Novice Investing - Sell It Fresh

Date: Sunday 20th 2008f July 2008 12:45:25 PM

Sell It Fresh - 12/19/2005

By: Novice Investing Staff

Fresh Del Monte Produce Inc. (FDP) is up for sale? That is what the Associated Press reported. TheDeal.com identified that JP Morgan has been hired to run an auction for the company which may fetch as high as $ 1.8 Billion. That is about $ 30.70 per share.

The company has been struggling for quite some time. Unfavorable weather, price war and tariff restriction has each played a part. A week ago, the company reduced earning guidance for the rest of the year and disappointed investors with that.

Our last update indicated that Fresh Del Monte is worth around $ 27.70 per share. If indeed the company can be sold for $ 30.70, it is at least getting a modest premium over its fair value. By hinting a buyout, management, which controls most of Del Monte's shares, indicated that they cannot manage it effectively and prefer other organizations to take it over. If that is their preference, then it is better to find a buyer immediately before the performance gets worse.

Still, this is not a screw-up company that one might think. It is still profitable and has been profitable for the last three years. Its main business line is banana and other fresh fruit products. Despite the unstable nature of fruit prices, we applaud management for being able to keep the company afloat. The stock is also offering 3.10 % dividend yield at current price.


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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Fresh Del Monte Produce Inc. (FDP) or any other securities.

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