RIT Capital Partners Plc, a British investment trust chaired by financier Jacob Rothschild, said on Tuesday it did not intend to make an offer for Alliance Trust Plc.
RIT, which manages about 2.4 billion pounds ($3.5 billion) of assets, said it would not be in the best interests of its shareholders to make an offer for the fellow investment firm.
Alliance Trust, which manages assets worth about 3.4 billion pounds, said in May it received an informal merger approach from RIT.
Alliance Trust appointed a new chairman earlier this year as part of a major overhaul, and added that it had hired Canaccord Genuity to advise the company on a strategic review.
Alliance Trust was not immediately available for comment.