The heated takeover battle between mid-market ERP provider Epicor and hedge fund Elliott Associates took a diminutive turn today, as Elliott terminated its offer to purchase all outstanding Epicor shares for $7.50 each.

Elliott’s decision to rescind its buyout offer followed a rapid-fire exchange this week in which Elliott extended its tender offer until Dec. 3 and Epicor’s board answered with a statement reiterating its hope that Epicor stockholders would not cash in their shares.

In a letter to Epicor’s board, Elliott asserted that the software company “never once quantitatively address[ed] how [it] will create shareholder value in excess of $7.50 per share.”

Against the backdrop of broader market declines and an Elliott buyout offer that began at $9.50 per share before dropping to $7.50, Epicor’s stock has seen only brief upticks on an otherwise steady decline to today, when it spent most of day trading for less than $3.00.

Elliott said it terminated its proposal in accordance with a provision that granted it the right to rescind the offer if the Dow Jones Industrial Average, the S&P 500, or the NASDAQ indices declined more than 10% after November 18. As of Thursday, all three had lost more than 10% of their value.

Ostensibly a win for Epicor’s board, which has repeatedly declared Elliott’s bids “conditional” and “illusory,” Elliott’s decision to pull back may only mark the beginning of a new chapter in the takeover fight.

In closing its letter to the Epicor board, Elliott noted, “We would … remind the board that Elliott remains interested in a constructive dialogue with the company to reach an agreement that would maximize shareholder value. Additionally, if we have learned anything from this process, it is that we are confident that a majority of the shareholder base is supportive of a change in the composition of the board.”

The board reference portends a continuation of Elliott’s fight during proxy season in January and February of 2009. Indeed, a source close to the dealings told Managing Automation recently that Elliott would likely wait until proxy season to make its next move. At that time, the hedge fund could nominate board directors more amenable to the takeover bid.

An Elliott spokesman today declined to comment beyond the company’s official statement.