Institutional Shareholder Services says Chiquita shareholders should vote against Fyffes deal

A proxy advisory firm says Chiquita Brands shareholders should vote against the company's proposed merger with Irish fruit company Fyffes, saying Chiquita might be able to get greater value from a different deal.

Institutional Shareholder Services said market enthusiasm is fading for the proposed stock transaction, which would create the largest banana company in the world. Chiquita would relocate to Ireland as part of the deal, lowering its corporate tax rates.

The companies agreed to combine in March, and they are projecting $60 million in annual pretax savings from the deal.

In August investment firm Safra Group and the Brazilian agribusiness and juice company Cutrale Group offered to buy Chiquita for $611 million, or $13 per share. Chiquita's board says the offer is inadequate.

ISS said that market enthusiasm for the Fyffes deal has declined "despite the board's strategic rationale and the anticipated synergies." The advisory firm said "the potential to realize greater economic value through an alternative transaction — as demonstrated by a higher cash offer from another potential strategic buyer - suggest(s) support for the transaction as currently structured is not warranted."

ISS did not offer an opinion on that proposed deal from Safra and Cutrale.

Shares of Chiquita Brands International Inc. rose 6 cents to $13.77 in midday trading Friday.