The consortium that made a takeover approach to the Gresham Hotel group has walked away and said it will not be proceeding with its bid.

In a statement yesterday, the Gresham board said representatives of the consortium had informed it that it was abandoning it takeover plans.

Earlier this week, the hotel group's board of directors confirmed the approach but said it was not in discussions with the consortium.

The board referred the consortium, believed to comprise of three Irish investors with experience in the leisure and hotel sector, to its majority shareholder, the Israel-based Red Sea Hotel group.

It too issued a statement saying that it was not in discussions with any party about a takeover.

Sources close to the Red Sea Hotel group, however, did signal that the group would consider offers put to it at an appropriate price level.

The consortium was believed to have offered to pay between €1.25 and €1.30 per share for the group valuing it at between €99 million and €103 million.

It was reported to have secured financial backing from a British equity house.

On the Irish Stock Exchange yesterday, Gresham shares lost 4 cent to end at 94 cent. It had traded as high as €1.02 following speculation about a possible takeover bid but retreated as the Gresham board of directors and the Red Sea group stated that no talks were being progressed.

Red Sea holds its 28 per cent stake in Gresham through Euro Sea and Hapoalim Nominees.

Mr Harvey Soning, a business adviser to Red Sea, took over as Gresham chairman in 2002. Mr Amos Pickel, a director of Red Sea, also joined the Gresham board.

Neither side would make any further comment yesterday.

The Gresham group has hotels in Ireland, the UK and Europe. Since Red Sea took control the group has sold hotels in Galway, Limerick and Killarney.