Retail entrepreneur Philip Green has dropped plans to bid for Marks & Spencer.

The news follows allegations of insider share dealing, which centred on Mr Green and his wife.

He said a takeover in the current circumstances could damage the M&S public image.

Mr Green later said that he had secured finance for a bid, but then decided last night not to push ahead with the deal.

"Having thought about it carefully I felt that the climate was not right at this time. My finance was 100% firm last night and it was solely my decision not to proceed," he said.

M &S shares dived on the news, with the stock down almost 8% or 19 pence at 233 pence.

Share dealing controversy

Earlier this week, Mr Green denied allegations of insider dealing, claiming they were part of a campaign to discredit him.

Late last year, Mr Green announced his interest in buying Marks & Spencer. The news sparked a rally in the company's stock, which had been hit by the slump in profits.

A few days previously, his wife had bought shares in the company and is now estimated to be sitting on a profit of £2.5m.

The news of Mrs Green's stake emerged at the weekend.

In a statement to the Stock Exchange on Tuesday, Mr Green said he had "behaved entirely properly throughout this matter, complying with all the relevant laws and regulations".

Door left open

Mr Green said he reserved the right to make a bid for Marks & Spencer if an offer was made by a third party.

The slump in profits and shares has meant that the retailer has long been seen as a takeover target.

Last month, it appointed a new Belgian boss, Luc Vandevelde.

Charged with the job of turning the company around, many hope that Mr Vandevelde will also act to boost the company's defences against attack.

Mr Green's reputation as an entrepreneur was sealed when he completed a buyout of Sears.

He and a consortium of investors, which included the Barclay brothers, bought the company for £548m. His sales of the different parts of Sears, which included Miss Selfridge, Wallis and Warehouse, raised £729m, a profit of £181m for Mr Green and his backers.