It is believed that Gulf president J P Bryan is balking at demands from key institutional shareholders in Clyde for a revised offer of around 135p before they accept Gulf's advances.
Clyde's shares closed at 119p on Friday, 14p above Gulf's 105p offer, which values the company at pounds 432m. Following Clyde's final defence document, expected on Monday or Tuesday, Gulf has another seven days in which to raise its bid under Takeover Panel rules.
Expectations of a white knight have faded in recent days, but analysts cautioned against pronouncing the takeover battle dead. "Gulf may just be bluffing to take some heat out of the shares," said one observer.
Gulf's case for valuing Clyde at 105p a share on the basis of net asset value was largely discredited last week by its opponents, despite a strong document from Gulf backing it on Tuesday. Most oil analysts now agree a bid in the range of 130-140p would constitute fair value for Clyde.
"If Gulf does not raise its offer, the bid has had it," said Richard Slape, an oils analyst at Charles Stanley.
Clyde, meanwhile, is expected to unveil profits for 1996 ahead of forecasts as part of its final defence document, along with an aggressive net asset value calculation that will establish a base value of the company at 105p per share, indicating an acceptable bid price of 140p.
The company also received support this week from its institutional shareholders, among them Schroders, Norwich Union, Capital and PDFM, which control more than 50 per cent of the company between them. One fund manager said he would only be willing to sell for between 135p and 150p a share.