The Scarlets say a merger with the Ospreys is "off the table" after the Swansea-based region had a change of heart.
It emerged on Monday that the rival teams could join forces as part of an overhaul of the professional game in Wales, with a new club created in the north of the country.
Ospreys chairman Mike James resigned at the start of a Professional Rugby Board (PRB) meeting amid the turmoil on Tuesday, citing the Welsh Rugby Union's "catastrophic mismanagement" of efforts to overhaul the game.
The Ospreys later denied a merger will go ahead, hitting out at the PRB's "chaotic approach to its own imposed restructuring criteria".
The Scarlets on Wednesday stated that terms had been agreed for a merger, but the plans - which the club say were originally suggested by the Ospreys - have now been scrapped.
A Scarlets statement said: "Firstly, we can confirm the statement issued by the Professional Rugby Board on Tuesday afternoon as accurate, as are the comments made by Wales' national coach [Warren Gatland] that the proposed merger was driven by the regions, in consultation with the PRB.
"In late December, the Scarlets received a high-level approach from the Ospreys to explore the option of a merger as they had come to the conclusion that their position as tenants at the Liberty Stadium was proving to be challenging.
"This was discussed at the two-day strategy meeting of the PRB on January 8 and 9. The loss of a region would have put Welsh rugby in breach of its commitment to having four regions playing in the major competitions. As a result, the option of a team playing out of north Wales was raised.
"By the time of the next PRB meeting on February 5, discussions had broken down between the Scarlets and Ospreys and we were told that the Ospreys and another region were in talks over a possible merger, again with north Wales being the option to maintain four teams.
"Subsequently, those discussions also broke down and we were approached again last week by the Ospreys to reconsider a merger.
"Heads of terms were agreed and signed by the Ospreys and Scarlets on March 1 on terms we believe our supporters would be happy with. This was to be proposed at a meeting of the PRB on Tuesday afternoon, but we were told at the start of that meeting that the Ospreys had changed their mind.
"The merger is off the table."