* U.S. drugmaker abandons takeover attempt after rejection
* Move had been widely anticipated given May 26 deadline
* Pfizer can return in 6 months, or 3 months if invited back (Adds further details, additional quotes from Read, background)
By Ben Hirschler and Bill Berkrot
LONDON/NEW YORK, May 26 (Reuters) - Pfizer said on Monday it had abandoned its current attempt to buy AstraZeneca for nearly 70 billion pounds ($118 billion) as a deadline approached without a last-minute change of heart by the British drugmaker.
Pfizer had until 5.00 pm (1600 GMT) on May 26 to make a firm offer or walk away, under UK takeover rules. Its decision to quit the stage, at least for now, had been widely expected after AstraZeneca refused its final offer of 55 pounds a share.
"Following the AstraZeneca board's rejection of the proposal, Pfizer announces that it does not intend to make an offer for AstraZeneca," Pfizer said in a short news release.
The biggest U.S. drugmaker promised it would not go hostile, leaving the fate of what would have been the world's largest ever drugs merger in the hands of its target, whose board would have had to make a complete U-turn to get a deal done.
"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, Pfizer's chairman and chief executive.
British rules now require an enforced cooling-off period. AstraZeneca could reach out to Pfizer after three months and Pfizer could take another run at its smaller British rival in six months time, whether it is invited back or not.
Pfizer's final offer was at a price point that many analysts and investors had previously suggested would bring AstraZeneca to the table for serious negotiations.
But in rejecting an earlier offer of 53.50 pounds as undervaluing the company, the British group indicated it needed a bid more than 10 percent higher, or at least 58.85 pounds per share, for its board to consider a recommendation.
Pfizer had urged AstraZeneca shareholders to agitate for engagement and several expressed disappointment at its intransigence, although others - encouraged by AstraZeneca's promising drug pipeline - backed the firm's standalone strategy.
What happens next will depend upon whether AstraZeneca's share price deteriorates in the coming weeks and how hard its shareholders push for it to revisit a deal with Pfizer.
BlackRock, AstraZeneca's biggest shareholder, backed the board's rejection of Pfizer's 55 pounds a share offer, but urged it to talk again in the future.
The proposed transaction ran into fierce opposition from politicians in Britain, Sweden - where AstraZeneca has half it roots - and the United States over the likelihood that the marriage would lead to thousands of job cuts.
Ultimately, it was price and the lack of room for eleventh-hour maneuvering by Pfizer, that killed the deal.
Pfizer had several reasons for taking aim at AstraZeneca for what would have been its fourth mega-merger in 14 years.
Highest on the list appeared to be Pfizer's desire to take part in a recent trend of so-called tax inversions under which it could reincorporate in Britain and pay significantly lower corporate tax. Pfizer would also be able to use tens of billions of dollars it has parked overseas, avoiding high U.S. taxes for repatriating the huge cash pile.
Pfizer also had its eye on a promising portfolio of drugs in AstraZeneca's developmental pipeline, especially several potentially lucrative cancer medicines.
It was this pipeline that AstraZeneca management used to make its case for Pfizer significantly undervaluing the company. Chief Executive Pascal Soriot went as far as making a 10-year forecast for a 75 percent rise in sales by 2023.
"As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy," Pfizer's Read said.
"We will continue our focus on the execution of our plans, bringing forth new treatments to meet patients' needs and remaining responsible stewards of our shareholders' capital."
The merger would have restored Pfizer as the world's largest drugmaker by sales, a position it relinquished to Swiss-based Novartis when billions of dollars in annual revenue evaporated after its top-selling cholesterol fighter Lipitor began facing generic competition in 2011. (Editing by David Evans and Mark Potter)