The owner of French club Montpellier said Tuesday he was withdrawing from plans to invest in Premiership side Gloucester after English officials voted to restrict his stake to 20 percent.
Both England's Premiership Rugby Limited (PRL) and the Ligue Nationale de Rugby (LNR), which runs France's Top 14, expressed concerns about potential conflict of interest arising from Montpellier owner Mohed Altrad also having a role in a rival European club.
The Syria-born businessman wanted to take a 45 percent stake in Gloucester but the LNR set the limit at less than half that, a position endorsed by PRL.
"Whilst this news is extremely disappointing for Gloucester Rugby Club and myself, rugby more generally is the biggest loser," Altrad said in a statement on Gloucester's website.
"Our vision was to support an English club, facilitate investment in junior and senior players as well as coaching staff and improve its training and playing facilities."
Altrad was adamant he had addressed the issue of conflict of interest and could not understand why rugby officials were not reassured by his plans.
He added: "I have still not received any substantive reasons why our safeguards were insufficient, beyond a sense of general discomfort with dual interests."
Gloucester were one of England's leading clubs in the amateur era but have been under-achievers since rugby union turned professional.
Gloucester chairman Martin St Quinton said he was disappointed by the collapse of the Altrad plan but insisted the future for the club was still bright.
"After many months of work and negotiations, we are understandably disappointed that matters have concluded this way and we fully understand Mohed Altrad's disappointment," he said.
Gloucester are eighth in the 12-team Premiership and with no chance of qualifying for the title-deciding play-offs.
Next season will see South Africa's Johan Ackermann, currently in charge of the Johannesburg-based Lions, take over as Gloucester head coach after Australian Laurie Fisher resigned last month.
Gloucester did however get through to the semi-finals of Europe's second-tier Challenge Cup, where they are away to France's La Rochelle in the last four on Saturday.