Osaka Prefecture has canceled the ?78.1 billion sale of a commuter rail line after local lawmakers rejected U.S.-based Lone Star Funds as the winning bidder, according to a source.

The prefectural government hasn¡¯t decided whether to start another auction of Osaka Prefectural Urban Development Co., said the source, who asked not to be identified as the matter is private.

On Monday, 53 of the 104 members of the prefectural assembly voted against Lone Star¡¯s offer to buy the prefecture-owned railway and logistics firm.

The company operates Senboku Rapid Railway, a commuter line in Osaka used by more than 50 million people annually.

The cancellation of the sale follows opposition in cities along the Senboku Line, including Sakai, where officials have said Lone Star¡¯s pledge to cut the transit fee by ?10 wasn¡¯t enough. Dallas-based Lone Star was picked as the winner last month by a government committee, beating offers from Fortress Japan Investment Holdings LLC and Nankai Electric Railway Co.

¡°One concern is that investors could pull back from future investment opportunities in Osaka¡¯s infrastructure assets and shift more of their focus back to Tokyo, which is getting the spotlight as the host of the 2020 Olympics Games,¡± said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.

Kazuyo Tsuji, a spokeswoman for the Osaka Prefectural Government, said she hasn¡¯t been informed of any future plan for the company. A person who answered the phone at Lone Star¡¯s Tokyo office said she wasn¡¯t authorized to comment.

Nankai Electric offered ?72 billion for Osaka Prefectural Urban Development, while Fortress Japan bid ?73.4 billion. The Osaka Prefectural Government owns 49 percent of the company, with the remainder controlled by private investors, including Osaka Gas Co. and Kansai Electric Power Co.

Yasuzo Yoshida, a prefectural assembly member who represents the Democratic Party of Japan, questioned whether a foreign investment fund seeking short-term profits could manage a railroad business safely.

Osaka Prefectural Urban Development, founded in 1965, runs the express commuter line in the Osaka Bay area and operates two logistics centers.

Lone Star, founded by John Grayken, pledged to boost Osaka Prefectural Urban Development¡¯s profitability and improve services, and planned to sell the company in an initial public offering after five years, according to a statement last month from the prefectural government.