Manches' Oxford office and Mills & Reeve have broken off talks about a potential tie-up.

The two firms entered into discussions last year that could have seen Manches' entire 25-partner Oxford office joining the top 50 national firm.

The deal would have handed Mills & Reeve its seventh UK office alongside Birmingham, Cambridge, Leeds, London, Manchester and Norwich.

It is understood the talks broke down as a result of strategic differences in December 2009, after a number of meetings between the two firms.

Manches confirmed its ongoing commitment to all three of its offices in Oxford, London and Reading.

Manches London office head Louis Manches said: "We were approached a while ago by a firm interested in our Oxford office. The discussions are not proceeding."

Mills & Reeve managing partner Guy Hinchley added: "We had a series of positive meetings with [the Oxford partners] to explore mutual opportunities. It did not get as far as getting into discussions with Manches as a whole. In the end we weighed the pros and cons involving the scale of the acquisition and our strategic objectives and decided not to proceed."

News of the talks came after it emerged in September that Manches and Halliwells had held a series of discussions regarding a merger. The talks went as far as the due diligence stage before breaking down.

Manches, which has a strong family and private client team, saw revenue dip to £34.1m in 2008-09, down from £34.4m the previous year. Profits per equity partner (PEP) dropped by 7.9% to £209,000 from £227,000 in 2007-08.