MADRID (Reuters) - The board of Spanish steel maker Acerinox announced on Monday that it was walking away from preliminary talks with Dutch rival Aperam for a potential tie-up that would have created a European stainless steel giant.
"The board of the company in a meeting today agreed unanimously not to continue with the preliminary talks with Aperam to evaluate a possible corporate operation," Acerinox said on Monday in a filing to Spain's stock market regulator.
The two companies disclosed last week that they had opened talks about a possible merger but that no agreement regarding scope, structure or the terms of a potential deal had yet been reached.
Such a deal would have run into intense scrutiny from the European competition authorities as the resulting company, with a capacity to produce 2.3 million tonnes of stainless steel a year, would have dwarfed current leader Finland's Outokumpu, according to analysts.
Shares of Acerinox fell 4% immediately after the end of the merger talks was disclosed and traded 2.3% lower later in the afternoon. Shares of Aperam, which is controlled by the Mittal family, were trading 3% down on Monday afternoon in Amsterdam.
Both companies are worth close to 3.2 billion euros at current market prices.
Soaring steel prices have boosted both steel makers' profitability to record levels. Acerinox's net profit jumped 11-fold last year, while Aperam's jumped almost six times.