In a statement on Friday, Mermaid said it had advised DP World Australia (formerly P&O Australia) that a merger of their respective marine service businesses was no longer attractive due to a “substantial change in circumstances”.

“Since the merger was announced, Mermaid’s financial performance has substantially exceeded expectations,” company secretary Peter Raynor said.

“In Mermaid’s view, the outperformance is such that the agreed merger ratio is no longer appropriate and is not in [shareholders’] best interests.”

Nearly two weeks ago, Mermaid released figures showing a half-year profit of $8.5 million for the first half of 2006, sharply up from the $2.1 million posted in the previous corresponding period.

Meanwhile, revenue for the six months almost doubled to $51 million, reflecting improved margins and growth across all divisions, it said.

“Mermaid had an excellent earnings performance in the first half of FY 2007 and continues to trade strongly with a number of exciting opportunities emerging,” Raynor said.

“There is an unprecedented scale of potential new developments planned in the northwest and Browse Basin regions and the company is well-positioned to take advantage of these opportunities.”

Just before Christmas, Mermaid announced it planned to merge with P&O to create what it said would be Australia’s leading diversified marine services company.

The merger would have seen Mermaid issue 221.9 million shares to DP World in return for 100% of the shares in P&OMS, P&O Maritime Services (PNG) and P&O Polar Australia (the P&OMS Group), subject to the approval of shareholders.