Birmingham withdrew their offer for Fabrizio Miccoli because of concern over his knee injury, reports the Birmingham Mail. Miccoli told a press conference that he rejected the Blues.
Paul Montgomery, Blues' chief scout, who had been heavily involved in setting up the deal, confirmed: "We withdrew our offer.
"The player was keen to come to us and we were advised that he would be fit for August, despite knee surgery.
"However, after doing more diligence and taking further specialist advice, we discovered that the injury, to his cruciate, was more serious than first interpreted to us. He will be out until October, at the very least.
"So taking everything into account, the manager and the board decided it was in the club's best interests not to proceed.
"The manager felt we couldn't risk £5 million on someone who wouldn't be available to us for a long while and nor could we predict what effect the injury might have on his performance in the future."