Liverpool's pursuit of Daniel Sturridge ended after the Chelsea forward made it clear he was only interested in a permanent move.
Negotiations between the clubs had begun late on Thursday night, just hours after Liverpool allowed on loan.
Chelsea were open to allowing the 22-year-old to leave on loan, but the player himself wanted a permanent move.
Liverpool's Charlie Adam has joined Stoke for £5m on Friday.
Meanwhile, midfielder Jay Spearing has left Anfield to join Bolton on a six-month loan deal, having undergone a medical at the Reebok Stadium.
Sturridge remained with the Chelsea squad in Monaco for Friday evening's European Super Cup against Atletico Madrid.