Airports operator BAA has rejected a takeover approach from Spanish suitor Grupo Ferrovial after weeks of speculation that a bid was imminent.
Ferrovial already has interests in Bristol and Belfast airports
The BAA board concluded that the £8.8bn offer undervalued its assets.
The company operates seven airports across Britain, including Heathrow, Gatwick and Stansted in London.
However, BAA said Ferrovial indicated that it may still increase its offer by "a small increment".
Shares in BAA fell 11.5 pence, or 1.3%, to 827.5p after the announcement.
A revised bid would depend on BAA agreeing to allow the Spanish group access to its accounts and recommending any higher offer.
"They're really testing the water and I think that they are capable of higher," said analyst Owen Gibbons at Cheuvreux.
Australia's Macquarie Bank is also considering making an offer for BAA.
BAA said Ferrovial's offer was worth 810p a share in cash, lower than its closing price of 839p on Thursday.
"On the basis of this proposal, the board does not believe it is in shareholders' interests for it to enter into discussions with Ferrovial," BAA said in a statement to the London Stock Exchange.