The increased offer came in the wake of last week's decision by Michael Heseltine, President of the Board of Trade, not to refer the bid to the Monopolies and Mergers Commission against the advice of the Office of Fair Trading.
Owners Abroad rejected the improved terms. Howard Klein, chairman, said: 'The offers still fail to recognise the value and potential of Owners Abroad.'
However it emerged that the companies discussed an agreed offer last week but the Owners board rejected a deal at a weekend meeting.
City observers said Airtours was likely to win the battle, unless a counter-bidder emerged. Analysts said it was unlikely that Thomas Cook, which had agreed a tie-up with Owners before the Airtours bid, would enter the fray through its German parents WestLB and LTU.
Airtours is now offering 15 of its shares for 34 Owners shares. Shareholders can take cash for up to 56 per cent of their holdings at 121p a share. Owners shareholders will keep their final dividend of 2.52p net, as the shares have just gone ex-dividend.
Airtours is offering convertible preference shareholders 218 of its shares for 100 Owners. The company forecast a dividend for this year of 8.7p, an increase of 20 per cent over last year.
David Crossland, the chairman of Airtours, said: 'Our final offers fully value Owners Abroad, providing its shareholders with a substantial increase in capital.'
Airtours shares rose 3p to 309p, and Owners shares closed 3p higher at 134p.
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