PartyGaming has pulled out of its bid to take over rival online gaming operator Empire.

A spokesperson for PartyGaming, which made an offer of 60p per share for Empire, confirmed that discussions between the two companies had been terminated.

PartyGaming's offer fell far short of Empire's 175p float price, and the deal would have valued the group at around £370m - significantly less than the £790m takeover offer made by Sportingbet in September, which has since been pulled.

“We made an offer which in our view reflected Empire's prospects together with potential synergy benefits,” said a spokesperson for PartyGaming.

The announcement was followed by a statement from Empire, in which the company said it would be suing PartyGaming for pulling out of using Empire as a ‘skin' website.

In October, PartyGaming set up a new standalone operating platform and cut its ties with third party skin websites - including Empire - which used to direct traffic to the business.

Since the launch of the new platform, Empire has experienced a sharp slowdown in poker revenues, while PartyGaming reported a 10 per cent increase in daily gross poker revenue, compared to the average for the third quarter this year.