Australian predator Macquarie Bank yesterday surprised the City by backing away from its £1.5 billion bid for the London Stock Exchange.
Macquarie, which has interests in Birmingham International Airport and the M6 Toll Road, said it did not intend to increase its offer or extend it beyond the February 28 deadline.
Jim Craig, head of the Macquarie Group in Europe, said: "Europe is a key growth area for Macquarie, and we continue to look forward to many attractive opportunities in the region."
The LSE, which earlier described Macquarie's approach as "derisory", seemed to have beaten the Australian outfit off with its tactic of doubling the amount of cash it intends to return to shareholders to £510 million and conduct an annual share buyback programme of £50 million.
Its share price, which has been at an all time high, rose by more than ten per cent again yesterday to 83412p, valuing the business at £2.13 billion.
The exchange - which accepts that consolidation among the world's major bourses is bound to happen - is also raising its full-year dividend by 71 per cent to 12p.
Weekend speculation following the LSE's announcement on Friday centred on the chances of Macquarie raising its offer from 580p to more than 700p per share.
But the bank said in a statement: "Macquarie has spent considerable time meeting with key LSE shareholders and user grups.
"Following these discussions, Macquarie has concluded that increased offer terms acceptable to Macquarie and its investors is unlikely to be acceptable to LSE shareholders. As a result, Macquarie will not increase the terms of its existing offer."
But Macquarie's decision does not necessarily signal the end of interest in Europe's largest stock market, with a number of private-equity firms and hedge funds thought to be working on a bid.
The LSE has been the subject of a year-long takeover battle, following interest last year from Euronext and Deutsche Boerse.