Australian underwear manufacturer Pacific Brands (PBG.AX) said takeover talks with suitors including KKR & Co (KKR.N) have ended without an offer being made, sending its shares down nearly 10 percent, as the dour retail outlook put off buyers.

Private equity giant KKR & Co made a buyout approach in January that local reports said could be worth $614 million for the struggling maker of Bonds underwear, Berlei bras and Sheridan sheets.

Pacific Brands said that after KKR's approach, it received unsolicited approaches from several other parties. Sources told Reuters those included rival global private equity firm TPG Capital TPG.UL.

"Having explored these enquiries, the board of Pacific Brands has concluded that a definitive proposal for the acquisition of the entire issued capital of the company is unlikely to be forthcoming in the near term," the company said in a statement.

Global private equity firms have been drawn to Australia's beaten-down retail and industrial firms this year after sharp share price declines, but with little success.

Company boards have proved hard to win over, reluctant to sell at depressed share levels. The non-mining sectors of Australia's economy have struggled under a strong currency, high interest rates and cautious consumers.

Australian surfwear company Billabong International (BBG.AX) rebuffed a revised $904 million takeover bid from TPG Capital in February, which was a 10 percent increase on TPG's initial offer, saying it was still too low.

The biggest successful privatization in two years was sealed by local firm Pacific Equity Partners (PEP), which bought business services company Spotless Group (SPT.AX) for $720 million last month after first winning support from 19 percent of shareholders.

Multiple parties had conducted due diligence on Pacific Brands, a person familiar with the situation told Reuters.

KKR generally holds strict financial discipline criteria, which would include not overburdening the business with a high debt load, another source told Reuters. Both people spoke on condition of anonymity.

Sources told Reuters in February that rival buyout firm TPG Capital had held initial discussions with a group of eight banks to fund a takeover bid for Pacific Brands.

Bankers said the protracted slump in Australia's retail sector meant the amount of debt that could be used in a buyout would be limited.

Pacific Brands said on Tuesday it would continue to focus on its top brands, including selling Berlei bras online and opening the first retail store for Bonds to offset declining sales to department stores, which have been ramping up their home brand offerings.

The manufacturer also reaffirmed its outlook that earnings and net profit before one-off items are expected to be materially down in the second half, compared with the first half, due to weak retail conditions.

The shares, which had jumped 14 percent in January when KKR first approached the firm, dropped 9.7 percent to A$0.56 at 0010 GMT. The shares were trading above A$1 in February 2011.

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