The Dubai-based engineer Dar Al-Handasah, known as Sidara, had been pursuing the firm for several months.

Wood Group shares fell by 73p, or 37 per cent, to 123¾p - the lowest level since December 2022.

Sidara blamed increasing geopolitical risks and financial market uncertainty for its inability to continue the takeover plans.

In May, Sidara had three approaches rejected after it was accused of undervaluing the business and its prospects before the Wood board agreed to engage on a potential 230p-a-share deal in June. Wood opened its books to its Dubai-based rival, which had until August 9 to announce a bid or walk away, The Times reports.

A spokesman for Sidara said: “In light of rising geopolitical risks and financial market uncertainty at this time, Sidara does not intend to make a firm offer for Wood.”

In a statement following the announcement, Wood Group said that the board remains confident in Wood’s strategic direction and prospects next year.