Henlys said it would not revise its cash and share offer - valuing Dennis at pounds 250m - despite last week's decision by Mayflower to raise its cash offer by 5 per cent to pounds 268.9m. Henlys said tough markets and an expected downturn in the Far East meant that a higher offer "would not be in the best interests of shareholders".
The move led the Dennis board to withdraw their backing for Henlys' bid. However the Dennis directors, who backed Henlys because of its better corporate fit, did not endorse Mayflower's bid and advised shareholders to take no action. The board will issue a recommendation before the Henlys offer expires on 16 October.
City analysts said a victory for Mayflower, which owns 29.9 per cent of Dennis - is almost inevitable unless Henlys can push up the value of its stock and hence the value of its offer.
Henlys was backed by Volvo of Sweden, which bought 10 per cent of the company at the start of the bidding war. But a sharp fall in Henlys' share price has led to a collapse in the value of the bid, tabled in August, from pounds 309m to just over pounds 250m.
Robert Wood, the Henlys chief executive, said he hoped that a rebound in financial markets would raise the offer value. "I am not conceding defeat. Some 70 per cent of Dennis shareholders have still to decide and this battle is still going to run over the next few weeks."
Henlys shares shed 12.5p to 412.5p. Mayflower fell 4p to 133.5p and Dennis was unchanged at 470p.