Resource Pacific shares soared last week after it was announced Xstrata had initiated an off-market takeover bid for the company, offering $A2.85 cash for each share.
This topped New Hope's bid of 0.94 New Hope Corporation shares to be paid for each Resource Pacific share.
New Hope chairman Robert Millner announced yesterday that the company would not seek to better Xstrata's offer and had applied to the Australian Securities and Investments Commission to withdraw its offer.
If the application is not approved, New Hope will not extend its offer when it closes on February 1 of next year.
Millner said that given the production problems at Resource Pacific's only mine, Newpac, and the company's lack of synergies, New Hope's offer was reasonable.
"We have shown that by increasing our saleable coal production by 24 percent in the first quarter that we have the management to turn around an underperforming mine like Newpac; however, we will not overpay for assets," Millner said.
After shelving the takeover effort New Hope will instead focus on accelerating the development of its New Saraji project in central Queensland.