The board of Hammerson, the owner of Birmingham’s Bullring shopping centre, has abandoned its planned buyout of smaller rival Intu, the company behind Manchester’s Trafford centre.

After weeks of pressure from shareholders, Hammerson’s directors said they believed the £3.4bn deal with Intu was “no longer in the best interests of shareholders”, blaming a deterioration in the British retail property market and concerns about a lengthy merger process.

The deal is now unlikely to go ahead but Hammerson can only advise shareholders to vote against it as it cannot formally withdraw at this stage without agreement from Intu. Intu’s board said it would consider a request from Hammerson not to convene a shareholders’ meeting to vote on the merger.

No date has been set for a vote because Hammerson delayed publication of documents relating to the acquisition earlier this month after receiving a takeover approach from the French shopping centre firm Klépierre.

Nick Bubb, an independent retail analyst, described the about turn by Hammerson’s board on the Intu deal as “embarrassing”.

The move comes after a series of mass store closures by retailers including New Look and Toys R Us, with more planned by Carpetright, Mothercare and Homebase.

David Atkins, the chief executive of Hammerson, said: “It is clear that the heightened risks to the Intu acquisition now outweigh the longer-term benefits. We have a clear strategy that has delivered consistent, strong returns on a standalone basis.”

Hammerson’s share price has fallen by 5.4% since the December announcement of the proposed tie-up with Intu as well as the collapse of the takeover approach from Klépierre. The French company ditched its takeover plans last week after Hammerson’s board rejected its £5.04bn offer as “wholly inadequate”.

In an announcement to the stock market about the Intu deal on Wednesday, Hammerson said it “has proven its portfolio is well positioned to weather the current environment” but “the equity market now perceives a heightened level of risk associated with the UK retail property sector as a whole”.

It added that “extensive engagement” with shareholders, particularly in recent weeks, had revealed a “wide range of views on the merits of the Intu acquisition”.

Intu said it regarded Hammerson’s explanations for withdrawing its backing for the merger as unsatisfactory, adding that it had been pursuing the deal in good faith since its announcement on 6 December last year.

“The board of Intu is entirely confident of Intu’s commercial future and prospects,” it said, adding that a trading update issued on Tuesday had “underlined the key strengths of Intu’s business”.