In a one-line statement, the maker of Tetley and Quickbrew tea, said that, given its "overriding wish to maximise shareholder value", it had decided not to go ahead with the flotation and would "pursue another opportunity" instead.
The company declined to comment further, but City sources said that last month's announcement that Tetley was planning to float was likely to have attracted a trade buyer.
"The process of flotation was always likely to flush out a predator," said one source.
Speculations is mounting that an international company, such as Swiss giant Nestle could come in with a bid in the next few weeks.
Yesterday, a spokesman for Nestle declined to comment.
Tata India, a subsidiary of the Indian conglomerate, was also mentioned as a possible suitor.
The other UK leading tea-makers, such as Unilever's Brook Bond, which owns the PG Tips brand, or Hillsdown Holdings' Typhoo, were thought unlikely to bid for Tetley as any takeover would run into competition problems.
Tetley is 75 per cent owned by a consortium of venture capital groups led by PPM Ventures, which were behind the pounds 190m management buy-out from Allied Domecq in 1995.
The chairman and chief executive officer, Leon Allen, and the finance director, Roger Price, each own an 8 per cent stake. Analysts said Tetley's flotation had received scant institutional interest because the likely float price was deemed to be too high.
Tetley's flotation may have also been damaged by the forthcoming pounds 1.7bn London listing of Coca-Cola Beverages, which has monopolised institutional interest in the UK drinks sector.Reuse content