French real estate company Klepierre has decided against making another bid for Hammerson PLC (LON:HMSO) after the UK property group turned down an improved offer.
Hammerson on Wednesday advised shareholders to reject an offer from Klepierre of 636p per share, up from a previous bid of 615p.
READ: Hammerson says “unanimously rejected” revised bid proposal from French property giant Klépierre
In a statement on Friday, Klepierre said it had decided to walk away from its attempt to buy Hammerson following a meeting between the two companies on Monday.
“The board of Hammerson did not provide any meaningful engagement with respect to the increased proposal and, after careful consideration, Klepierre has concluded that it does not intend to make an offer for Hammerson,” it said.
Shares in Hammerson plunged 12.3% to 457p in morning trading.
Hammerson says Klepierre offer 'significantly undervalues' the firm
Responding to the announcement, Hammerson said its board continued to believe the proposal "very significantly" undervalued the business after the Monday meeting, which involved discussions between its chairman David Tyler and Klepierre counterpart Jean-Marc Jestin.
"The board is confident in the intrinsic value of Hammerson and its prospects," Tyler said.
"It is entirely focused on delivering value for shareholders in the shorter and longer term."
Hammerson, which owns UK shopping centres including the Bullring in Birmingham and the Brent Cross in London, was demoted to the FTSE 250 index from the FTSE 100 last month following a share price slide.
At the end of last year it reached an agreement to buy mid-cap shopping centres firm Intu Properties PLC (LON:INTU) for £3.4bn, a deal which will create a £21bn portfolio of retail developments across Europe.
READ: Shopping centre owner Hammerson to buy rival Intu Properties in all-share deal
Liberum left its rating on the stock at ‘hold’ and target price at 610p, saying: “Klépierre’s decision to walk away from a bid could still leave Hammerson’s management and shareholders in an unfortunate short-term position: The market has clearly taken a negative view of Hammerson’s proposed acquisition of Intu.
“However, if the Intu deal does not complete, it would be a rejection of management's vision.”