The company, which owns the Waterstone's book chain as well as its music stores, received a second proposal of 210p a share last week. Despite being 20p more than an earlier bid from Permira, HMV said the offer still undervalued the company.
'As such, HMV Group will not be entering into discussions with Permira with regard to the revised conditional proposal,' it said in a statement.
Numis analyst Steve Davies said: 'We still remain sceptical about the chances of this conditional proposal leading to an actual bid'. He said that 'trading has probably got worse rather than better since Christmas', when HMV's like-for-like sales were down 5.5 per cent and Waterstone's like-for-likes fell by 2.5 per cent. Davies added: 'If this is the case, it would clearly affect the price that Permira would be willing to pay'.
The group said in its statement that its operational strategy was well underway since its Christmas trading announcement of January 12, a move it believes will lead to higher returns for shareholders.
Earlier this month, HMV began a five-store trial of merchandising and layout changes, as well as a new price architecture for chart/back-catalogue music and DVDs.
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