Explaining the decision, Chris Masters, the Salvesen chief executive, said the company could see no compelling industrial or financial logic to the deal and that the board had concluded it was not in the best interests of shareholders. "To some extent I'm relieved. But I regret the whole thing, to be honest, because it has created such uncertainty within the company," Mr Masters said.
The rejection of the deal preserves the independence of the company which was founded in Edinburgh 150 years ago by the Salvesen family. However, Hays' attempts at takeover have only served to highlight the relatively poor performance of the company which is still in the midst of a long- term re-structuring programme.
Ronnie Frost, the Hays chairman, said he had decided to walk away from the deal because he was not prepared to over-pay. The Salvesen family's 38 per cent stake had also persuaded him that a hostile tilt at the group was not worthwhile. "I'm marginally disappointed and I don't understand it but it's history now and we've got to move on," Mr Frost said. He added that he saw the failure of the bid as an opportunity missed.
"Everyone agrees that the logistics sector needs rationalising and we were the only company who could do it. The time seemed to be right with Salvesen."
Hays had made it clear that its second offer was final. It offered 17 new Hays shares plus pounds 20.40 in cash for every 24 Salvesen shares held. The offer included the right to elect for a 15p special dividend that would have taken the total offer to 406p per share. Hays had also offered to make extensive public assurances to maintain the location of Salvesen's operational offices in Scotland in recognition of the company's prominent role north of the border.
Christian Salvesen shares which had been boosted by Hays interest, immediately slumped 46.5p to 304.5p. Hays shares rose 3p to 435p.
The board's decision pleased Sir Gerald Elliot, a former Christian Salvesen chairman and family member. "This is good news. They [Hays] should never have got involved in the first place. The company has good and loyal shareholders who support the board."
Other family members were less impressed. "To be honest I thought the offer was still 370p but 390p would have been more interesting," one said. "The share price had been languishing for about two and a half years. From what I've heard from the family, I would have thought there would have been some interest at around 400p. I'm slightly disappointed."
In the City analysts expressed surprise at the collapse of the deal. "I did not expect Hays to walk away so soon. This leaves both companies with a question mark over them,'' said Nyren Scott-Malden of BZW. Nigel Uttley of Greig Middleton said: "It will be some time before the trading at Christian Salvesen justifies the share price." He added that he was curious to see how Salvesen would defend its position.
Another analyst said it was possible that Salvesen might sell Aggreko, its power and air-conditioning business.
Salvesen said that it was "actively reviewing" various options including the sale or de-merger of businesses, the re-structuring of the balance sheet and a possible share buy-back."