French telecommunications provider Iliad has scrapped plans to acquire U.S. mobile service provider T-Mobile.
The news comes after Deutsche Telecom, which currently owns T-Mobile, rejected an improved bid from Iliad.
"The Iliad group announces that it puts an end to its project of acquiring T-Mobile US, following exchanges with Deutsche Telekom and selected board members of T-Mobile US who have refused to entertain its new offer," said Iliad in a statement.
The jilting comes just a few months after Sprint dropped its plan to merge with T-Mobile, which had sparked concerns over market dominance in the U.S. Deutsche Telecom has missed three chances to sell T-Mobile in as many years, including a bid from AT&T in 2011 that was called off because of regulatory concerns.
According to a source close to the matter, Iliad's improved bid valued T-Mobile at $36 per share, including cost savings, and was for 67 percent of the company. Not counting the synergies, the bid remained at $33 per share. Iliad made a bid for 56.6 percent of the company in August for $15 billion. This offer also valued the company at $33 per share and was rejected as too low.
"Thank God this is over," said Heinz Steffen, an analyst at Fairesearch GmbH in Germany. "The offer was a joke. I think Iliad really meant it seriously, given the resources they invested in the process, but it was a desperate attempt of the small guy buying the big guy."
Despite the fact that selling T-Mobile would allow Deutsche Telecom to focus more on its European business, the board was reportedly split on whether or not to sell its sole growing asset. According to people close to the matter, Deutsche Telecom will wait until a U.S. frequency auction in November before deciding what to do with T-Mobile.
T-Mobile says that it expects to overtake Sprint as the third-largest carrier in the U.S. before the end of the year.
Iliad will now focus only on its operations in France. Recently the company gained market-share in France due to a strategy that involved slashing mobile and landline package prices. This pushed the company's stock to the highest that it has been since 2004.
It is unclear whether or not Iliad will pursue other projects. The company recently tried to consolidate the French market by attempting to buy Bouygues' mobile network, while Bouygues tried to buy Vivendi's SFR. That plan failed when Vivendi sold SFR to Numericable Group SA.
After the announcement, shares in T-Mobile fell 3.8 percent to $26.59.
