Montpellier owner Mohed Altrad has ended his interest in Gloucester after Premiership Rugby limited his proposed investment in the club to a 20% stake.
The news was revealed via press statement from Gloucester which read: "Mohed Altrad has heard with great disappointment that his proposal for a significant investment in Gloucester Rugby has been rejected by the PRL, creating a set-back for the promotion and advancement of English and European rugby interests.
"At a PRL board meeting on 11 April, the decision was made to restrict Altrad's investment to 20%, after a narrow vote against a 45% interest. This follows the decision taken by the French LNR in March. With the PRL and LNR votes at the next EPCR board meeting now pre-determined, Mohed Altrad has decided to withdraw from the transaction.
Commenting on these two votes, Altrad said: "Whilst this news is extremely disappointing for Gloucester Rugby club and myself, rugby more generally is the biggest loser.
"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.
"The wider benefits were obvious: a stronger club at both English and European level which would have generated more interest in the sport; investment in English qualified players to support the RFU on the international scene and, more widely, a sign to potential investors that European rugby was entrepreneurial, ambitious and open for business.
"Martin St Quinton, Chairman of Gloucester Rugby, and I have worked relentlessly to pre-empt and satisfy the concerns of the regulatory bodies, volunteering both Gloucester and Montpellier Rugby clubs to the highest level of transparency and scrutiny.
"Our proposals included very clear Conflict of Interest policy, fully auditable by regulatory bodies and with an express acknowledgement of the sanctions for breach. I staked my personal reputation and that of my global Group, Altrad, to respecting these standards of integrity.
"Having initially proposed a 55% investment, we were pushed hard to come down to an interest below 50%. I respected the guidance given and proposed a 45% stake in Gloucester, with even further commitments. I have still not received any substantive reasons why our safeguards were insufficient, beyond a sense of general discomfort with dual interests.
"Despite this it is clear that I would be limited to 20%. What some people don't seem to understand is that a 20% interest is no different from 45% from the point of view of control, influence and integrity. It demonstrates an apparent desire from certain stakeholders to prevent this transaction for no more than personal and self-preservation reasons.
"We have received some strong support from many decision-makers but unfortunately not enough. It is ironic and regrettable that whilst we have been fully engaged in a transparent process with sporting integrity at the centre of our proposals, the same cannot be said for the final decisions of LNR and PRL.
Andrew Umbers of Oakwell Capital who advised the Altrad Group said:
"It is disappointing having received broad support from all of the relevant rugby authorities, RFU, FFR, World Rugby and the EPCR but not the unanimous support of the PRL.
"With £500m of revenues in the U.K. the Altrad Group would have brought significant investment into the city of Gloucester and its well managed and fanatically supported rugby club."
Fortune favours the brave. This approach simply puts the brakes on a sport that could pioneer growth and investment opportunities. Maybe this can be revisited when the regulatory landscape is more favourable.
Gloucester Rugby Chairman Martin St Quinton added:
"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.
"It has been a frustrating process for him and ourselves at Gloucester Rugby. We worked tirelessly together to try and overcome all the obstacles put in our way. Sadly, the matter was ultimately taken out of our hands, other parties decreed that it was not meant to be.
"However, we now move forward as a Club with much to look forward to this season and beyond, including a European semi-final this weekend and then the push for Champions Cup qualification.
"On behalf of Gloucester Rugby, we would like to thank Mr Altrad for his interest in the Club. It speaks volumes of how well we are viewed externally that he was so interested in investing in us."
Gloucester said they firmly believe they have an exciting future ahead of them and whilst they would have welcomed Altrad's investment in to the English game, they are on a solid footing moving forward and look forward to finishing this season strongly and have a lot to look forward to next season and beyond.