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Wynnefield: Increase in Cutrale-Safra Offer is “Significant”

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Wynnefield Capital, a long-term holder of Chiquita Brands (NYSE:CQB) , owning 1,646,103 shares or 3.5% of the company, today announced that it views today’s updated offer by Cutrale-Safra to $14.50 per share in cash as a “significant” increase in the offer price and affirmed its support for the Cutrale-Safra transaction.

WYNNEFIELD EMPHASIZED THAT THE SPECIAL MEETING OF SHAREHOLDERS OF CHIQUITA SHOULD BE CONDUCTED AS SCHEDULED ON OCTOBER 24, 2014.

Also, in light of the offer increase, Wynnefield called on proxy advisory firm ISS to swiftly re-consider its prior recommendation. Wynnefield reiterated its previously stated belief that ISS’ prior recommendation was flawed, relying on dubious long-term projections devised by the partisan Fyffes/Chiquita investment bankers that failed to account for the commoditized and unpredictable nature of operational risks in Chiquita’s business, as well as flawed projections of synergies that failed to properly account for EU regulatory developments.

That view was validated by a resounding market reaction. On the day ISS issued its recommended support for the Fyffes scheme, Chiquita Brands’ share price fell by about 4.2%, even as broader markets were flat to slightly up.

Wynnefield reiterated that its analysis demonstrates that the all-cash Cutrale-Safra proposal would provide superior value and eliminate the risks associated with a merger contemplated in the Fyffes proposal. Wynnefield projects that Chiquita’s shares would fall by $2.00 – $2.50 if the Fyffes scheme were approved.

In fact, the revised Cutrale-Safra offer could have been $14.70 per share had the Chiquita Board of Directors not increased the break-up fee from 1% to 3.5% as part of its revised Fyffes scheme, thus limiting the potential upside to shareholders, while further entrenching themselves.

The Wynnefield analysis concludes that, as a company analyzed on a cash-flow basis, rather than an Earnings per Share (EPS) basis, Chiquita Brands would be a better company for all stakeholders as a private enterprise, and that today’s increased offer reflects Cutrale-Safra’s commitment to appropriately taking the company private.

ABOUT WYNNEFIELD CAPITAL, INC.

Established in 1992, Wynnefield Capital, Inc. is a value investor specializing in U.S. small cap situations that have company- or industry-specific catalysts.

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