Assura Group (LSE:AGR) has rejected the cash and shares bid from Primary Health Properties PLC (LSE:PHP, OTC:PHPRF) made last week.
The board of the healthcare property investor said the possible offer from its sector peer had been considered carefully with its advisers and they "concluded that it is not at a level that is sufficient to be recommended to shareholders".
PHP's proposal on 3 April was made up of 9.08p of cash and 0.3848 new PHP shares for each Assura share held, which gave a valuation of £1.5 billion based on the PHP share price at the time.
This compared to a £1.6 billion all-cash offer from a private equity consortium led by US firm KKR.
Assura noted in its statement to investors that there was no certainty that PHP would return with a firm offer.
In a separate statement on Wednesday, KKR said it was "pleased to announce that they have reached agreement on the terms of a recommended cash offer" with the Assura board.
The US firm confirmed that its offer is for 49.4p in cash for each Assura share, comprising 48.56p in cash from the consortium and the promised quarterly interim dividend of 0.84p announced by Assura on 18 February and due to be paid today.