The former AC Milan and Chelsea striker was leading the investment group to takeover Colchester.
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In a joint statement both parties said: "Aspire Media Group has decided not to proceed with the proposed acquisition of Colchester United by Sports Alpha Capital (SAC), the investment consortium managed by Joao Xavier and including Alexandre Pato. Accordingly, discussions have concluded.
"SAC will continue to explore future opportunities within English football while maintaining a lasting respect and affection for Colchester United and its supporters.
"Colchester United remains focused on the remainder of the season and its ongoing ambitions for progress and success."