A consortium led by Icelandic investor Baugur Group has dropped its GBP40m (US$79m) proposed bid for suit retailer Moss Bros, which was first tabled in February.

Baugur said despite concluding its due diligence and arranging necessary funding, that it was not in the best interests of its stakeholders to proceed with the offer, which was worth 42 pence per share.

Baugur added that since its original proposal there have been a number of significant changes to the composition of the company's share register.

"As a result of these changes, Baugur believes that the execution risk associated with completing the proposed offer has become unacceptable," the company stated.

Gunnar Sigurdsson, chief executive of Baugur Group, said: "We are disappointed by recent developments that have effectively frustrated our proposed offer, but remain supportive of the management team.

"Baugur is keen to continue to work with the board, management and other major shareholders to identify ways to unlock the potential in the business."

Since Baugur initiated its bid, home and fashion brand Laura Ashley has gradually doubled its shareholding in Moss Bros, to around 9.79%.

This brought some speculation in financial circles that Laura Ashley was lining up a bid, while others suggested that Laura Ashley merely views Moss Bros as an investment opportunity.