Merrill Lynch and JP Morgan are frontrunners to lead a near-€1bn ($1.2bn) secondary equity issue for Telekom Austria, the Austrian telecom company, after a €9.7bn takeover of the group by Swisscom collapsed at the 11th-hour.

The takeover by the Swiss telecoms group would have been one of the biggest European deals this year. A banking source close to the deal put a value of €9.7bn on the proposed takeover, €7.7bn of equity and €2bn of debt.