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Datatec's decision - taken after two months of due diligence - means it has effectively called time on plans to acquire a significant European distributor.
Alan Marc Smith, president and CEO of the Westcon Group, said it would revert to the original European acquisition strategy of expanding on a country-by-country basis.
He claimed Datatec had pulled out of the deal because it disagreed with the valuation of the Landis unit.
He did not believe the deal's collapse would cast doubt over Datatec's financial position: "We had released the majority of the cash and were in a position to close the transaction."
The collapse leaves Landis seeking another buyer for its distribution arm, which does not fit in with its strategy of focusing purely on services.
In a statement, Landis said it had resumed discussions with a number of interested parties, but industry watchers believed Westcon was the only viable suitor for its distribution arm.
Steve Brazier, CEO of analyst group Canalys, said: "Once someone has walked away from an acquisition, it's a warning sign to others. Landis has no Cisco franchise, so it's not attractive as a networking distributor."
Ingram Micro European president Greg Spierkel described the Landis distribution business as "unhealthy", but added: "We might look at it, but we look at everything that comes up."