Hong Kong's bourse today scrapped its unsolicited $39 billion approach for London Stock Exchange Group.
The move comes after HKE failed to convince LSE management to back a move that could have transformed both global financial services giants.
The surprise cash-and-shares approach, made last month, had threatened to upend the LSE's own $27 billion plan to buy data and analytics company Refinitiv.
The Hong Kong Exchange had said the LSE would have to ditch the Refinitiv purchase for its offer to go ahead.
"We still believe the strategic rationale for the combination of our two businesses is compelling and would create a world-leading market infrastructure group," HKEX chief executive Charles Li said.
"Despite a huge amount of work and discussions with a broad set of regulators and extensive shareholder discussions, the level of engagement from LSEG led us to conclude that the continued pursuit of a combination of the two businesses would not be in the best interests of our own shareholders," Lie added.
Refinitiv is 45%-owned by Thomson Reuters which owns Reuters News.
The approach's chance of success had been viewed by analysts as slim after it was emphatically rejected by the LSE just two days from the HKEX going public with its interest.
The political turmoil engulfing Hong Kong, and perceptions of Beijing's growing influence over the city, were seen as another key obstacle to any deal.
Subsequent efforts by HKEX officials to engage with LSE shareholders had also met with resistance.
Some investors told Reuters the HKEX would have to raise its offer by at least 20% - mostly in cash - to tempt LSE shareholders.
Since the HKEX went public with its interest in mid-September, its shares had fallen 8%, compared with a 5% drop in the Hang Seng benchmark.
The failure of the bold move leaves open the question of what Li might try next to fulfill the HKEX's strategy of being "China-anchored and globally connected".
The HKEX has been the world's largest capital-raising venue in five of the past 10 years, but has been working to diversify its equities focus, launching a bond trading platform with China and buying the London Metal Exchange in 2012 for £1.4 billion.
Under British takeover rules, the HKEX had until October 9 to make a binding offer for LSE.
The withdrawal of the approach means it cannot bid again for the LSE for at least six months unless the LSE's management agreed to an offer, another group made a bid for the London exchange operator, or other events were deemed to be a material change in the LSE's circumstances.