NEW YORK (Associated Press) - Funeral services provider Service Corp. International said Tuesday that it had withdrawn its $1.5 billion cash offer to acquire smaller rival Stewart Enterprises Inc.

In a letter filed with the Securities and Exchange Commission, Houston-based SCI said it rejected Stewart's demands that SCI finance the entire deal, assume all responsibility and risk for gaining regulatory approval and raise its $11-per-share offer for the Jefferson, La.-based company.

The two sides had been talking about the offer since July 23 after Stewart rejected an earlier offer of $9.50 a share on July 14.

SCI owns 1,300 funeral homes and 350 cemeteries in the United States, Canada and Puerto Rico. Stewart owns 221 funeral homes and 139 cemeteries in the United States and Puerto Rico. In 2006, SCI paid $1.2 billion to acquire Alderwoods Group, another major chain.

The news was announced after markets closed. Stewart shares plunged $2.09 or 29 percent to $5 in after-hours trading, having lost 40 cents or 5 percent to $7.09 in the regular session.

The stocks of both SCI and Stewart are a far cry from their heydays. During the 1990s, chain ownership of funeral homes and cemeteries and advance sales of funeral and burial services turned both SCI and Stewart into much-touted growth stocks.

SCI peaked in the mid-$50s in summer 1996 when its stock split 2-for-1. Stewart stock reached the mid-$50s in spring 1998, when it also split 2-for-1.

But buying sprees of foreign funeral homes did not result in the revenues that had been expected. In 2001, publicly traded funeral providers were forced to restate their earnings after the companies were told by regulators that they could not count revenue from "pre-need" services until the services were actually delivered.

Aggravating the situation was a sharp increase in the number of consumers opting for cremation and other lower-cost services.