Book publisher Prentice-Hall Inc. yesterday rejected a $700 million takeover bid from Gulf & Western Industries Inc. and said it would look for a better offer for the company.

It also initiated some classic defenses against unwanted takeovers, including "golden parachute" employment contracts for top executives and a higher dividend.

Gulf & Western, undaunted, said it would press on with its $70-a-share offer for the publishing house. And analysts said Prentice-Hall's defensive measures might not be enough to fend off the bid -- especially if the company is unable to find a company willing to offer more than Gulf & Western.

Prentice-Hall's board described G&W's offer as "inadequate" and unanimously rejected it. But Gulf & Western said, "We think our offer is a thoroughly fair price . . . "

Gulf & Western, the large New York-based conglomerate, announced its bid for Prentice-Hall earlier this week. The combination of Prentice-Hall and G&W's Simon & Schuster division would create one of the nation's largest and most diversified publishers, with interests ranging from textbooks to computer software.

Prentice-Hall management initially rejected the offer, a move now endorsed by the company's board. Speculation over the possibility of another bid drove the company's stock up over G&W's $70-a-share offering price. Yesterday, Prentice-Hall stock closed at 73 5/8, up 4 1/2, with 930,300 shares traded.

Despite the speculation, analysts say they are not sure who else might want to bid for Prentice-Hall.

Because Gulf & Western's offer is fairly generous, it is hard to envision another bid for much more, said John Reidy, an analyst for Drexel Burnham Lambert Inc. He suggested the two sides might be able to compromise by G&W sweetening its bid by $2 a share or so.

In a filing with the Securities and Exchange Commission yesterday, Prentice-Hall revealed that it issued lucrative "golden parachute" contracts to 13 executives and directors providing them with substantial severance compensation if they lose their jobs through a takeover. Prentice-Hall also raised its quarterly dividend to 48 cents a share from 46 cents, a move to induce shareholders to hold on to their stock for dividend income rather than to sell it for a one-time gain.