FRANKFURT (Reuters) - Hedge fund Elliott International stood firm in rejecting U.S. wholesale drugs group McKesson's (>> McKesson Corporation) $8.3 billion (£5.08 billion) offer for European counterpart Celesio (>> Celesio AG) on Monday, saying it was "irrevocably bound" not to accept the bid at is stands.

Celesio management this month recommended its shareholders accept the bid from McKesson, the largest wholesale seller of drugs in the United States, which wants to expand abroad and boost its purchasing power with pharma majors.

Germany-based Celesio supplies pharmacies across Europe and owns Britain's Lloyds pharmacy chain. A combination with McKesson would create a global group with annual sales of around more than $150 billion and would be Germany's biggest healthcare deal since drugmaker Bayer (>> Bayer AG) bought rival Schering in 2006.

McKesson's 23 euro-per-share cash bid represents a 43-percent premium over Celesio's share price prior to speculation in June that majority owner Franz Haniel & Cie might sell its stake.

Celesio shares were down 0.4 percent at 22.92 euros by 1409 GMT on Monday, implying scepticism among investors that the wrangling will conclude with a far more attractive deal for Celesio shareholders, who have until January 9 to tender their stock.

Elliott, run by U.S. investor Paul E. Singer, has spent about 800 million euros ($1.09 billion) building a stake in Celesio and already said this month it would not tender its shares, calling upon McKesson to sweeten its offer.

"Elliott has seen reports suggesting that it will change its mind and accept McKesson's offer. These reports are categorically incorrect," Elliott said in a statement on Monday. "To be absolutely clear, Elliott's final, binding decision is not to accept McKesson's offer on its current terms."

Celesio declined to comment. A Germany-based spokesman for San Francisco-based McKesson also declined to comment.

"NO GOING BACK"

Elliott has 25.16 percent of the voting rights in the company, enough to block a deal that needs the support of investors holding 75 percent of Celesio's shares.

"It looks as if Elliott is prepared to let the deal fall through unless they get more money. Elliott has gone out on a limb and it seems there's no going back now," a Frankfurt-based trader said.

McKesson and its closest U.S. rivals, AmerisourceBergen (>> AmerisourceBergen Corp.) and Cardinal Health (>> Cardinal Health Inc), have all been looking to expand outside their domestic market, where they command a combined 95 percent share.

The bid valued Celesio including its debt at about 11 times expected earnings before interest, taxes, depreciation and amortization (EBITDA) for this year. That is in line with the multiple that Walgreen Co (>> Walgreen Company) paid for a 45 percent stake in European pharmacy chain Alliance Boots last year.

Elliott has been strongly active in Germany this year, having also built a large position in Kabel Deutschland (>> Kabel Deutschland Holding AG) and aiming to sue bidder Vodafone (>> Vodafone Group plc) for a better price than was accepted by other shareholders, according to people familiar with the matter.

($1=0.7315 euros)

(Reporting by Christoph Steitz; additional reporting by Daniela Pegna; editing by Greg Mahlich and Tom Pfeiffer)