Its shares fell 9 percent to a year low of 446 pence in early trading and were down 4 percent at 0851 GMT after De La Rue said it would write-off about 4 million pounds ($5.7 million) of costs associated with the failed bid.
De La Rue, the current passport provider, said that it had "considered all the options" but would not challenge the move, which will see the £490m contract handed to Gemalto, a firm headquartered in Amsterdam and listed on the French and Dutch stock exchanges.
Our new blue British passports will definitely be made in France, now United Kingdom firm De La Rue has chose to drop their appeal.
Today, De La Rue said it was "cautious" about full-year expectations, but said it had started the year with "a satisfactory order book" underpinned by 16 per cent growth.
But reports that Franco-Dutch firm Gemalto had won the tender to produce the new passport was criticised by some politicians and newspapers as unpatriotic, and De La Rue had said it would challenge the decision.
The company's CEO Martin Sutherland even invited Theresa May to "come to my factory and explain to my dedicated workforce why they think this is a sensible decision to offshore the manufacture of a British icon".
Last month it was announced that the company will not design and produce the United Kingdom passport when its existing contract expires in July 2019.
The lower revenue is expected due to "the write off of the £4m bid costs related to the United Kingdom passport tender and delays in the shipment of certain contracts in the last week of the period", the company said.
It said it would assist with the transition to the new supplier, and was expecting no impact on its performance in the next 18 months.
Despite their French-sounding name, De La Rue (who make the current burgundy passports) objected to the new ones being manufactured in the European Union.