BRUSSELS/FRANKFURT (Reuters) - After more than a year of negotiations, Deutsche Boerse got only 30 minutes notice on Sunday from the London Stock Exchange that their planned merger was effectively over, sources familiar with the talks told Reuters.

A woman walks past the London Stock Exchange building in the City of London, Britain, January 16 , 2017. REUTERS/Toby Melville

The LSE, in a highly unusual step, was about to publish a statement saying it would reject European Union demands needed to win approval for the 29 billion euro ($30.7 billion) deal.

London’s lack of consultation with its merger partner underscores a breakdown in relations that officials and executives involved in the talks say was as responsible as any antitrust condition for the failure of the latest attempt to combine the two exchanges.

The LSE move followed weeks of acrimony over German pressure to give Frankfurt preeminence as the headquarters for the combined firm over London, sources told Reuters.

Its refusal to sell the MTS Italian fixed income trading business and its prediction that Europe’s antitrust authorities would likely block the deal, have all but ended the merger and knocked the share prices of LSE and Deutsche Boerse, both of which declined to comment on Tuesday.

Talks were derailed by German demands that the headquarters be moved to Frankfurt and an investigation by state prosecutors into possible insider trading by Carsten Kengeter, the chief executive of Deutsche Boerse who was set to lead the combined group, the sources said. Kengeter denies any wrongdoing.

“There have been tensions for a longer time,” said one person with knowledge of the negotiations.

In early February, Thomas Schaefer, the finance minister of the state of Hesse, home to Deutsche Boerse, called for the headquarters to move to Germany because of Britain’s planned departure from the European Union.

His remarks were the clearest such public demand in Germany and were noticed by lawmakers in Westminster, who afterwards held a rare public debate in the British parliament on the future of the LSE, with some questioning the merger.

Schaefer had anticipated the resistance that his demand would meet in London. “They don’t want to be the first to send a clear signal that Brexit has unavoidable disadvantages for Britain,” he told Reuters.

Deutsche Boerse had attempted to find a compromise, fearing that German authorities would otherwise block the deal, said two people familiar with the negotiations.

In the weeks that followed Schaefer’s remarks, Deutsche Boerse made attempts to discuss establishing a joint holding company with LSE, similar to that of Franco-German group Airbus.

“We could have talked about it and come to the conclusion that we could not agree,” said one source. “But the LSE didn’t even want to speak about it.”

MISTRUST

The sudden move by the LSE came despite what sources familiar with thinking at the European Commission have described as a willingness, in principle, to give its blessing to the deal to create Europe’s biggest stock market.

Those people said EU antitrust officials feared that rejecting the deal would allow a rival from outside Europe, for example, Asia, to buy the London Stock Exchange (LSE), thereby dwarfing continental rivals.

It nonetheless imposed strict preconditions, including the sale of MTS. A spokesman for EU antitrust chief Margrethe Vestager said on Tuesday its handling of the case was based on “facts and law and not other considerations”.

For some observers, the breakdown is no surprise.

Dirk Schiereck of the technical university of Darmstadt, who carried out a study on the merger, predicted it last week.

“The Germans are afraid of London’s dominance and the Londoners are worried that Frankfurt could take away business,” he told Reuters in the days ahead of the LSE’s statement.

It leaves the future strategy of the exchanges uncertain and lingering disappointment in both financial centers.

“Frankfurt lost having a feather in its cap,” Sharon Bowles, a non executive director of London Stock Exchange plc and former lawmaker in Brussels, said.

“And we have lost an olive branch in Brexit negotiations.”