Pfizer backs away from hostile bid for AstraZeneca

U.S.-based drugs firm Pfizer Inc. has backed away from its $120-billion takeover of Britains AstraZeneca PLC, citing a rejection by the AstraZeneca board.

Pfizer had said it will make a firm offer by today, in an effort to woo shareholders into a deal that would merge two of the worlds biggest drugs companies.

Instead it issued a statement Monday saying it would not pursue the deal at this time.

Pfizer said it doesn't intend to make another offer for AstraZeneca.

"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," saidIan Read, chairman and chief executive of Pfizer.

Under U.K. government rules, the pharmaceutical firms face a three-month cooling off period before talks can restart, giving both time to figure out their next move.

The AstraZeneca board had rejected the deal as undervaluing the company, but the U.S. rival said the current enrichedoffer of $93 in stock and cash, made just a week ago, represented full value for AstraZeneca.

Pfizer, the maker ofLipitorand Viagra, has been courting No. 8AstraZenecasince January, saying their businesses would be stronger together.

Pfizer now may behoping that AstraZeneca investors will pressure the companys board to negotiate on streamlining or merging some of their operations.

"For Pfizer, this now puts them in a position where they went out there to become the super pharmaceutical company in one fell swoop, and now that's not going to happen," said SteveBrozak, president ofWBBSecurities. "Now the question becomes, do they look for another target or rethink their strategy?"

The British government had criticized the deal, despite assurances the new company would have headquarters in the U.K., fearing a loss of jobs and decreased research spending.

In the U.S., Pfizer was accused of trying to use the deal to shift its profits to a lower-tax jurisdiction.

In a statement, AstraZeneca Chairman Leif Johansson acknowledged Pfizer's decision.

"We welcome the opportunity to continue building on the momentum we have already demonstrated as an independent company," Johansson said.

A Pfizer-AstraZeneca combination would have represented the richest acquisition ever among drugmakers and the third-biggest deal in any industry, according to figures from research firm Dealogic.