De La Rue, which has its headquarters in Basingstoke, also issued a profit warning, saying annual operating income would now be around £60m to £65m.
Gemalto has a number of factories in the United Kingdom and is expected to use its Fareham site to print some of Britain's new passports, bringing with it the prospect of 70 new jobs.
'Following four weeks of intense consideration and clear legal advice, we have taken the decision not to challenge the award of the United Kingdom passport contract.
But to the dismay of Eurosceptics, the government opted to award the £490m contract to EU-based rival Gemalto.
He added: "We're a business, we have to make pragmatic business decisions".
"De La Rue is a great British company with a strong heritage and trust is a key element, but it's now made itself incredibly vulnerable to overseas predators", said City veteran Richard Bernstein, Crystal Amber's head.
That appeal process ended at midnight on Tuesday.
GETTYAmber Rudd faced backlash following the decision to grant the contract to a French Dutch firm
In a statement, De La Rue added: "As we initially announced, we have looked at all possible avenues open to us, and thoroughly evaluated all our options".
British banknote manufacturer De La Rue told investors to expect a 6% increase in revenues from its recently ended trading year but remained "cautious" about its outturn for 2018 after losing Britain's passport tender back in March.
Media captionDe la Rue boss Martin Sutherland claimed: "It is surprising the British government does not support British industry".
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.
The company makes British passports at its Gateshead factory, where it employs around 600 people.
De La Rue's share price fell by 4.17% to 471.5p following the announcement which also included its second profit warning since March.
De La Rue also confirmed that its full-year earnings would be hit by a write-off of about £4m related to the bid costs for the passport tender.