It was meant to be a marriage made in heaven. Telia and Telenor, the Scandinavian telecoms groups, had complementary international operations. They were both technically advanced, and their employees spoke - almost - the same language.

Two years ago, when the industry's global consolidation was already well under way, the $50 billion (€49.4 billion) union of Norway's Telenor and Sweden's Telia made sense. The Nordic region's biggest merger would have created Europe's sixth-largest telecoms group.

This week, amid scenes of corporate chaos and bitter recriminations, the merger was called off. And as executives of both firms try to pick up the pieces, what remains is a cautionary tale of why cross-border mergers can go horribly wrong.

In retrospect, the problems that would sink the deal were apparent from the beginning. Having been ruled by Swedish monarchs from 1814 until 1905, Norwegians are understandably paranoid about their big brother to the east.

Norwegians also feel very protective towards Telenor because it is their leading high-tech company and a counterweight to their over-dependence on traditional industries such as oil, shipping and fishing. A takeover of their flagship telecoms group by Sweden was therefore always going to be unpopular in Norway.

The omens were not auspicious. A first merger attempt, in early 1998, was called off, with the Swedish industry ministry blaming Norwegian nationalism.

Talks were revived late last year. A new merger agreement was published in March that included plans for a stock market listing for the combined group next year. At this stage, tensions in the ownership structure were already evident. Because of Telia's greater size, the shareholding was 60-40 in Sweden's favour, but voting rights on the board were split 50-50 in deference to Norway's desire for a merger of equals.

Controversial issues, such as the location of various business units of the merged company, were not addressed. Mr Dag Jansson, head of Nordic telecom and media activities at Gemini Consulting, says: "Decisions on potential killer questions were delayed. The hope was that the closer they got to a stock market listing, the more minds would be concentrated."

Tensions persisted. In September, one month before the merger was due to take formal effect, Mr Bjorn Rosengren, the Swedish Industry Minister, committed an unpardonable gaffe. During an appearance on prime-time television, when he thought the cameras had been switched off, he denounced Norway as the "last Soviet state". The Norwegians were not amused.

On October 18th, a Norwegian delegation led by Mr Dag Jostein Fjaervoll, Transport and Communications Minister, refused at the last minute to attend the signing ceremony in Stockholm that was meant to bring the merger into effect. A frantic all-night session brought the Norwegian bride back to the altar, but the marriage was to be short-lived.

Last week, the board of the merged company split down national lines over whether to locate its prestigious mobile division in Stockholm. Mr Jan Ake Kark, the Swedish chairman, used his casting vote to swing the decision Sweden's way.

The Norwegians denounced the decision as "invalid" under the terms of the merger accord. The Swedes said it was valid under Swedish law.

No one was more embattled in this saga than Mr Tormod Hermansen, the Norwegian chief executive of Telia/Telenor. He became a target of an overt Swedish campaign to unseat him. The abuse was personal, too. He was attacked for his cheap suits, his unpolished shoes, his hairstyle, his unfashionable glasses and his moustache. The stress showed. In a moment of frustration last week, Mr Hermansen kicked and punched a Norwegian radio reporter.

Last Friday, Ms Marianne Nivert, the Swedish second vice-president of the combined group, called for Mr Hermansen's resignation. Senior Telenor managers responded by demanding her dismissal. On Tuesday, Mr Arnfinn Hofstad, the Norwegian deputy chairman, signalled the end when he said the merger should be scrapped. No one wanted it to end this way.

What the protagonists have learned is that politics and business do not mix. The Swedes drove a commercial agenda; the Norwegians never denied their national one, and in the end, those differences proved irreconcilable.

"They were sharing the same bed, but they were not sharing the same dreams," an insider said yesterday. It is difficult to imagine a sadder epitaph.