French telecom provider Iliad announced on Monday that it had canceled its plan to buy a larger stake in T-Mobile US. The company is the third to walk away from the carrier.
Plans of purchasing more than half of T-Mobile's shares started in August when Iliad offered $15 billion in cash, or $33 per share, to counter the Sprint-T-Mobile merger. Eventually, the merger was canceled after receiving opposition from individual competitors who argued that the merger will create an impossible competition in the market.
Iliad CFO Thomas Reynaud confirmed that it was in talks with different private equity firms and companies that want to be part of the acquisition deal with T-Mobile. The company executives set up a meeting with Deutsche Telekom, owner of T-Mobile US, to reach an initial agreement.
Now, Iliad decided to withdraw from the deal as Deutsche Telekom seemed to be uninterested in its offer, even if the company has received financial support from banks and private companies, according to the Wall Street Journal.
However, T-Mobile US rejected Iliad's offer because of credibility issues. The French company decided to raise its offer to $36 per share to take over 67 percent of the U.S. carrier, but this did not change the decision, the New York Times reported.
News of the canceled deal caused T-Mobile's shares to plummet by 4.3 percent at $26.41, making it the lowest since last year.
T-Mobile felt that Iliad was not capable of running a business, and thought it would be wiser not to sell it in order to keep it running, according to sources from Reuters.
"It would not have made any sense to leave Deutsche Telekom with still a large stake of equity exposed to a company they have serious doubts about," the person said.
Both T-Mobile US and Deutsche Telekom refused to comment, while Iliad has released a statement that it will "continue its profitable growth policy as it has been conducted over the last 15 years."
