updated 3/24/2006 12:02:33 PM ET 2006-03-24T17:02:33

British insurance company Aviva PLC withdrew its 17 billion pound ($30 billion) proposal to buy smaller rival Prudential PLC on Friday, just days after it announced the approach.

However, Aviva said it intended to remain on the acquisition trail to consolidate its position as Britain’s largest insurance company.

“It leaves us where we were three weeks ago. We’ll accelerate ... where opportunities make sense,” Chief Executive Richard Harvey said.

Aviva said the deal “would have created significant value for both sets of shareholders,” but depended on cooperation from Prudential.

The Aviva offer, which valued Prudential at 708 pence ($12.44) a share, would have created an industry leader with a 36 billion pound ($63 billion) market capitalization.

The insurer added that it reserved the right to make or participate in an offer within the next six months if Prudential agreed to recommend an offer or if a rival bidder emerged.

Shares in Prudential rose over the week as analysts speculated about Aviva raising its offer or the chances of a takeover war.

After pushing well above the value set by Aviva, Prudential shares dropped 5.7 percent to 674.5 pence ($11.71) after Friday’s announcement. Aviva stock rose 1.3 percent to 833 pence ($14.47).

In a statement to the exchange, Prudential said it continued to have “full confidence” in its “independent future.”

In an attempt to publicly woo its reluctant takeover target, Aviva revealed Monday that it had made an approach to Prudential on March 16. The all-share proposal offered 82 new Aviva shares for every 100 Prudential shares.

Harvey said on Monday that there was “a compelling strategic, financial and operational logic” behind a merger, which would have created the world’s fifth-largest insurer by market value.

There had been speculation of a tie-up between Aviva and Prudential for months, but Prudential had consistently played down such rumors.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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