Bestfoods, maker of Hellmann's mayonnaise, Knorr soups and sauces and Skippy peanut butter, rejected the $66 per share cash offer which would create a group close to challenging Nestle AG for the crown of the world's biggest food group.

Unilever Plc chairman Niall FitzGerald said its offer was at a "very full and very fair price", and if successful would lead to huge synergies between the two groups and annual cost savings in excess of $500 million per year.But industry analysts said Unilever will have to offer more to clinch the deal, and fears of an even bigger cash offer or being drawn into a hostile bid battle undermined the shares.

"Unilever will have to offer more if it wants Bestfoods, and we believe it can offer up to $70 and still make the figures stand up," said analyst at HSBC Securities, Andrew Saunders.

Unilever shares tumbled in London on investors worries over the high cash price of the deal. Its shares were off over 8 per cent at 352 pence by 1420 GMT in London, and down over 5 per cent at 46.65 euros in Amsterdam.Shares of Bestfoods in New York rose $11-3/8 to 61-15/16.

FitzGerald told shareholders at the group's London annual general meeting that Unilever made the bid to Bestfood's board on Monday at a premium of 30 per cent to Bestfoods' share price last Friday and 10 per cent above its all-time high.

"Bestfood has refused to talk to us over the $66 per share cash proposal which we consider very full and very fair," FitzGerald told reporters after the annual meeting.

He refused to be drawn on whether Unilever would increase its offer, go hostile or walk away, but gave Bestfoods' board until the end of Thursday, New York time, to start talks, or Unilever would reconsider its position. Unilever has not talked directly to Bestfoods shareholders.

FitzGerald said Unilever, the world's second largest consumer goods group after Philip Morris, could easily raise the cash for the bid from borrowings with its triple A debt rating, and at the proposed bid level would be earnings enhancing in the second year after completion.

A Bestfoods acquisition for Unilever, the world's third largest food group and producer of Lipton tea, Flora margarine and Magnum ice cream, would see the Anglo-Dutch giant leapfrog ahead of Philip Morris's Kraft Foods Corp, and push it close to Swiss-based Nestle in global food sales.

Unilever gave 5 billion pounds back to shareholders last year as it saw potential acquisition targets as being too expensive.

But since that decision in February 1999, the valuation of food stocks has halved, FitzGerald said.