IWG gave its three other suitors - TDR Capital, Terra Firma and Starwood Capital - more time to make firm offers or walk away from bids for the company on Saturday.

TDR Capital, Terra Firma and Starwood Capital now have until Aug. 7 to declare their intentions after IWG asked for a deadline extension from Britain's takeover regulator.

IWG did not immediately respond to a request for comment on Prime dropping the pursuit.

California-based Prime said in May that IWG had rejected its takeover offer approach. Prime said then that it was considering making another offer for IWG.

FTSE 250 <.FTMC> firm IWG, worth 2.75 billion pounds, has been a takeover target for months, with Canadian firms Onex Corp and Brookfield Asset Management making a joint approach for IWG in December. Their takeover talks failed at the start of February.

The battle for IWG comes amid growing interest in the flexible workspace industry as working habits change and the demand for office providers grows. Last year, IWG rival WeWork secured a $4.4 billion investment from Japan's SoftBank group.

IWG was left vulnerable to bid approaches after its shares tumbled last October, when a profit warning rattled investors. The company blamed a slowdown in the London market and the impact from natural disasters overseas.

IWG, founded in 1989 by British entrepreneur Mark Dixon, also warned in June that 2018 profit would be hit by the cost of opening new sites and a weak performance in Britain.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri)