British oil and gas producer Capricorn Energy pulled the plug on its planned merger with Israeli gas group NewMed Energy on Feb. 15 after months of shareholder pressure that also toppled Capricorn's leadership.

Activist investor Palliser and some of Capricorn's biggest shareholders had publicly opposed the tie up, and major shareholder advisory groups had also recommended rejecting the plan.

Earlier this month, almost the entirety of Capricorn's board, including its chief executive, were replaced by new directors proposed by Palliser. The new directors announced a strategic review of the company.

"Taking into consideration the views expressed by shareholders... the board has resolved to advise shareholders to vote against the NewMed transaction," Capricorn said in a statement.

"This action is necessary to enable the consideration of all potential strategic options for the company, including the material return of capital to shareholders and potential engagement with respect to alternative options."

NewMed said in a statement the two companies had "mutually agreed" to terminate the transaction.

Eli Samaha, managing partner at Capricorn's biggest shareholder, Madison Avenue, said in an email to Reuters, "Madison is pleased to put this chapter of the company in the past. We look forward to seeing management set a new course." Madison holds just over 8% of Capricorn.

A vote by Capricorn shareholders on the deal planned for Feb. 22 will not take place, Capricorn said.

Under the NewMed deal, Capricorn would have paid out a $620 million special dividend - sourced mainly from an Indian tax payout - to its shareholders, which the previous leadership said would be cut to around $500 million without the merger.

The deal is the second transaction Capricorn has scrapped since September, when it ditched a merger plan with Tullow Oil, also met by strong investor opposition, to pursue the tie up with NewMed.

Vocal opponents of the NewMed deal and Capricorn shareholders Palliser, Kite Lake and Legal & General Investment Management did not immediately respond to requests for comment.

Capricorn shares were down 0.8% at 247.4 pence by 1518 GMT, compared with a broader index of oil and gas firms which was down 0.3%.

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