Jugos del Valle, Mexico's largest fruit juice producer, has said it has withdrawn from negotiations with US food group, Kraft Foods Inc., regarding the latter's proposed takeover of the company, after they failed to agree on price. The announcement precipitated a 40% fall in the juice company's shares.

In July, the two companies announced a non-binding agreement for Kraft to acquire 100% of the company. But on Friday, the Mexican company said the deal was off after its majority shareholders said they would not extend the deadline for negotiations on price.

"This potential operation is suspended indefinitely," Jugos del Valle said in a statement. "The company has been and will be in a position to analyze other business alternatives, including the possible sale of the company, and will continue with its investments and growth plans."

Kraft said that the talks ended "because the two companies were unable to reach mutually satisfactory terms."

Although the subsequent drop in the Jugos share price makes the company more attractive to potential buyers, analysts said the market would be cautious when Jugos, which had turnover of Ps3.52 billion ($354m) in 2001, is next in negotiations regarding a takeover. Indeed, Jugos has previously had talks with Coca-Cola, which also came to nothing, and has also been linked with Cadbury-Schweppes and PepsiCo.

In spite of the apparent disparity between the value put on the company by its controlling shareholders and would-be buyers, the company is still thought to remain a takeover target for a multinational group.