Sanchez Flores, who is under contract with La Liga side Espanyol until 2019 but has a release clause in his deal, had been Stoke's first choice to replace Hughes.
Flores explained his decision during a press conference for Espaynol today.
Spanish pundit Guillem Balague has well and truly put to bed rumors of a possible move from Stoke City for Espanyol manager Quique Sánchez Flores.
Balague, a well-respected Spanish journalist, claims the current Espanyol boss has already met with the club's board over a potential deal.
"We like the connection (with the club), how they treat us, I like that Espanyol are growing".
'I am and will be the manager of Espanyol, ' he said.
"I'm well and quite happy with my situation", the 52-year-old Spaniard added.
In any event, both Stoke's plans and O'Neill's contract situation with the FAI have been shrouded in confusion once again as Irish football's governing body await Stoke's next move. We are happy, we have many things that make us feel like that.
Stoke City have sacked their Welsh manager, Mark Hughes, after poor results this season in the league.
They had hoped to announce the hire on Friday but negotiations dragged on, meaning he is likely to watch Monday night's game with Manchester United from the stands rather than the touchline.