European private-equity firm Permira has dropped its plan to make an offer for British books and music chain WH Smith (WHS). In a statement issued Friday, WHS said it would continue to pursue its turn

European private-equity firm Permira has dropped its plan to make an offer for British books and music chain WH Smith (WHS). In a statement issued Friday, WHS said it would continue to pursue its turnaround strategy and would push for the demerger of its Hodder Headline publishing arm.

"We can now focus fully on our turnaround plans for the U.K. retail High Street business and deliver value for our shareholders," WHS CEO Kate Swann says in the statement. WHS stock closed down 7.6% at 290p on Friday.

The U.K. takeover panel had previously imposed a deadline of Aug. 9 for Permira to make an offer for WHS. Talks stalled in June after both parties failed to reach an agreement over the 545-store retailer's pension-fund trustees.

WHS' sales have eroded in recent months, due in part to competition from supermarkets, e-tailers and entertainment specialists. Earlier this year, the chain signaled its plan to eliminate the singles format from its racks in favor of focusing its entertainment offerings on albums and DVDs.

According to labels body the British Phonographic Industry, WHS had a 4.7% share of the British albums market in value terms durin 2003, and a 7.3% of the singles market.