Initially mooted last month, the merger would have seen the creation of a new 32,000-home operation within Sanctuary Group, known as Sanctuary 21, specialising in the provision of housing for older people.

Housing & Care 21 said it will not be pursuing the merger and instead intends to continue as an independent organisation.

A statement by the housing and care provider said: “After carefully considering the findings of the due diligence process, it was evident that Housing & Care 21 could not be confident that the conditions set for the merger with Sanctuary Housing Association, as specified in the agreed Statement of Commitments, would be fulfilled.

“Sanctuary was clear that it did not regard the Statement of Commitments as being legally binding, so Housing & Care 21 sought to gain assurance through the due diligence process that these terms for merger would be honoured. Unfortunately more doubts than assurances arose from this process.

“Concerns were raised with Sanctuary, who concluded that the merger would not go ahead.

“Housing & Care 21 will not be looking to find an alternative housing organisation to merge with, but will instead re-focus on maintaining the momentum in its own improvement and investment programmes. We remain committed to being the leading provider of housing and care for older people of modest means.”

Sanctuary Group issued its own statement, saying: “Sanctuary has withdrawn from merger discussions with Housing & Care 21 as the board felt potential operational synergies were not met by an acceptable cultural fit between the organisations.

“Sanctuary remains committed to expanding its offering to older people through the development of new homes as well as the on-going delivery of viable and cost effective services.

“Sanctuary is pursuing alternative merger and acquisition opportunities as part of the Group’s business plan.”