Comparison website iSelect will launch a share buyback after takeover talks with its suitor Providence Equity Partners broke down.
iSelect says recent volatility in its health insurance business and management changes means there are "no reasonable prospects" that the company would fetch a fair price.
As a result, the company is recommending discussions with Providence and other parties should now cease, and for iSelect to focus on operational and capital management initiatives.
iSelect will now launch a share buyback over 12 months of up to 10 per cent of the company's ordinary shares on issue.
Shares in the group tumbled more than 11 per cent, or 13.5 cents, to $1.08.
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iSelect chairman Chris Knoblanche says an on-market share buyback funded by the company's cash balance is an effective method of returning capital to shareholders.
"Our strong balance sheet and positive outlook for the business have helped to create this opportunity to consolidate the company's capital base for the benefit of all shareholders," he said.
iSelect has recently gone through a management shake-up with chief executive Alex Stevens resigning on the same day the company announced it had received a confidential and non-binding takeover offer from Providence on October 13.
Mr Knoblanche said the board was also considering seeking shareholder approval to conduct a larger on-market buyback of shares.
He said the company had substantial capacity to undertake further capital management of up to $50 million.
Announcements about further capital management initiatives will be made next year.
