Icelandair has ditched plans to buy low-cost rival Wow Air.
In a statement to the Icelandic Stock exchange, the airline said it had cancelled the proposed $25 million (£19.6 million) aqcusition.
It had signed a deal on 5 November.
The group said in a statement: “Therefore, it is unlikely that the board of directors of Icelandair Group can recommend to the shareholders that they agree to the purchase agreement. Furthermore, the board does not intend to submit to the shareholders’ meeting a proposal to postpone decision-making on the purchase agreement.”
“Due to this this situation, both parties agree to abandon the aforementioned purchase agreement.”
The chief executive and founder of Wow Air, Skuli Mogensen, said: “It was clear at the outset that it was an ambitious task to complete all the conditions of the share purchase agreement in this short period. We thank the Icelandair Group’s management team for this challenging project, and also wish the management and staff of Icelandair Group all the best.”
Bogi Nils Bogason, who is the Interim president and chief executive of the Icelandic airline, said: “The planned acquisition of Icelandair Group of Wow Air will not go through. The board of directors and management of both companies have worked on this project in earnest. This conclusion is certainly disappointing. We want to thank Wow Air’s management for a good cooperation in the project during recent weeks . All our best wishes go out to the owners and staff of the Wow Air. ”
Shares in Icelandair (CPH: ICEAIR) have plunged 10.68% (1354GMT).