The West Ham boss confirmed last week that the club were among a number of suitors interested in signing the Scot, with West Brom and Valencia also reportedly interested.
However, Allardyce revealed on Saturday that discussions had fallen through, telling reporters after Saturday's 2-0 defeat to Liverpool: "[It] broke down on negotiations apparently this morning."
When asked whether the deal could be revived, Allardyce added: "I really don't know at this moment in time. There's so much going on at the club, thank God the window is shutting [on Monday].
"It's a disaster that window, as we all know, it creates lots of problems for managers.
"Whether we get Darren Fletcher it's neither here nor there, it's about the window being a really huge distraction for us all.
"Listening to [United manager] Louis van Gaal yesterday, he says you don't trust him when he keeps telling you they're bringing nobody in so I hope he hasn't brought anybody in."
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