Procter & Gamble Calls Off Effort to Buy AHP, Warner

CINCINNATI —  Procter & Gamble Co., faced with investor backlash and a sinking stock price, on Monday abandoned negotiations to acquire drug makers Warner-Lambert and American Home Products.

Three weeks of negotiations, initiated by the drug companies, had P&G; Chief Executive Durk Jager considering a $140-billion stock purchase that would have transformed the 163-year-old company, the largest U.S. maker of household products. Some investors said the acquisitions would have reduced per-share earnings, spurring a four-day drop in the stock.

“We simply came to the conclusion [Monday] morning, as our stock came under additional pressure, that it no longer made sense to continue on the path we were on,” Clayton Daley, P&G;’s chief financial officer, told Bloomberg News.

P&G; stock, which had fallen as low as $94.81 on Monday before the announcement, closed at $96, down $6.69 on the New York Stock Exchange.

P&G; had been approached by the two drug companies to help them fend off an unsolicited $75-billion bid by rival Pfizer Inc. for Warner-Lambert.

With P&G; stepping aside, Warner-Lambert said it “will continue to explore strategic alternatives, including discussions with Pfizer.” Pfizer declined to comment on P&G;’s decision.

In New York Stock Exchange trading, Warner-Lambert shares fell $4.06 to close at $87.94, American Home dropped $5.44 to close at $42.96 and Pfizer fell 69 cents to close at $34.38.

P&G; is expected to report earnings today. Wall Street is forecasting fourth-quarter earnings of 88 cents per share, compared with 78 cents in the year-ago period.