Adds analyst comment in paragraph 7

By Neeshita Beura

June 5 (Reuters) - Apollo Global Management APO.N and Britain's Bodycote BOY.L have ended talks over a £1.52 billion ($2 billion) takeover proposal, they said on Friday, sending shares of the British thermal processing services group down as much as 12%.

The U.S.-based asset manager had submitted an all-cash bid to Bodycote two weeks ago following several approaches, sending its shares surging as the 885 pence per share offer represented a nearly 27% premium to the closing price before the bid was disclosed.

Despite Friday's losses, the biggest in the FTSE 250 index .FTMC, Bodycote's share price is up about 5% this year.

Several UK- and Irish-listed companies have in recent years attracted interest from overseas buyers for their relatively cheap valuations. However, global markets have been rattled by the Iran war, prompting businesses to conserve cash.

Apollo said in a statement on Friday it did not intend to make a firm offer for Bodycote, giving no reason for the decision but adding it continues to hold Bodycote and its management in high regard.

The asset manager cannot make another approach for six months under British takeover rules, except under some specific conditions.

"We think the Apollo interest has, in the very least, validated our long-held view that the market undervalues the quality of Bodycote's businesses and the strategic transition underway," Berenberg analyst Andrew Simms said.

Bodycote said it was no longer in an offer period and was confident of its strategy.

"The Board of Bodycote has strong confidence in Bodycote's potential and its strategy to create a high-performing, resilient business with attractive growth prospects."

The company provides heat treatment and other metal processing services to improve the performance and durability of metal components used in sectors including aerospace, defence, automotive, and energy.

Last week, Bodycote maintained its full-year 2026 guidance, adding that it remained mindful of ongoing geopolitical uncertainty and would continue to tightly manage costs.

($1 = 0.7450 pounds)