Chemical maker A. Schulman Inc (SHLM.O) said it dropped its bid for Ferro Corp (FOE.N), about four months after it had offered $563 million for its smaller rival.
A. Schulman shares fell more than 11 percent to $24.63 in morning trade, while Ferro shares fell as much as 12 percent to $6.19.
"We have given Ferro's board ample time to come back to us to initiate a discussion," A. Schulman Chief Executive Joe Gingo said on a conference call with analysts on Tuesday.
"At this time, this has not happened, so we have decided to look elsewhere for acquisition opportunities."
A. Schulman and Ferro sell products used in industries such as electronics and construction.
A. Schulman first contacted Ferro in November 2012 and expressed its interest in Ferro in a letter on February 13, but was rebuffed. A formal offer in March was also rejected.
A. Schulman said the acquisition would help cut costs and widen its customer pool.
The company, which in May agreed to pay $50 million for Network Polymers, a maker of thermoplastic resins and alloys, said on Tuesday it would finalize the deal within the quarter ending November.
A. Schulman on Monday posted third-quarter results well below analysts' estimates, hurt by the slowdown in Europe, and lowered its adjusted profit forecast for the full year.
The company's shares were down 7 percent at $25.97 in afternoon trading on the Nasdaq. Ferro shares were down 10 percent at $6.30 on the New York Stock Exchange.
(Reporting by Sayantani Ghosh and Bhaswati Mukhopadhyay in Bangalore; Editing by Sreejiraj Eluvangal)