It may have cost the better part of £750,000 and a massive amount of goodwill, but the Edinburgh club was back under the Scottish Rugby Union’s control last night. The deal to take ownership back after a brief experiment with independence ends months of bickering and almost six weeks of outright warfare between the two organisations.

Apart from the consortium headed by Bob Carruthers that has lost its stake in the game, the two main losers appear to be Stephen Larkham, the Australia fly half, whose contract to join the club will now not be honoured by the union, and Lynn Howells, the coach, who has been unceremoniously axed without a word of explanation.

“Larkham is not coming, at least not at the moment,” Gordon McKie, the union’s chief executive, said, making it clear that he believes the deal overvalued the player. “The offer that was made is not sufficiently commercially attractive or sensible for us to follow through on it. It is not one we would normally make. We are open to talking to his agent to find ways of making it commercially sensible. There are two or three positions in the Edinburgh team that need to be strengthened and we feel we can fill three places instead of one by taking this stance.”

However, it is a decision that has flabbergasted Howells, who is fuming about the way he got caught in a row between club and union that has nothing to do with him. “It would be bad for Scottish rugby if a player of that calibre fails to turn up,” he said. “Not only would the players have benefited but the whole sport would have gained enormously. That sums up the whole situation – decisions are being made that have nothing to do with rugby.”

And that, as far as he is concerned, includes his own axing. “I’m very bitter about the whole thing,” he said before paying tribute to the loyalty of the players and supporters. “I have not been told any reason why I have not been included. The disappointing thing is that I had put together a squad that I believe can succeed and I won’t get a chance to coach them. It might not have been crammed with as many internationals as in the past but Edinburgh have not succeeded; the highest they have finished is fifth in the league with one Heineken Cup quarter-final. If things don’t change they will always be also-rans.

“If there were rugby reasons, if my man-management or coaching was not good enough, I would disagree but would accept it. But not allowing me to stay on is purely political and nobody has been big enough to meet me face to face and tell me. Nobody from the SRU has spoken to me in the whole 11 months I have been here.”

The buy-back deal was close to completion at the start of the week but was delayed by a number of complicating factors including a desire by Carruthers, who is on holiday and could not be contacted for comment yesterday, to save the position of as many of the Edinburgh employees as possible.

On the bright side, McKie has already had a meeting with the Edinburgh players who are not involved in Scotland’s match against Ireland today to reassure them about their futures and will meet the international players next week to press home the same message.

He will also seek to end the non-sensical position where Glasgow, who continued under SRU ownership throughout all this, are overloaded with international players in some positions where Edinburgh have a shortage.

In the short term, Henry Edwards will take over the coaching of the team, just as he did a year ago when the union was preparing to sell the club to Carruthers, and Nic Cartwright, formerly the chief executive at Harlequins rugby league club, will take over as the chief executive from Monday. All the legal claims against each party being lined up by both sides will be dropped as part of the settlement.

McKie remains adamant that the collapse of deal for independence does not mean the collapse of outside investment in Scottish rugby and that future deals can still be done.