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Shares in Hammerson (HMSO) have tumbled after French shopping centre operator Klepierre (LOIM.PA) abandoned its £5 billion bid for its UK rival.
The shares slumped 11% to 462p as Klepierre announced its withdrawal, following Hammerson's rejection of an improved deal, worth 635p per share, on Wednesday.
Klepierre said in a statement: '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.'
Hammerson, which owns Birmingham's Bullring shopping centre (pictured) among others, said in response that Klepierre's offer 'very significantly undervalued Hammerson'.
'The board is confident in the intrinsic value of Hammerson and its prospects,' said chairman David Tyler. 'It is entirely focused on delivering value for shareholders in the shorter and longer term.'
Klepierre's withdrawal leaves the path clear for Hammerson's planned takeover of Intu Properties (INTUP), whose shares jumped 2.7% to 216.3p on the news.
Investors have been sceptical of the merits of that deal, with shares in Hammerson having slumped after it announced the bid in December.
'Klepierre's decision to walk away from a bid could still leave Hammerson's management and shareholders in an unfortunate position,' said David Brokcton, analyst at Liberum.
'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.'
Mark Williamson, analyst at Peel Hunt, said Hammerson could now struggle to push through the deal.
'With shareholders having had 635p waved in front of them, has the appetite for the combination with Intu cooled?
'We think so, and anticipate the Hammerson general meeting being more balanced than the board recommendation may suggest.'
The FTSE 250 index of 'mid-cap' stocks fared better, rising 0.5% to 19,872.