Milan have reportedly told Mario Balotelli he can only remain if Liverpool renew the loan.
According to Sky Sport Italia, negotiations to buy the 25-year-old outright have been abandoned.
Balo will only remain in the Rossoneri squad next season if he renews his loan, with Milan paying a portion of his wages.
The striker was sold to Liverpool for approximately €20m in August 2014 and then brought back again on loan a year later.
He failed to make an impact this season at San Siro, scoring one Serie A goal in 20 appearances.
There were also two goals in three Coppa Italia ties.
Balotelli is under contract with Liverpool until June 2018, but does not appear to have a place at Anfield either.
There was reported interest from Espanyol and clubs in China, while this week newly-promoted Serie A outfit Crotone urged him to join them on loan for regular first team football.
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