Transport company Stagecoach Group is no longer going ahead with the acquisition of North Devon business and assets of First Devon and Cornwall.
The firm changed its mind after the Office of Fair Trading (OFT) referred the anticipated acquisition to the Competition Commission due to "concerns the merger will reduce competition in local bus services in the area".
A Stagecoach Group spokesman said: "We are extremely disappointed at the decision of the OFT to refer what is a relatively small transaction to the Competition Commission.
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"We do not believe we can justify spending further money and management time on what has already been a lengthy process.
"As a result, we have reluctantly decided not to proceed with the acquisition and have informed First we are withdrawing."
The £2.8m acquisition was announced on March 12th.
Stagecoach shares rose 0.96% by 274p by 14:42.
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