It seems that a deal to create the world's largest cement manufacturer is in danger, as Swiss firm Holcim said that its merger with French rival Lafarge would not go ahead.

Previously, the two firms agreed on the merger in April. Under the deal, shareholders of Lafarge were to receive one Holcim share for each Lafarge share.

Soon after taking a decision on the merger, Holcim's shares outperformed those of Lafarge. And Holcim said that it wanted to negotiate the agreed share exchange ratio and governance issues, in good faith.

As per sources, if this merger becomes a success, the companies jointly would have sales of about €32bn.

Holcim, a Switzerland-based building material company, said, "The Holcim Board of Directors has concluded that the combination agreement can no longer be pursued in its present form, and has proposed to enter into negotiations in good faith around the exchange ratio and governance issues".

French cement major Lafarge said in response that it remains committed to the tie-up and is willing to explore the possibility of revision of the parity, in line with recent market conditions.

However, it also said that it would not accept any modifications in the terms and conditions of the existing agreements.

It was found that Lafarge received a letter on Sunday from the chairman of Holcim, under which the company board mentioned that the company does not want to pursue the previous agreement that was approved last July.

The original deal, dubbed as 'a merger of equals', would involve a capital increase on Holcim's part in order to meet a one-to-one share exchange.