Mobile phone giant Vodafone today said it had pulled out of the multi-billion pound auction for US operator AT&T Wireless.
The group, which is believed to have submitted a bid worth £18 billion, said it withdrew from the race this morning after deciding it was no longer in the interest of shareholders.
Vodafone had been locked in the bidding war with US rival Cingular after first revealing its interest in AT&T last week.
The news was greeted with relief in the City, which feared the group was overpaying for the company, with shares rising more than 6%.
A statement to the London Stock Exchange added: "Vodafone remains committed to its existing position in the US market with its successful partnership in Verizon Wireless."
The board of AT&T, which announced the company was up for sale three weeks agofollowing a string of poor results, reportedly met last night to discuss thebids.
Vodafone and Cingular were thought to have made offers of 35 billion US dollars (£18.4 billion) at the weekend and then returned with revised bids.
Vodafone is understood to have made a final offer of 38 billion US dollars (£20 billion) for the third largest operator in the US - a sum that Cingular was expected to match.
Analysts had voiced concerns about the takeover as it would force Vodafone to give up a profitable stake in US firm Verizon Wireless.
They also criticised the "poker tactics" of the company in refusing to confirm officially that it had made a bid.
Cingular - a joint venture owned by US telecoms giants SBC Communications and BellSouth - would generate cost savings from overlaps with its existing business.
But market watchers said Vodafone was unlikely to reap similar benefits and was pursuing a bid because it wanted direct control of a US operator rather than a minority stake.
The bidding battle became a two-way race after Japanese firm NTT DoCoMo - which has a 16% stake in AT&T - decided on Friday not to make an offer.Reuse content