A multimillion euro management buyout of Irish software company Propylon's US business, which was to be backed by Fidelity Investments, has fallen through.

In a letter sent to Propylon shareholders, Propylon chief executive Paul McKeon says the sale process continued up to early December but "at that stage it was decided that the proposed sale would not proceed".

Mr McKeon goes on to say that the directors of the company are now considering the financing options to grow the business in the US and that he will contact shareholders in the near future with further details.

Speaking yesterday Mr McKeon said it would probably be towards the end of the year before the company looked at raising further funding.

He said the buyout approach was unsolicited but had been considered by the board of directors.

"We are not looking to sell any business," said McKeon. "It's business as usual for us."

Mr McKeon also said the software firm, which was profitable in 2005, will report a small loss in 2006 having funded expansion in the US market where it signed up three large customers.

Propylon's Legislative Workbench suite of applications assists parliamentarians in the creation and publishing of legislative documents. The company's first major US customer was the state of Pennsylvania, which signed a deal worth €6 million in 2004.