National Express said its annual profits will be below expectations
National Express has said that all talks of a merger with rival Stagecoach have now ended.
"It is unlikely that a combination with Stagecoach could be successfully executed in 2009, even if appropriate terms could be agreed," it said.
Stagecoach had approached the train operator about a tie-up with the East Coast Main Line operator this month.
Stagecoach said it was "extremely disappointed" that National Express decided against its offer.
"Stagecoach believed that there was a compelling strategic and financial proposition for a combination which would have represented a unique opportunity to deliver incremental value for both sets of shareholders," it said.
Stagecoach, which operates South West Trains and East Midlands Trains, had made a new all-share offer for its rival.
National Express said that it intended to raise funds by issuing more shares "as soon as possible".
It warned last week that its full-year profits are set to fall below expectations because of higher interest costs and lower profits at its North American business.
Earlier this month, a group led by its largest shareholder, Spain's Cosmen family, withdrew a £765m takeover offer.