Chiquita’s decision to reject a $611m takeover will have been met with a huge sigh of relief from Fyffes boardroom and shareholders alike.

The US fruit distributer’s commitment to press ahead with its all-share merger with contemporary Fyffes represents a better end to the week for the Irish firm, which earlier saw its shares hammered on speculation the deal was doomed.

Chiquita said Monday’s $13 per share approach from US juice maker Cutrale and Brazilian investment firm Safra was “inadequate and not in the best interests of Chiquita shareholders”.

But the reality is that today only looks like marking the end of the first chapter of a potentially hostile takeover saga.

Safra and Cutrale responded with their own statement that seemed squarely aimed at Chiquita’s shareholders. The bidders said Chiquita’s decision was “a continuation of its track record of shareholder value destruction”.

The statement added: “We’re considering all alternatives to provide shareholders with the opportunity to send a clear message to the Chiquita board that they should enter into discussions.”

If that does not represent the first shots of a hostile takeover battle, it is difficult to imagine what would.

Consequently Fyffes’ UK-listed shares only recovered some of the ground they lost on Monday when news of the bid emerged. By mid-Friday afternoon Fyffes had recovered 2.9% to 75.65p, but that still represents a fall of over 14% from its Monday price of 88p.

That alone suggests this saga still has a long way to go.

The deals compared

It is not necessarily simple to compare the relative merits of the two deals on the table. The Cutrale/Safra deal is a straight forward enough cash offer at a premium of 29% to Chiquita’s pre-bid share price.

The potential benefits of the Fyffes tie-up are more complex. Although nominally a merger, effectively Chiquita is taking over the Irish firm paying for the deal with just under half of its own shares. Chiquita proposes to move its corporate HQ to Ireland to benefit from the country’s lower tax regime, while the combined company will become the world’s largest banana exporter and expects to see significant benefits from cost savings and economies of scale.

There are already suggestions that a significant number of Chiquita shareholders view the more definitive benefits of a cash offer as the more favourable course of action. The shareholders themselves will effectively get to decide which route they prefer when they are asked to vote their approval of the Fyffes deal - a meeting scheduled for 17 September.

Safra and Cutrale could simplify matters by raising their bid to a level the Chiquita board feels compelled to accept – consensus opinion appears to be that $15 a share would be difficult to turn down.

But if the Chiquita board remains committed to pressing ahead with the controversial ‘inversion’ deal, it faces a very public battle to convince shareholders to back its rejection of the cash offer and is likely to get dragged further into a political row.

Growing political and media anger over US companies employing these so-called inversion tactics – taking over a foreign firm and shifting their tax base to the other company’s home jurisdiction – provided Safra and Cutrale with the opportunity to step in with their own offer.

US pharmacy chain Walgreens recently backed down in the face of fierce criticism and consumer boycotts over its plans to move its tax base to the UK by buying up Alliance Boots.

The negative PR threat to Chiquita is clearly less intense than that for a retail chain, but shareholders will not be deaf to arguments that inversions are not in their best long-term interests as they represent more of a tax arbitrage play than building long-term investor value.

Round one is over, but this could be a long fight.