands' stock in 1973; he became chairman of the company in 1984. During the 1970s and 1980s, United Brands sold many of its holdings, including Baskin-Robbins (1973) and A&W (restaurants, 1982; soft drinks, 1987).

The firm became Chiquita Brands International in 1990. Chiquita acquired Friday Canning two years later. It then began divesting its meat operations, and all were sold by 1995.

In 1993 the European Union (EU) set up trade barriers against banana imports from Latin America, favoring banana-producing former European colonies in the Caribbean. The preference system angered Chiquita, whose bananas come from non-favored countries, although it retained more than 20% of the European market. In 1997 the WTO ruled the EU's trade policy illegal; the battle continued, however, over just how open the market should be.

Chiquita bought vegetable canners Owatonna Canning (1997), American Fine Foods (1997), and Stokely USA (1998) and merged them with Friday Canning in 1998. Also that year Hurricane Mitch destroyed Chiquita plantations in Honduras and Guatemala, costing the company $74 million. Sales were not affected though, as Chiquita was able to turn to growers in Ecuador and Panama. In 2000 the company announced cost-cutting efforts that included job cuts and a reorganization of some divisions.

Beset by a weakened European currency and a banana glut, the company announced in January 2001 that it was unable to pay its public debt. Chiquita also sued the European Commission, demanding $525 million in damages, due to the EU banana trade policy. The EU and the US later reached an agreement modifying quotas and tariffs until 2006, when all such restrictions are set to end. In November 2001 Chiquita filed a debt-restructuring plan under Chapter 11 seeking approval for an agreement the company made with bondholders to change more than $700 million of debt into equity. The plan was approved and the reorganization went into effect in mid-March of 2002 and the company began trading again on the NYSE. That same month, Chiquita announced the resignation of Steve Warshaw as the company president, CEO, and director. Cyrus Freidheim Jr. was named new chairman and CEO.

In 2002 Chiquita sold its interest in the Midwest wholesale produce distribution business operated by the Castellini group of companies to Castellini management for about $45 million, which includes debt assumption and $21 million in cash.

The company sold its Los Angeles-based Progressive Produce to Progressive's management for about $7 million in 2003. Also that year Chiquita acquired Atlanta AG, one of Germany's leading fresh fruit and vegetable distributors.

In a move to further concentrate on its fresh produce business, in 2003 the company sold its subsidiary, Chiquita Processed Foods (vegetable canning), to Seneca Foods for $110 million in cash, as well as stock, and debt assumption.

Also that year Chiquita sold its unprofitable Pacific division, located in Panama (Puerto Armuelles Fruit Co.) to a cooperative of banana workers. It sold its joint venture with The Packers of Indian River, a grapefruit grower and packer, to its joint venture partner. Chiquita also sold its interest in the Florida joint venture with The Packers of Indian River.

In May 2004 Chiquita voluntarily disclosed that it had paid "protection money" to terrorist groups at its banana-growing operations in Colombia. In June the company sold its Colombian banana operations to Columbian banana company C.I. Banacol SA for about $52 million. In February 2005 the Court of First Instance ruled against Chiquita in its suit against the European Commission.