SYDNEY — Australian department store group David Jones Ltd. said Monday that British and Luxembourg-based investment fund EB Private Equity has withdrawn its 1.65 billion Australian dollar, or $1.69 billion, takeover bid for the retailer.

This story first appeared in the July 3, 2012 issue of WWD. Subscribe Today.

“The company has been informed via letter this afternoon that EBPE has decided to withdraw its proposal,” David Jones said. “The EBPE letter states that recent publicity around its proposal has made it difficult to proceed.”

David Jones revealed Friday it had received a takeover offer, sending its stock price soaring almost 20 percent, before closing at 2.59 Australian dollars, or $2.65 at current exchange, or 14.6 percent.

Over the weekend and Monday morning, Australian media and investors questioned the credibility of the bid as no one had heard of the private equity player. Some observers went as far as to characterize it as a hoax.

Trading in David Jones’ shares was suspended mid Monday pending an announcement. Earlier in the session, they slumped 7.7 percent. When they reemerged from the trading halt, the shares slumped by more than 13 percent, closing at 2.33 Australian dollars, or $2.38.

Although the Australian Securities and Investments Commission had no comment, it is now widely anticipated the regulator will look into the matter.

Among questions being asked: why didn’t the Australian Securities Exchange order a trading halt earlier? Who is behind the obscure British blog that was set up just a fortnight earlier and broke the news? And of course, who is John Edgar, the fund’s chairman, and what is EBPE?

Linked to a series of abandoned U.K. shelf companies, Edgar, a 41-year-old Scot, is listed in British company records as a director of the two-year-old Luxury Beverage Co. Ltd., which last year claimed to have produced the world’s most expensive whiskey and the world’s first “luxury halal” drink, aimed at the United Arab Emirates market: the $6.2 million Isabella’s Islay and the $5.5 million non-alcoholic Ruwa, both sold in diamond- and ruby-encrusted crystal decanters.

Coming forward to quell the hoax speculation, Edgar told The Australian Financial Review that EBPE is a property-focused fund with $200 million under management, which has done deals in Europe, Africa and North Africa. Edgar said he was talking to potential capital and finance partners and made an initial approach to David Jones in May for 1.52 billion Australian dollars, or $1.56 billion, increasing the offer last week to 1.65 billion Australian dollars, but had not expected the offers to be made public. Edgar said EBPE’s primary interest was David Jones’ property portfolio, valued by analysts at 600 million to 750 million Australian dollars, or $614 million to $768 million.

“It was a damned if they [David Jones] do, damned if they don’t type situation,” said Morning Star analyst Tim Montague-Jones. “If it got leaked out to the press that there was an offer, then they had to provide the information to the wider investment community. They did tell people to be cautious about it.”

According to Professor Ian Ramsay, the director of the Centre for Corporate Law and Securities Regulation at the University of Melbourne, the incident is unprecedented among ASX Top 200 companies.

“I haven’t seen anything quite like this one,” said Ramsay. “I don’t think it has damaged their [David Jones’] credibility. But I think it’s probably damaged a little bit of faith in the share market, if anything. This is the sort of thing that regulators need to stamp on. I do think there is a clear need for an active investigation of Jones’ shares in the period between the leaking of the information and the trading halt.”