FCB is understood to have been trying to lure Blamer to take on either the role of New York chief executive or chief executive of FCB North America, with a view to succeeding Brendan Ryan as chief executive of FCB Worldwide in the next few years.
However, Blamer and FCB failed to reach an agreement and talks eventually broke down.
In a statement, FCB spokesman Bill Haney said: "We think Steve Blamer is a great guy and a first-rate executive but we couldn't reach an agreement."
Grey is understood to have fought hard to keep Blamer and, in a statement issued to staff yesterday, Grey Global Group chairman, chief executive and president Edward H Meyer finally ended speculation that Blamer was set to leave.
"There's been a lot of talk in the press speculating that Steve Blamer might leave Grey. Forget it! Both of us want you to know that we are fully committed together to building Grey Worldwide. Now, in the grand tradition of Grey, back to work."
Blamer has worked at Grey for 15 years and, for the past three, he has been running Grey New York having returning from the UK after a two-year stint heading up Grey London, which he joined from Los Angeles.
He had been due to stay in London for at least another year, but was recalled to New York to help turn around the performance of Grey Global's flagship office.
If Blamer had moved to FCB, it would have taken him back to the agency where he started his career 20 years ago as an account executive.
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