(Bloomberg) -- Iliad SA said that Vodafone Group Plc rejected a revised offer to combine the two companies’ Italian businesses, ending its bid to consolidate in one of Europe’s most competitive telecom markets.

In its latest bid, Iliad offered Vodafone an additional €100 million ($108 million) in cash, for a total of €6.6 billion, and gave up its previous demand for options that would’ve given the French carrier a way to gain greater control over the proposed joint venture, the company said in a statement on Wednesday. 

Read More: Iliad Bids for Vodafone Italy Control at €10.5 Billion Value

“We said in December that we are exploring options with several parties in Italy,” a Vodafone spokesperson wrote in an email. “We are no longer in talks with Iliad, but our discussions with others continue.” 

Still, Iliad’s exit leaves the UK-based company with fewer escape routes from the hyper-competitive market. A tie up with Swisscom AG-owned Fastweb, which is also weighing a deal, is an “inferior” option, said Bloomberg Intelligence analyst Erhan Gurses. 

“That outcome won’t address the key problem — Iliad’s disruptive threat to incumbents,” Gurses wrote. 

Iliad’s billionaire owner Xavier Niel said this week that Vodafone “has a problem” in Italy, a market that is ripe for consolidation and where Iliad has been very aggressive. The company’s entry to the Italian market in 2018 as a no-frills mobile operator, sparked a price war and made it one of the most competitive telecommunications markets in Europe. 

What Bloomberg Intelligence Says:

Vodafone’s rejection of Iliad’s revised joint-venture offer for the pair’s Italian operations leaves the UK carrier with the inferior M&A option of tying up with Swisscom’s Fastweb. Yet that outcome won’t address the key problem — Iliad’s disruptive threat to incumbents. The revised offer didn’t include the opportunistic call option to fully acquire the JV at the initial valuation, denying Vodafone upside from hefty synergy and consolidation benefits.

— Erhan Gurses, BI telecoms analyst

The company said Wednesday it will pursue a standalone strategy in the market instead and “fiercely pursue market share gains.” Iliad would’ve gotten €400 million in cash and both parent companies would’ve gotten access to a €2 billion shareholder loan in the revised bid, it said in the statement. 

Vodafone, which is looking at selling off assets to focus on more profitable markets, had previously rejected an €11.25 billion bid for its Italian unit from an Iliad-backed consortium in 2022, saying the offer wasn’t in shareholders’ best interests. 

Vodafone shares fell 3.7% to 66.24 pence at 9:06 a.m. in London, the biggest intraday decline since November. The stock has dropped 29% in the last 12 months. 

(Updates with additional details throughout)

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