The Magpies had agreed a £49m fee with Freiburg for Manzambi, who has spent the last few weeks representing Switzerland at the World Cup finals.
Personal terms had also been agreed with Manzambi and his representatives, but concerns were raised when the 20-year-old refused to sign off on the deal.
Switzerland’s continued involvement in the World Cup was a factor slowing down the completion of the transfer, but Newcastle officials became increasingly concerned last week that another club had entered the equation and that Manzambi’s head had been turned.
Sure enough, the midfielder last night indicated that he would not be joining Newcastle and would instead be heading to Aston Villa, who made a late move of their own after another of their midfielders, Amadou Onana, damaged his knee ligaments while playing with Belgium.
Villa have swiftly agreed terms with Freiburg – they are understood to be paying broadly the same fee as Newcastle had agreed – and have also reached a rapid agreement with Manzambi over a proposed move to Villa Park.
The financial elements of the deal were not a major factor in Manzambi's decision to reject Newcastle's advances as Villa have effectively just matched the terms he was going to be on had he moved to Tyneside.
Instead, and perhaps more worryingly from a Magpies perspective, Manzambi is understood to have chosen Villa because they can offer Champions League football next season and he regards Unai Emery's side as more realistic challengers for major honours in the next couple of years than Newcastle.
The developments are another huge blow to Newcastle’s recruitment team, led by sporting director Ross Wilson, who had identified Manzambi as their preferred replacement for Sandro Tonali, who joined Tottenham in a £100m move at the start of the month.
The failure to complete the deal follows a similar scenario earlier in the summer that saw the Magpies set up a move for winger Victor Munoz, agreeing terms with both the selling club and the player, only for Liverpool to swoop in and hijack the transfer at the last minute.
Munoz ended up heading to Anfield, with Newcastle switching their attention to Bazoumana Toure, who eventually ended up heading to St James’ Park.
Sources claim that while missing out on Manzambi is a disappointment, Newcastle have alternative targets that had already been sounded out, meaning they should be able to move relatively swiftly to line up an alternative to the Swiss midfielder.
However, it remains to be seen how successful they are in completing a deal for any of those options given that last summer also witnessed a succession of proposed transfers collapse when Newcastle found themselves facing late competition for players they had spent a considerable amount of time pursuing.
The Magpies have completed three incoming deals so far this summer, with Ewen Jaouen and Sean Steur having accompanied Toure through the entrance door.
However, the departure of both Tonali and Anthony Gordon has significantly depleted the squad that finished last season in 12th position in the Premier League, and Newcastle also face a battle to hold on to their captain, Bruno Guimaraes, who is the subject of ongoing transfer interest from Arsenal.
It was suggested earlier this month that Guimaraes is interested in a possible move to the Emirates, although at this stage it does not look as though Arsenal are willing to offer what would almost certainly be required to sign the Brazil international.