Trace said on 20 April that it had agreed a 135 pence-per-share takeover bid from management buyout vehicle Tulip Holdings. But shortly afterwards Microgen disclosed that was in talks about a counter offer for the vendor and followed up with the 155 pence-per-share bid.

Tulip came back with an increased bid of 156 pence-per-share, but Microgen trumped that offer with a new 180 pence-per-share bid.

Microgen managed to buy 25.83% of Trace and get valid acceptances in respect of around 45.70% of Trace shares, but its offer for the vendor lapsed yesterday as a result of insufficient acceptances from shareholders.

Microgen says Trace independent director Colin Clarke, who holds a 10% stake in the group, had given an undertaking to accept its bid once his existing irrevocable commitment to Tulip's revised offer had lapsed.

But the Tulip offer wasn't withdrawn and didn't lapse, leaving the management vehicle with valid acceptances representing 48.87% of Trace and beneficial ownership of 1.19% of the vendor.

Microgen says Clarke's shares in Trace would have given it sufficient acceptances to declare its offer unconditional.

In a statement Microgen chairman, Martyn Ratcliffe, says: "The Microgen increased cash offer represented a significant premium over any other offer made to Trace Shareholders and was unanimously recommended by the independent directors of Trace. It is disappointing and highly unusual that such a unanimously recommended offer was compromised by the undertaking provided by one of the independent directors to an ultimately unrecommended competing offer."

Update

In a statement released by Trace Group on 2 August, the independent directors of the company say they are disappointed that Microgen's bid of 180 pence per share failed.

However, they say they do "welcome the fact that the announcement from Tulip brings to an end this unsettling period for the company."