France Telecom has withdrawn its proposed €26.7 billion (US$42 billion) takeover bid for TeliaSonera, which would have created Europe's largest telecommunications company, an Associated Press report said.
The report quoted France Telecom in a statement saying that 'the dialogue opened with the board of directors of TeliaSonera was unable to reach agreement on its financial conditions.'
It also said the deal was 'not essential to the pursuit of its strategy.'
The combined company would have been the world's No. 4 telecom operator, with 237 million subscribers and holdings in developed and emerging markets.
That would have eclipsed Spain's Telefonica, which has some 200 million subscribers, as Europe's biggest telecom provider.
When France Telecom made its informal offer June 5, Stockholm-based TeliaSonera's board unanimously rejected it as too low.
France Telecom had offered 56.225 Swedish kronor a share, which would have valued TeliaSonera at about 252 billion Swedish kronor (US$42 billion).
'As the terms and conditions have not been significantly improved, the board of TeliaSonera maintains its view that the proposal substantially undervalues the company,' TeliaSonera said in a statement.
ABG Sundal Collier analyst Henrik Vikstrom said the France Telecom offer was attractive. He added that the board's rejection of the offer could be an attempt to attract higher bids, but said it would be difficult to find a company prepared to offer more than France Telecom.
The Finnish government, which owns 14% of TeliaSonera stock, said it has complete faith in the decisions of the company's board.