The company received a bid that it deemed too low considering the potential of the business.
Newco, the group led by Thornton's chairman Christopher Burnett, had been revising its offer after the confectioner reported disappointing first half 2005 results.
Newly appointed interim chairman John Jackson spoke to ConfectioneryNews.com as the long running proposed takeover talks ended.
"The bid from Newco was rejected for being too low. It undervalued the company going forward and also had pre-conditions relating to the company's pension scheme," said Jackson.
The bid had a time restraint, to be completed by the end of January.
Responding to speculation about a possible bid from Icelandic group Baugur, Jackson confirmed that Thornton's had not received a formal approach.
"No bid has been made and we are not actively looking to sell the business. However that's not to say we wouldn't consider a firm offer, but it would have to be at a fair price," Jackson said.
Looking forward Jackson said the company would focus on its retail outlets and enhancing its relationship with supermarkets.
Thornton's will re-launch its Thornton's Direct, delivery business.
Jackson revealed the company had taken onboard new management to oversee the operation and were developing a better website, aimed at being more efficient for consumers.
Jackson, a senior independent director with Thorntons, will act as chairman of the company until a full time executive with retail experience is appointed.
The company will unveil its strategy to turn around poor sales on 21 February when it announces its interim results.
Earlier this month Thornton's announced first half sales of £112.3 million (€163m), a decline of 6.2 per cent compared to 2004, over the company's most lucrative trading period.