Neovia Financial has been forced to abandon a bid to buy the European pre-paid payment services division of IDT Corporation after running into problems with regulators in Gibraltar.
Neovia agreed to buy IDT Financial Services Holdings Limited (IDTFSH) in a cash deal worth £10 million back in in December.
But the company has now issued a statement saying the deal will not go ahead after the Gibraltar Financial Services Commission (FSC) said it was "unable to consent to the acquisition".
The problem centres on a "substantial underlying shareholder" in Neovia who, under Gibraltar banking law would have become a controller of IDTFSH if the deal had gone ahead.
The shareholder refused to provide the FSC with information required in connection with the approval process. This means the FSC has decided it cannot consent to the change of control of IDTFSH to Neovia despite not having any objections to the proposed acquisition.
The company is now reviewing the situation with its advisers and says it will update shareholders in due course.
According to the Neovia Web site, its major shareholders include IIU Nominees, Standard Life Investments, UBS, MF Global UK, Franklin Templeton Institutional, Fidelity, Arron Banks, Cantor Fitzgerald Europe and ABN Amro.
Earlier this month Neovia revealed that president and CEO, Ron Martin was leaving the company for "family reasons".