Fyffes deal with Chiquita now looks more likely to succeed

Efforts by Fyffes to conclude a proposed $1 billion merger with Chiquita Brands to create the world's biggest banana company received a boost yesterday when Chiquita said an influential proxy advisory group had reversed its recommendation that shareholders vote against the deal.

Institutional Shareholder Services (ISS) had advised Chiquita shareholders to reject the merger in favour of a cash offer from Brazil's Cutrale-Safra, but now says it is the best deal.

Chiquita told the stock market that ISS said its board had acted "appropriately" by sticking with the proposed merger, despite rival cash bids from Cutrale-Safra. Merrion analyst David Holohan said the move "is indicative of the strategic rationale of the merger winning out over the shorter-term opportunism that was present in the Cutrale-Safra offer".

“ISS has concluded that the Cutrale-Safra offer... does not provide sufficient compensation to Chiquita shareholders to warrant giving up on the potential upside of the revised Fyffes transaction,” ISS said.

Chiquita shareholders will vote on the merger on Friday while Fyffes shareholders will vote next Monday.