MARKS & Spencer pledged to focus on its trading revival last night after rejecting a £9bn takeover proposal from Philip Green.

M&S said the cash-plus-shares deal significantly undervalued the group, saying that a review was already underway to create better value for shareholders.

It presents a setback to the Bhs and Arcadia owner as he had already made it clear that a firm offer depended on a recommendation from the M&S board.

New chief executive Stuart Rose said the priority for M&S was to concentrate on improving the business, which he said had shown signs of being fundamentally strong during his first four days at the helm.

He said: "The ball is back in Philip Green's court. If and when he comes back with a further offer, we will give it the same consideration as we gave the offer this morning."

Mr Rose, who took over from Roger Holmes after M&S admitted that its sales recovery had faltered, promised to review all aspects of the business.

Speculation in the City now centres on whether Mr Green will return with a higher offer or make a direct appeal to investors.

Anthony Platts, of Tees Valley stockbrokers Wise Speke, said: "The point of offering a partial share offer was to attract those wishing to hitch a ride on the Green success train.

"His purchase of Bhs has gone on to make him a seriously rich man and the City may be attracted to having a piece of the action in his quest for M&S.

"But launching a bid is a very expensive process, involving enormous investment, banking and legal fees.

"Philip Green does not enter into takeovers for the benefit of others. If he feels that he can't win outright, he backs out, as we saw four years ago when he last took a look at buying M&S."

The fight for control of M&S took place against a backdrop of a High Court dispute over the position of Mr Green's legal team.

M&S successfully argued on Wednesday that there was a conflict of interest in Freshfields representing Mr Green as the law firm had worked with M&S in the past and was in possession of confidential information.

But an appeal by Freshfields was heard yesterday by Lords Justices Pill and Kay during which the firm said it had erected "Chinese walls" to avoid cross-over of information. The injunction, if upheld, would have a widespread and unfortunate effect on the ability of solicitors to act in circumstances such as the present, its counsel, Michael Brindle QC said.