After months of twists and turns, Chiquita shareholders today delivered a fatal blow to its merger plans with Fyffes to create the world’s largest banana supplier.

In a huge blow to Ireland’s Fyffes, Chiquita shareholders went against the recommendation of their board and voted down the deal in preference to a cash offer from Brazilian firms Cutrale and Safra Group.

There had been murmurings of Chiquita shareholder discontent since the deal was announced - both over the terms of the merger and the controversial ‘inversion’ plan to move the corporate HQ to Ireland.

But what looked to be the killer blow to the merger was Cutrale/Safra’s last-minute improved offer yesterday to $14.50 per share.

Without that intervention the shareholder vote could still have gone either way, though the signs had been positive.

Influential shareholder advisory firm Institutional Shareholder Services came out in support of the merger earlier this week, having previously recommended that shareholders vote against the plan.

However, ISS reversed its position again yesterday after the $14.50 per share offer, stating: “The certainty of value in the newest revised Cutrale/Safra offer may make that alternative more compelling [than the Fyffes merger]”.

Cutrale-Safra hailed the reversal as a major victory, noting that ISS’ statement went “as far as it possibly can given the constraints of time to enable ISS clients to change their votes.”

Wynnefield Capital, which owns 3.5% of Chiquita, also came out against the Fyffes deal this week and called the improved offer a “significant” increase yesterday.

The Chiquita board rejected the improved offer again this morning, but investor sentiment seemed to be moving against Fyffes in favour of Cutrale-Safra as the week went on.

Ultimately the guaranteed cash reward of $14.50 per share was deemed more attractive than the theoretical rewards on offer via the benefits of operating as a larger merged company. ISS made clear in its guidance to investors that the rewards of the merger would take time to realise, writing: “Two years is a long time to forecast out the banana business; at just 90% achievement of projected 2016 EBITDA, the present value falls to just $12.80 per share—materially below the $14.50 value of the newest revised Cutrale/Safra offer.”

Chiquita will now enter into negotiations with Cutrale-Safra – who said their offer stands until 26 October. Its shareholders will expect an agreement to be reached.

Where this leaves Fyffes’ plans is less clear.

The Irish firm will receive compensation (upped to 3.5% of Chiquita’s market value - around US$20m - in the recent renegotiation of terms), but that is scant reward for having to tear up its global growth plans.

The market responded to the news by driving down Fyffes’ London shares by 10.5% to 72.5p. The shares are now back to their pre-merger level having risen as high as 111p after the deal was announced.

David McCann, Fyffes executive chairman, said the firm “remains the leading European banana company with turnover in excess of €1bn and a long and successful history of growth”.

McCann added that Fyffes would remain at the “forefront of the global produce industry” – but it’s hard to imagine the company getting another chance to transform into the dominant global banana player again.

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