The proposed £850 million sale of Carpetright to its founder Lord Harris has fallen victim to the credit crunch.
In an announcement late on Friday, Harris said that the "availability of funding and cost of capital" had scuppered the deal.
The collapse of the£12.50 a share deal led to a massive fall in the company's share price, which ended down nearly 18 per cent Friday as investors were disappointed by the deal's demise.
The company's independent directors announced an increase in the interim dividend from 20p to 22p after the news.
The difficulty in obtaining bank finance has made deals to buy large companies much harder to pull off. Both Harris and the independent directors said the company would continue to focus on existing strategy and growth plans.
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