Athletic Bilbao have rejected an offer of 36 million euros from Manchester United for Ander Herrera.
United believed they were closing on a deal for the Spanish midfielder following their failure to sign him last summer -- only for the Basque club to insist they had turned down the bid.
Herrera, 24, was believed to have a 36 million euro release clause in his contract with Athletic, due to go up by a further six million euros at the start of July.
However, Athletic posted a brief statement on their website saying that they had declined United's approach.
"Athletic Club wish to communicate that this week it has rejected an offer from Manchester United FC of 36 million euros to transfer the federative and economic rights of the player Ander Herrera," the statement said.
Herrera, originally a target for former United manager David Moyes, had been due to become Louis van Gaal's first signing.
The Netherlands coach had opted not to pursue Cesc Fabregas and Toni Kroos, two midfielders Moyes wanted to sign, as United chose to go for former Real Zaragoza player Herrera.
At 36 million euros (28.8 million pounds), Herrera would have become the fourth most expensive signing in United history after Juan Mata, Dimitar Berbatov and Rio Ferdinand.