Shares in Alexander David, led by chairman Michael Hicks and chief executive David Scott, have been suspended on Aim since 6 August, when it informed the market that it was mulling an acquisition of Hoodless.
But sources close to the discussions said yesterday that after lengthy deliberation, Alexander David had decided against proceeding, with matters not helped by concerns over the current tough environment for the small cap broking market.
The news marks the second time that Hoodless has failed to agree a takeover of its business in just five months. Back in May, rival Astaire was forced to shelve its plans for a £3.6m acquisition of Hoodless after discovering a £1.4m black hole on the balance sheet of its own retail stockbroking subsidiary, Rowan Dartington.
Hoodless is keen to continue in its pursuit of a deal and is thought to have already received preliminary expressions of interest from different parties.
It is just one of a number of small-cap broking players sniffing around consolidation deals as the numerous smaller firms in the sector struggle to cope with ever-declining levels of business from more cost-conscious growth companies in the wake of the financial crisis.
Last month, larger rival Evolution Group expressed a possible interest in acquiring Panmure Gordon, though it stressed that no formal discussions had taken place and that an offer may not be forthcoming.
Panmure Gordon, for its part, appeared resistant to the idea of a deal, insisting it has a strong footprint, significant growth potential and a clear strategy “as an independent entity”.