Shares in industrial gases group BOC soared more than 20 per cent yesterday following a surprise takeover approach from German rival Linde.
BOC immediately rejected the unsolicited approach - thought to be worth some £7.6 billion - but its stock rocketed, valuing the company at more than £7 billion, on hopes that Linde would make a higher offer.
Shares in Linde fell five per cent following its move, which finally confirmed the speculation which has swirled around the UK and German stock-markets for years.
But news of BOC's rejection sent shares of French industrial gases rival Air Liquide up 5.2 per cent in Paris.
Some five years ago American regulators blocked an agreed £7 billion takeover of BOC by Air Liquide and US firm Air Products and Chemicals.
Yesterday, BOC did not disclose the offer price proposed by Linde, but said it was subject to a number of preconditions including financing, clearance from competition regulators and an examination of its books.
"The board has met together with its advisors and unanimously rejected the proposal because of its pre-conditions and its failure to value fully the growth prospects of BOC," BOC said in a brief statement.
Surrey-based BOC, which serves two million customers in more than 50 countries, said it was confident in its current strategy to deliver growth and returns to shareholders as an independent company.
Analysts said they did not expect Linde to make a hostile offer.
"It's a very clear rejection from the company. BOC have said a number of times that saw no point in a merger or acquisition between themselves and Linde," said ING analyst Paul Satchell.
There has been speculation Linde might bid for BOC to bulk up its own industrial gases business in Asia.