Manchester City have pulled the plug on a proposed move for Soren Larsen, according to sources in Denmark.
Schalke had agreed a fee with Sven Goran Eriksson's side, reported to be around £3.7 million, but have withdrawn their interest in the Danish striker.
"We actually agreed terms but, suddenly, Soren Larsen's agent, Ivan Marko Benes, called up and said that the English club had said 'no'," Schalke's Andreas Muller told BT.
It leaves the 26-year-old in a difficult position as he was primed for a switch to The Premier League but he has stressed that it will be business as usual in the Bundesliga.
"I am ready to fight further in Schalke," said Larsen. "I know it'll be difficult but I think I can have a good end to the season."