The Daily Mail has confirmed it has pulled out of the bidding for rival newspaper the Daily Telegraph.
The Daily Mail has dropped out of the bidding for the Telegraph
It said the price had now risen too high for it and bid partner, venture capital firm CVC Capital Partners.
The Daily Mail's withdrawal leaves just two remaining bidders, media tycoons the Barclay brothers and a consortium led by venture capital firm 3i.
The final price for the Daily Telegraph and sister title the Sunday Telegraph may reach as much as £700m ($1.3bn).
Together with the Spectator magazine, they are being sold by newspaper group Hollinger International.
"CVC Capital Partners have been leading a consortium, including Daily Mail & General Trust, which has been having discussions ...relating to the sale of certain assets of Hollinger International," the Daily Mail said in a statement.
"CVC took the decision last night to terminate discussions ... on
the basis of price."
Hollinger is expected to announce the Telegraph's new owner within the next few days, with analysts saying the Channel Island-based Barclay brothers are now the favourites.
However, the bidding process may be delayed following an admission from Hollinger International that it had mistakenly overstated circulation figures for its Chicago Sun-Times newspaper over several years.
UK's best-selling broadsheet
Circulation of 873,181
Editor - Martin Newland
Up for sale from US-based Hollinger International
Bought by former Hollinger boss Lord Black in 1985
Hollinger says it is now trying to pinpoint what caused the errors and said that similar investigations at the Daily Telegraph and Sunday Telegraph had not revealed any erroneous circulation figures.
New York-based Hollinger was previously led by controversial media baron Conrad Black - who back in January tried and failed to sell the Daily Telegraph behind the company's back.
Lord Black agreed to sell the paper to the Barclay brothers for a knockdown £245.1m.
This move was however blocked by a Delaware judge and Hollinger announced that the Telegraph would be sold under open auction.
Hollinger had earlier removed Lord Black for receiving unauthorised payments and the two remain locked in an outstanding court battle over the affair.
The newspaper group's £680m lawsuit accuses Lord Black of "racketeering" by using the company's money to support his lifestyle and taking more than £16m in unauthorised "non-competition" payments.