Garry Krauss, chair of Melbourne City Opera, said, "The two companies have worked diligently toward the proposed merger. However, it has not become apparent that for various reasons a merger on equal terms is not possible at this time," but he said that the various reasons were "confidential."

"It was a lot more complicated to bring about the proposed merger than we had imagined. We worked bloody hard, but in the end we came to a couple of hurdles that we just couldn't cross."

Krauss said the decision was "extremely disappointing." "I am bitterly upset," he said. "The decision was made by the board on logical grounds, but I think it's a tragedy."

The new entity was poised to receive a share of the A$7.6 million in government funding allotted to boost opera opportunities for performers in Victoria. Other companies competing for the money, which was to be determined by written application from the organizations, are OzOpera (the touring company of the Sidney-based Opera Australia) and Operalive. The companies, which at present receive no government money, will now be considered separately for funding.

Melbourne City Opera still plans to rename itself VicOpera.