Puig Brands shares plunged more than 14% in European trading after the Spanish cosmetics maker and Estee Lauder terminated merger discussions late Thursday. Estee Lauder's stock jumped over 10% in premarket trading on the news, signaling investors preferred the deal collapsing rather than forcing a combination.

The two companies had confirmed in March they were exploring a merger that could have created a global beauty group to rival L'Oreal. For Puig, a tie-up with its larger American peer would have delivered the scale it currently lacks. The company had already lost its bid for Kering's luxury beauty unit, which L'Oreal acquired for roughly $4.7 billion last fall.

The collapsed talks leave Puig without a path to rapid growth through acquisition. Investors punished the stock on Thursday, betting that without a major partner, the Madrid-listed company will struggle to match rivals like L'Oreal and Estee Lauder in market reach and R&D spending.