British aero electronics group Cobham said it was withdrawing its GBP£273 million (USD$427 million) bid for rival Thrane & Thrane after the Danish company rejected its offer, though other suitors were expected to step in.
Cobham said it had been in talks with Thrane regarding a potential deal over the last year, and submitted an offer of DKK420 Danish kroner (USD$74.11) per share on February 8.
Cobham's offer is a 5 percent premium to Thrane's closing price on Friday, but a 38 percent premium to their close on February 7.
But the Thrane board said they were unable to recommend the proposal, according to a Cobham statement on Monday.
It was not immediately clear why Thrane rejected the offer. The satellite and radio communications equipment maker did not reply to requests for comment.
Last month, co-founder Lars Thrane, who owns almost 24 percent of the company, was quoted as saying that he would not sell his stake to a then-unnamed suitor.
This came soon after Thrane said it received a non-binding, unsolicited approach from a potential buyer seeking a majority stake, and had initiated a strategic review.
Cobham's withdrawal would prompt Thrane's shareholders to put additional pressure on the company's board, Poul Ernst Jessen, an analyst with Danske Markets told reporters.
Jessen does not expect Cobham to raise its offer but said other potential bidders could include Honeywell, Rockwell Collins, EADS and Inmarsat.
Cobham, whose equipment aids communication between military vehicles and aircraft, had been trying to increase its exposure to commercial markets after revenue growth was hit by cuts to the military budget in the United States.
Commercial aircraft demand, however, is rising as high oil prices force airlines to replace fleets with more fuel-efficient planes.
In its statement, Cobham said it reserved the right to reconsider its position.
"I don't think Cobham will come back with a higher bid," Morningstar analyst Neal Dihora said. "They have been good about not overpaying."
