The terms we envisaged were not being met
Bayonne have pulled out of merger talks with Basque Top 14 neighbours Biarritz, club president Alain Afflelou announced on Wednesday.
The two clubs began negotiations last week with Afflelou upbeat about the prospect of a merger for next season.
But on Wednesday, he said he had "put an end" to the talks.
"The terms on the table during our first meeting were no longer applicable. I cannot commit our club, which is in a healthy state, legally and financially, to heading blindly forward," he said in a communique.
"After consulting our major shareholders, members of the board and supporters' representatives, the terms we envisaged were not being met so I decided to put an end to the talks."
It was a far cry from a week ago when Afflelou said it made little financial sense for the two clubs to remain separate in a sport that was increasingly about money.
Both Bayonne and Biarritz are struggling this season and in danger of relegation, largely as they have been unable to match the spending power of clubs like Toulon and Racing-Metro.
Biarritz are bottom, eight points adrift of Bayonne, who are second from bottom.
Afflelou, who remarked last week that there was no question of either club losing its identity, admitted that he and his Biarritz counterpart Serge Blanco had both initially been opposed to the idea.