Regis Group, the Southend-based residential investor, announced late yesterday afternoon that it no longer planned to make a bid for Grainger Trust.

But Regis and its partners in the proposed deal, Merrill Lynch and the William Pears Group, reserve the right to make an offer for Grainger within the next six months if there is a material change of circumstances.

They may make an offer if they secure support from the Grainger board, if another party makes a play for the company or if Grainger unveils a reverse takeover or sells its major assets.

Regis's decision, which was announced after the close of trading on Wednesday, comes a week after it confirmed that it was considering a revised cash offer for Grainger.

Earlier this month Grainger rejected the first unsolicited bid approach from Regis, saying the proposal was unwelcome and significantly undervalued it. The initial approach was pitched at around 680p a share, valuing Grainger at around £885m.