A DEAL to create the world's largest banana company has collapsed after shareholders of US firm Chiquita rejected a merger with Fyffes.

The proposed union was first unveiled in March and would have created a distributor of more than 160 million banana boxes a year.

The rejection by Chiquita shareholders comes after a consortium led by Brazilian juice maker Cutrale raised its offer for the US firm this week.

Chiquita said it now expects to enter into discussions with Cutrale over a deal that would trigger a termination fee to Fyffes worth 3.5 per cent of Chiquita.

Dublin-based Fyffes, which also sells products under the Sol brand, employs more than 12,000 people worldwide.

Chiquita is the larger of the two with annual revenues of 3 billion US dollars (£1.8 billion) and 20,000 staff.

Fyffes chairman David McCann said: "Fyffes remains the leading European banana company with turnover in excess of 1 billion euros and a long and successful history of growth."

He added: "We are confident that Fyffes will remain at the forefront of the global produce industry.

"We will continue to focus on successfully developing our business for the benefit of all stakeholders."

Fyffes began trading in the 1880s when the first commercial delivery of bananas from the Canary Islands arrived in London for EW Fyffe, Son & Co.