Mr Green has now made three offers for M&S
The board of Marks & Spencer has rejected the latest £9.1bn ($17bn) proposed offer from Philip Green.
Mr Green had raised his proposed takeover offer for M&S to £4 a share, and is now considering his next move.
M&S's board said it "believes that Revival's proposal... continues to undervalue the Group and its prospects significantly".
The firm said it was "confident" it would demonstrate this to shareholders in a strategy review due on 12 July.
By the close of trade on Thursday, the M&S share price stood 4.5 pence lower, or 1.22%, at 363.75 pence.
Mr Green is deciding whether to drop his offer, and is expected to respond to the M&S rejection later on Thursday.
He said banking advisers Goldman Sachs and Merrill Lynch are in contact with M&S shareholders about his proposed offer.
Mr Green indicated on Wednesday the 400 pence offer is his final one "on the table".
"Goldman and Merrill will talk to them (M&S shareholders)... there are going to be a lot of whingeing shareholders," he told the Reuters news agency on Thursday.
In its statement, M&S went on to say there were concerns over a number of "major areas of uncertainty" in relation to Mr Green's bid vehicle Revival, and its proposal which M&S said needed clarifying.
1. First Philip Green offer
2. M&S reject bid
3. Second Philip Green offer
4. Second M&S rejection
5. Latest offer from tycoon
6. Third M&S rejection
These include the ownership structure of Revival, its financing and any conditions attached to it.
Other concerns were over the characteristics and value of Mr Green's share alternative, of 335 pence a share in cash and a 30% equity interest in Revival.
It also wanted to know how Revival would deal with competition issues, including the undertakings Philip Green would be prepared to make to obtain competition clearance.
In response, Revival said it was "puzzled" why the board of M&S questioned certain aspects of its proposal only after rejecting it.
Revival also said its repeated requests for information regarding the M&S pension schemes had not been met and that its request for a meeting with the trustees had been denied.
Philip Green's 400 pence a share offer was higher than its previous one of about 370p per share, but had to be recommended by the M&S board before becoming a formal bid.
Earlier on Thursday Mr Green said the new offer had the support of Schroder Investment Management Limited, which owns around 1.2% of M&S shares, conditional upon acceptance of the offer by the retailer's board.
The news came a day after M&S's biggest shareholder, US-based investment group Brandes said it would support his offer if it was backed by the M&S board.
On Tuesday the UK's Takeover Panel gave Mr Green until midday on 6 August to make a formal offer for the High Street favourite.
Shareholders are now waiting to see what M&S reveals at its strategy review on Monday.
It is expected to include savings from the supply chain, a revaluation of M&S property and initiatives to drive like-for-like sales.
However Jeremy Baker, of London Metropolitan University, said: "The main difficulty of the board is to come up with something exciting. We don't see anything thrilling at the moment."
And financial analyst Tony Craze said: "I am a bit disappointed with the Marks and Spencer board not coming back after they had made their statement on Monday.
"That would have given investors the chance to compare what the board has, and what Mr Green is offering. But at the moment we don't know what Mr Rose has prepared."