Prudential's 79 per cent stake in Egg, the internet bank, is no longer for sale. The UK life assurer yesterday said a series of extensive talks had failed to produce a high enough offer.

The failure to strike a deal removes the uncertainty that has hung over Egg's operations for the past eight months, but is an embarrassment for Mr Jonathan Bloomer, Prudential chief executive.

Mr Bloomer said the board had been realistic about Egg's value, but had concluded that retaining the stake offered better value for Prudential shareholders.

"We haven't seen an offer that reflects what we see as the value of the business," he said.

Egg shares plummeted 40p on the news to 104p, below their price in January when Prudential first announced it was in talks to sell its stake and the lowest level since the end of May 2003.

Mr Bloomer said the group had an obligation to explore all options for the business once expressions of interest had sparked the potential sale process in January, which followed Prudential's decision to look for a partner to invest in the French side of the business.

The recent decision by Egg to close its French operations had led many to think a sale was imminent because the internet bank had said the reason behind the closure was that none of the potential bidders - thought to have included JP Morgan, MBNA and Capital One - wanted to invest in that business.

However, it now seems that those steps to refocus the business on its successful core UK operations were enough to satisfy the current owner.

"This is an embarrassment for Bloomer," said Mr Roman Cizdyn, analyst at Commerzbank. "The attitude among investors is that this is not a sacking offence per se, but they are drawing up a list of things such as the failed attempt to merge with American General and the cut in the dividend last year." - (Financial Times Service)