LONDON (Bloomberg) - Chrysalis Group plc., which sold its radio unit in July to focus on music publishing and recording, fell the most in almost 16 years in London trading after rejecting a takeover offer of £1.55 a share.

The offer "significantly undervalues" Chrysalis, the company said in a statement, without identifying the bidder. The company, which owns the publishing rights to Blondie, David Gray and Outkast, ended a search for a buyer, saying it can't get maximum value for its assets because of "global economic and credit market conditions."

Chrysalis fell 20 pence, or 15 percent, to £1.15 in London, valuing it at £77 million ($151.6 million). The decline was the biggest since July 1992.

"The market was expecting the deal," Richard Menzies-Gow, an analyst at Dresdner Kleinwort, said in a telephone interview yesterday. "The credit markets don't help. It's not the best environment to have an offer and reject it, pushing for a higher price." He cut the stock to "hold" from "buy."

Chrysalis said on December 5 it was in talks that may lead to a sale. The London-based Times reported March 14 that EMI Group Ltd., controlled by financier Guy Hands, was the bidder for the music-publishing unit.

Chrysalis sold its radio unit, including the Heart 106.2 radio station, for £170 million to an investment company chaired by former ITV plc. CEO Charles Allen. Chrysalis's music-publishing unit generates revenue through album sales, copyrights of songs and their use in films, television programs, computer games and mobile-phone ring tones.

Chrysalis will review non-publishing operations for possible sale, with any proceeds to be used to reduce debt, according to yesterday's statement.

Earnings in the first half ended on February 29 were in line with management's targets, Chrysalis said.

The company reiterated comments from November and January that a "relatively quiet" schedule of music releases led to a weaker first half for music publishing versus a year earlier.

Net publisher's share, or the royalties received from songs after payments to composers, probably fell 10 percent in the first half, Chrysalis said. For the year ending on August 31, net publisher's share will be "slightly lower" than a year earlier, the company said.

The collapse of the US sub-prime mortgage market is threatening to stifle economic growth and making financing harder to obtain for deals such as the Chrysalis sale.