According to a press release posted by Gorenje, Panasonic established that raising its stake in the Velenje-based group above 10.74% and proceeding with the takeover would not be consistent with its current investment strategy.

After the due diligence period running between July and September, Panasonic completed a process of valuation and assessment, taking into consideration all related matters, including current market conditions and Gorenje ownership structure.

"As a result of such valuation and assessment, we concluded that increase of shareholding stake in Gorenje is not consistent with the current investment strategy of Panasonic Corporation," the release cited Panasonic.

It added that Panasonic informed Gorenje that "at the moment it cannot continue activities for increasing the ownership stake in Gorenje and will not continue with the takeover procedure".

Laurent Abadie, the chairman and chief executive officer of Panasonic Europe, told Slovenian reporters in a conference call that raising the stake would be too costly given Gorenje's strong gains on the stock market in the past four months.

Since July Gorenje surged by about 40% on the Ljubljana Stock Exchange.

Abadie also said the decision was not the result of the ongoing investigation of insider trading.

Asked whether the decision could change in the future, he only said Panasonic would retain its current stake of just under 11%.

The management and supervisory board of Gorenje said the decision would in no way affect the goals or development of the Gorenje group as set in its strategic plan.

The release added that within the first year of the strategy's implementation, Gorenje was posting more than 50% growth in operating profit and was projected to wrap up they year with EUR 7.6m in net profit.

The release added that Gorenje and Panasonic would continue with their business cooperation in various fields as planned in the joint strategic partnership agreement.

Panasonic's due diligence has raised a controversy in Slovenia after it transpired that the Gorenje management had delayed the release of the information.

Five days before the news was publicly released on 25 July, Gorenje chairman Franjo Bobinac had informed about Panasonic's plans Prime Minister Miro Cerar.

This raised speculation as to who knew about the insider information and whether anyone may have benefited from it. Potential insider trading is also being probed by the National Bureau of Investigation.

The biggest single shareholder of Gorenje is the state-run Pension Fund Management (KAD) with 16.37%, followed by International Finance Corporation (11.80%) and Panasonic (10.74%).