Flag Telecom and Pivotal Pvt Equity, the company, which had made an offer to acquire the former at a price higher than that offered by Reliance, have "mutually" decided not to pursue their discussions, clearing the way for Reliance to acquire Flag Telecom for $207 million.
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In a filing with US Securities and Exchange Commission, Flag Telecom Group said, "Flag, after taking into account the agreement and plan of amalgamation with Reliance on October 16, and Pivotal, after taking into account its defined investment parameters, mutually determined not to pursue further discussions with respect to transaction between the parties."
Flag had a market capital of $7 billion at its peak and has laid submarine cables of around 50,000 km across the globe and has hubs in the Middle East (West Asia) and the US.
The company's network spans four continents and has presence in Asia, Europe, Middle East and the US.
Flag, a bandwidth company, had filed for bankruptcy under Chapter 11 last year, and had successfully come out of the filing.
Earlier this week, Pivotal Private Equity had expressed its willingness to acquire Flag Cable system for "not less than $220 million or $110 dollars per share for 2 million outstanding shares of Flag".
Pivotal's offer came just days after Reliance Gateway Net, a wholly owned subsidiary of Reliance Infocomm, proposed to acquire the entire equity stake in the Nasdaq-listed Flag Telecom Group for $207 million (about Rs 1,000 crore).
Flag Telecom's board had subsequently met to discuss Pivotal's offer and informed SEC that Pivotal's proposal constituted an offer that was expected to be a "superior one".
The company had also said it intended to start discussions with Pivotal under amalgamation conditions.
However, Flag Telecom's board had also pointed out it was in favour of amalgamation with Reliance Gateway, and added that "there can be no assurances that an agreement will be reached with Pivotal".