Toto Wolff says Mercedes wanted to supply McLaren with engines in 2018 but negotiations dragged on for too long.
When it became clear that Honda had failed to develop a competitive power unit in 2017, McLaren started to seek alternative options for 2018.
McLaren shareholder Mansour Ojjeh approached Daimler chairman Dieter Zetsche about a possible deal -- leaning on the relationship the two built during Mercedes' 25-year supply deal with McLaren between 1995 and 2014 -- but when it came to negotiating details, the deal fell through.
Wolff insists Mercedes was interested in a deal, but says he was not able to put the infrastructure in place to cater for a fourth customer team at such short notice.