Kicker magazine confirmed a report from the Bild tabloid on Thursday, indicating that Bayern's supervisory board made the decision to retract the offer during a meeting on Monday due to Kimmich's indecision regarding the proposal.
The 30-year-old Kimmich, who has made over 400 appearances for Bayern since joining from Leipzig at the age of 20 in 2015, is believed to earn approximately 20 million euros ($21 million) annually at the club.
The new contract proposal reportedly included a slight increase in salary.
Max Eberl, Bayern’s board member for sports, mentioned to broadcaster Sky earlier this month that discussions between the two sides had been constructive following the club's announcement of contract extensions for Jamal Musiala, Alphonso Davies, and Manuel Neuer.
“We’ve done our work bit by bit. We’ve had very good discussions with Joshua. We’ve clearly shown what our idea is with the extensions (that were announced),” said Eberl, who hoped that “we’ll get it over the finish line.”
Kimmich has played every minute for Bayern across three competitions until he was substituted due to a tendon strain before halftime against Eintracht Frankfurt last weekend. He is expected to miss the upcoming match against Stuttgart on Friday, but the club is optimistic about his return for the Champions League last 16 clash against Bayer Leverkusen on Wednesday.
Kimmich is free to negotiate with other clubs at the end of the season, provided he does not sign a new contract with Bayern beforehand. There has been speculation about a potential reunion with former Bayern coach Hansi Flick at Barcelona, although the financially struggling Spanish club would still need to cover his salary.