Women's apparel retailer Talbots Inc said Sycamore Partners, with which it had been in exclusive talks for a buyout, was not prepared to execute a deal at this time.
Shares of the company plunged 23 percent in premarket trading to $1.97. They closed at $2.56 on Thursday on the New York Stock Exchange.
Talbots said it remains open to pursuing a transaction with Sycamore at $3.05 per share, if the private equity firm can provide certainty over closing the deal and financing commitments.
The offer values the retailer at around $215 million.
The company, which also reported first-quarter results, said it was exploring other strategic alternatives.
Cash-strapped Talbots, once a popular destination for its classic fashion, has been consistently lagging competitors Ann Inc and Chico's FAS Inc and its sales have fallen for five years in a row.
Talbots put itself up for sale and opened its books to Sycamore in January, shopping for a higher bid after rejecting the firm's initial offer.
The company is also looking for a successor to outgoing Chief Executive Trudy Sullivan who unsuccessfully tried to reignite growth at the chain with new store formats and cost cuts.
© 2016 Thomson/Reuters. All rights reserved.