Chiquita shareholders should reject the company’s proposed takeover by Fyffes to pursue a bid from Cutrale and Safra groups, according to proxy advisery firm Institutional Investor Services.

Voting to adjourn the September 17th shareholders meeting “appears to be the most robust option” for Chiquita to realise higher value from an alternate transaction proposed by the Cutrale and Safra groups, ISS said in an e-mailed report today.

Investors appear to have lost enthusiasm for the Fyffes transaction, as evidenced by a drop in the shares of the companies, ISS said. Fyffes shares have fallen 26 percent since March 10th, the day the Chiquita takoever was announced and Chiquita tumbled 16 per cent between March 10th and August 8th, the last trading day before the Cutrale-Safra offer was made public. Cutrale and Safra on August 11th offered to acquire Chiquita for $13 a share in cash, compared with a Chiquita market value of about $10 prior to the offer, ISS said.

“There is no risk, only upside, to the Chiquita board engaging with Cutrale-Safra,” the Brazilian groups said in a separate statement today. Cutrale, a closely held juice maker controlled by Brazil’s Jose Luis Cutrale, is partnering with banks owned by Joseph Safra, the country’s second-richest man, to break up the Fyffes deal so they can buy Chiquita.

Chiquita’s board has said the Cutrale-Safra offer is “inadequate.” The acquisition of Fyffes would create the world’s largest banana company. Chiquita rose 0.5 per cent to $13.78 in early trading.

Fyffes fell 6.6 per cent to 96 cents.

- Bloomberg