AT&T on Monday withdrew its offer to buy a stake in the company that controls Telecom Italia, the largest Italian telecommunications company, for about 2 billion euros, or US$2.7 billion.
In a terse statement, AT&T did not give any reason for the decision to pull back its offer to buy a third of the controlling company, Olimpia.
A person who had been briefed on the negotiations but was not authorized to comment on them publicly, however, said AT&T had been dissuaded by the intense political pressure in Italy against a sale to a foreign company.
AT&T's announcement came against the backdrop of an extended Telecom Italia shareholders' meeting on Monday, called to elect a new board and approve last year's financial results.
The meeting ran late into the evening as investors lined up for a chance to question management.
Pirelli, which controls Olimpia, had been in exclusive talks with AT&T and America Movil, which was also negotiating to buy a one-third stake in Olimpia.
AT&T will now be able to negotiate with other companies while it tries to work out an accord with America Movil, the largest cellphone company in Latin America.
America Movil said it had yet to decide whether it would follow AT&T or continue talking with Pirelli, Reuters reported.
Telecom Italia has attracted several potential buyers in the last six months, but the only concrete offer came on April 1 from AT&T and America Movil, which announced their offer to Olimpia at the same time though they were formally acting separately.
AT&T owns 9 percent of America Movil.
The announcement that the two foreign companies were negotiating to buy control of Telecom Italia set off a wave of objections in Italy by politicians who said the company had strategic importance to the country and should not fall into foreign hands. Although Italian Prime Minister Romano Prodi said he would not step in to block the sale, he and several of his ministers said they hoped that an "Italian solution" could be found.
Had its offer been accepted and approved, AT&T could have gotten, for a relatively modest investment, a strong foothold in Italy's corporate market and an expanded presence in Germany, France and the Netherlands -- countries where Telecom Italia has been building broadband Internet businesses.
AT&T already sells telecommunications services to some of Europe's largest companies and provides services in Europe for US-based companies.
Intesa Sanpaolo, a leading Italian bank, said on Monday that it might buy a stake in Olimpia.
The Telecom Italia shareholders' meeting gained particular attention because of the sale negotiations and also because the former chairman, Guido Rossi, resigned two weeks ago after clashing with Pirelli's chairman, Marco Tronchetti Provera, over strategy.
More than 350 shareholders registered for the meeting, compared with 75 last year, a Telecom Italia spokesman said.
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