French real estate investment fund Klepierre said this morning it does not intend to make a final offer for Hammerson after its second approach of £5bn was rebuffed by the board.
Shares in Hammerson tumbled 12 per cent on the news.
Then, earlier this week, Klepierre's chairman met Hammerson's chair with an increased proposal of 635p per Hammerson share, but that was dismissed as undervaluing the company and shareholders were told to take no action.
The revised proposal for an acquisition coming in at 635p per Hammerson share, comprised 50 per cent in new Klepierre shares and 50 per cent in cash.
Hammerson chairman David Tyler said on Wednesday: "The board has considered the revised proposal from Klepierre carefully. At 635p, it is only a three per cent increase on the previous proposal and continues very significantly to undervalue the company."
In an update today, Klepierre said 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".
The firm had until Monday 16 April to decide whether to make a firm offer.
The move had an added layer of complexity as Hammerson's £3.4bn takeover of Intu was treading water as a result. The shopping centre owner said it would wait for the next decision from Klepierre on whether to make a final offer, before progressing with shareholder documents.
Hammerson has offered 253.9p per Intu share, valuing the company at £3.4bn. The combined group would boast a £21bn portfolio of retail developments across Europe.