AstraZeneca rejected the $120-billion takeover offer by Pfizer, the world's biggest drugs maker, saying it doesn't take into account the value of drugs it is currently developing. (Associated Press)

U.S.-based drugs firm Pfizer Inc. has backed away from its $120-billion takeover of Britain’s 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 world’s 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," said Ian 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 enriched offer of $93 in stock and cash, made just a week ago, represented “full value” for AstraZeneca.

Pfizer, the maker of Lipitor and Viagra, has been courting No. 8 AstraZeneca since January, saying their businesses would be stronger together.

Pfizer now may be hoping that AstraZeneca investors will pressure the company’s 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 Steve Brozak, president of WBB Securities. "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.

With files from The Associated Press