Iliad, the French telecoms group controlled by billionaire Xavier Niel, has withdrawn its offer to acquire a majority stake in T-Mobile US, the US telecoms business controlled by Deutsche Telekom.
The company said on Monday night that a fresh bid that raised its offer to buy two-thirds of T-Mobile at a value of $36 a share had been rejected by the German group and management of the US business.
Iliad surprised the market with an initial approach for 56.6 per cent of the company at about $33 a share in July - valuing the deal at about $15bn - although the offer was rebuffed by Deutsche Telekom.
In response to the initial rejection, Iliad said that it had pulled together a consortium with two private equity funds and international banks "allowing it to improve significantly the terms of its offer by enhancing the cash amount and increasing the share of T-Mobile US's capital".
However, after the latest rebuff, Iliad said that it had "put an end to its project of acquiring T-Mobile". Shares in T-Mobile fell 2.9 per cent to $26.82 in mid-afternoon New York trading, with most of the losses coming after Iliad's withdrawal notice.
The withdrawal of Iliad means that a takeover offer for T-Mobile has fallen through for the third time in three years. Deutsche Telekom has in the past held failed talks to sell the business with both AT&T and Sprint.
Those familiar with the thinking at Deutsche Telekom have consistently maintained the Iliad offer was too low, given that the company had already held conversations about a potential sale to Sprint at about $39 a share.
One person added that the German group did not see itself as a forced seller, as the US group was expanding its customer base on the back of a revitalised "challenger" strategy led by chief executive John Legere.
Iliad is likely to return its refocus to the French market where it has continued to increase market share by cutting costs. The withdrawal will also return attention to prospects of consolidation of the country, where Bouygues Telecom is under significant pressure to consolidate with rivals such as Orange or Iliad.
While Mr Niel has failed in his attempt to acquire a significant foothold in the US, the bid for T-Mobile has drawn greater global attention to the French entrepreneur's success. Shares in Iliad lost almost 16 per cent of value after the group confirmed the bid for T-Mobile.
Iliad said that its bid had been based on an "ambition to accelerate T-Mobile US's transformation", notably by saving more than $2bn of cost annually. "This transaction would have created significant value for both Iliad's and T-Mobile US's shareholders," it said.
However, analysts had been sceptical about such cost savings given T-Mobile was already being run as a low-cost business similar to the strategy laid out by the French group.
Analysts believe that T-Mobile will continue to attract bid interest in future, with other potential suitors such as the SoftBank-controlled Sprint as well as Dish.
Mr Legere, however, has said he was "sick and tired" of the speculation.
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