Chiquita Brands International, owner of the namesake banana label, said it will continue with its planned purchase of Irish competitor Fyffes after rejecting an unsolicited $611 million takeover proposal from Cutrale Group and Safra Group.

Chiquita remains committed to completing the pending Fyffes deal, the Charlotte, North Carolina-based company said in a statement yesterday. The August 11th offer of $13 a share from Cutrale and Safra is “inadequate” and not in the best interests of shareholders, it said.

“Chiquita has determined not to furnish information to, and have discussions and negotiations with, the Cutrale Group and the Safra Group at this time,” the producer said in a letter to the suitors, a copy of which was included in the statement. Cutrale, a closely held juice maker controlled by Brazil’s Jose Luis Cutrale, partnered with banks owned by Joseph Safra, the country’s second-richest man, to challenge the Fyffes deal. The buyout proposal was 29 per cent more than Chiquita’s closing share price on August 8th, the last trading day before the offer, and is worth $1.23 billion including assumption of net debt, according to data compiled by Bloomberg.

Chiquita fell 10 cents to $13.41 after the close of regular trading in New York. Dublin-based Fyffes, which traces its roots to the 19th century, rose 1.1 per cent to 91 cents .

Cutrale and Safra are “extremely disappointed” in the board’s decision, they said in a statement. “The Cutrale Group and the Safra Group are considering all alternatives to provide shareholders with the opportunity to send a clear message to the Chiquita board that they should enter into discussions regarding the Cutrale-Safra proposal,” they said.

Cutrale and Safra probably will make a higher offer, Brett M. Hundley, a Richmond, Virginia-based analyst at BBandT Capital markets who recommends buying Chiquita shares, said by phone.

The Fyffes combination is worth $14 to $17 a share, and the rival bidders need to offer something in that range, he said. “I think $15 gets the board’s attention and potentially opens up a dialog between the two companies,” Hundley said in the interview.

The combination with Fyffes, proposed in March, would create the world's largest banana company. It also would cut Chiquita's tax bill by relocating its headquarters to Ireland even though it's the larger company, a process known as inversion that members of the US Congress and President Barack Obama want to discourage. Obama said August 6th that the Treasury Department is looking for ways to use existing rules to curb such inversions. A Senate bill on the matter would retroactively affect eight pending deals, including Chiquita-Fyffes.

Bloomberg