Struggling nightclub operator Revolution Bars has rebuffed a merger proposal from rival Deltic Group.
Revolution is already the subject of a £100 million takeover tilt from Slug And Lettuce owner Stonegate, but Deltic said it believes a deal between the duo would represent a "disappointing outcome" for shareholders.
Instead, it has tabled an alternative proposal involving an all-share merger which would see a merged firm continue to be listed on the London Stock Exchange.
Deltic, one of Britain's biggest nightclub operators, said such a deal would create "a powerhouse group" and could be of "greater attraction" to Revolution shareholders than the Stonegate offer of 200p per share.
"Deltic believes that a combination of its business with Revolution would transform the scalability of the enlarged group, provide scope for material synergies and enable the operational issues within Revolution to be better addressed through Deltic's management team taking responsibility for both businesses, creating a powerhouse group in its sector that can exploit further opportunities to both expand and consolidate the market," the group said.
However, Revolution, which issued a profit warning in May that sent shares tumbling, has rejected Deltic's overtures.
The Ashton-under-Lyne-based firm, which owns more than 60 Revolution and Revolucion de Cuba high street bars, has said it is facing "well-publicised sector cost headwinds" that have also hit its rivals, including the impact of the living wage and the new apprenticeship levy, as well as an above-inflation increase in business rates.
Shares in Revolution were up more than 5% in morning trading to 183p.
Deltic's estate consists of 57 clubs, including those operating under the PRYZM, Bar & Beyond, Steinbeck & Shaw, ATIK, and Fiction brands.
Revolution said in a statement: "The board confirms that it received a possible proposal from Deltic and thereafter met with Deltic.
"Based on these preliminary interactions, the board had concerns over both the value and deliverability of the combination and did not see any merit in progressing their proposal as the board believes that a combination of Revolution and Deltic is not in the best interest of shareholders at this time."
The group added that its talks with Stonegate continue.
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