The move follows withdrawl from the bidding for the Edinburgh-based broadsheet of two Scottish offers, one from Caledonian Publishing, owners of the Herald, and another from Scottish Tory businessmen.
Liam Kane, Caledonian's chief executive, said that although the company had offered a "fair price", it had been outbid by its rivals.
The Toronto-based Thomson Corporation, which put the Scotsman and its Aberdeen-based newspapers up for sale in July, also confirmed that Publications Scotland, a consortium of Conservative business leaders lead by Professor Ross Harper, had been ruled out because it was bidding to buy the Scotsman alone.
A change from Canadian to English ownership will mark the end of the Scotsman's 180-year battle to avoid the clutches of its Sassenach neighbours. Ever since its foundation, its proprietors have fought hard to retain the paper's distinctive Scottish identity. It has only ever had two English editors and when it was last up for sale in the 1950s, its then owners, the Findlay family, said it could be sold "to anyone but an Englishman".
The withdrawal of Caledonian Publishing and Publications Scotland leaves three serious bidders in the frame. They include Northcliffe, Deutsche Morgan Grenfell, the investment group, and a financial consortium represented by Coopers & Lybrand.
Northcliffe is understood to have bid pounds 175m for the Scotsman, Scotland on Sunday, the Edinburgh Evening News, the Aberdeen Press and Journal and Aberdeen Evening Express. Morgan Grenfell, and the Coopers & Lybrand group, which is thought to include a large publishing company, have made offers of about pounds 200m. Caledonian Publishing and Publications Scotland each bid less than pounds 150m.
Caledonian's withdrawal marks the end of Mr Kane's dream of creating a pan-Scottish group to rival the London-based media companies. It also calls into question the future of the Herald. If Northcliffe wins the battle for the Scotsman, Caledonian would almost certainly lose its contract to print the Scottish Daily Mail. At the same time, the Herald would face increased competition from its Edinburgh rival.Reuse content