Blackstone Inc. has walked away from a proposed $4 billion tie-up with New World Development Co. after the embattled property developer refused to hand over the reins, people familiar with the matter said.

The New York-based real estate investment firm has informed the company of its decision, ending a protracted yearlong negotiation that stalled in recent months, according to the people, who asked not to be identified because the information is private. Goldman Sachs Group Inc. advised Blackstone on the deal, the people added.