A US-based healthcare group has tried to breathe fresh life into stuttering talks with Smiths Group, the industrial conglomerate, by proposing a £2.8bn takeover of the British company's medical division.
Sky News has learnt that Nasdaq-listed ICU Medical tabled a written offer for Smiths Medical last month that would have been composed largely of cash.
The deal, which was rejected by Smiths' board, would also have consisted partly of ICU stock, giving the FTSE-100 company exposure to any value created by combining the two makers of medical devices.
ICU is understood to have been flexible about the amount of stock that would be part of the transaction, which would have valued Smiths Medical at between £2.5bn and £2.8bn.
Insiders said on Monday that the proposal was made by ICU soon after Sky News reported that the two companies were close to abandoning their discussions about the creation of a £7.5bn transatlantic healthcare group.
It is unclear where the rejection of ICU's most recent offer leaves the two sides, although a source close to Smiths pointed out that talks must be ongoing given the absence of a stock exchange announcement to the contrary.
Smiths and ICU have been in talks since May, and the British company is likely to update the City on its progress when it reports annual results on 21 September, if not sooner.
News of the discussions was welcomed by Smiths investors when they were confirmed four months ago, amid hopes that the company was close to unlocking part of the value bound up in its conglomerate structure.
Since then, both Smiths and ICU have tabled a string of proposals about how a combination could work, with varying degrees of governance and management control being held by the two parties.
ICU, which makes devices used in infusion therapy and oncology, is being advised by Barclays, while Goldman Sachs is advising Smiths.
The American company has a market value of $6.26bn (£4.9bn).
The US-based company has a long track record of takeovers including the $900m purchase completed last year of Pfizer's Hospira Infusion Systems arm.
Smiths Medical, which also supplies advanced devices to healthcare markets around the world, accounts for just under 30% of the group's revenues, making it the company's largest unit on that basis.
Its performance has been rocky in recent years, with revenue in the half-year to January down 5% to £451m.
In July, Smiths Group shares tumbled after the company said that changes to European Union rules on medical devices would hurt sales from 2020.
The company said this year that it was making "significant progress on its return to growth" in the medical arena but cautioned that higher research and development costs were having an impact on short-term profitability.
Smiths also operates in areas such as security detection, making much of the body-scanning equipment used at airports around the world.
In total, it has five main divisions, which also include John Crane, a provider of engineering solutions for energy and other process industries.
The company's structure has long been a source of consternation for some investors and analysts, although talk of a takeover or break-up has never resulted in significant corporate activity.
In recent months there has been growing talk among City investors that Smiths is likely to attract the attention of an activist investor keen on pressing more aggressively for a break-up, although its shares have generally performed strongly in recent months and are up modestly over the last year.
Mr Reynolds Smith, who joined the company in 2015 from GKN, the engineering firm which has just been bought by Melrose Industries, is under pressure to demonstrate that its existing structure continues to deliver benefits to shareholders.
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"Over the medium-term, we are confident that will achieve organic revenue growth above our chosen markets, which in aggregate are growing 3-4% annually," he told the City in March.
A Smiths Group spokeswoman declined to comment.