Australian pharmaceutical group Sigma Healthcare has withdrawn from its bid to acquire UK pharmacy chain Boots, ending plans for a potential $10bn (£7bn) takeover.

Sigma, which operates as both a wholesaler and retailer, said on Monday that acquiring the high street pharmacy business, operator of about 1,800 UK stores, would not align with its strategic priorities and capital investment goals.

The Financial Times had reported last week that Sigma was in early-stage discussions over a possible deal that could have valued Boots at around $10bn.

Following the announcement, Sigma shares rose 6 per cent on Monday.

The senior product and investment strategist at Global X ETFs, Marc Jocum, said investors appeared relieved by the decision.

He added that the market reaction “suggests shareholders would rather see management focus on executing the opportunities already in front of them than pursue another transformational deal of that scale.”

“Sigma has many opportunities for growth and is confident in its established growth strategy, with a primary focus on the Australian market,” the company said in a statement.

The proposed deal would have strengthened Sigma’s presence in the UK market, following its acquisition of a controlling stake in pharmacy chain Greenlight Healthcare last month.

Last year, the company completed a merger with Chemist Warehouse to form a A$30bn (£17.8bn) pharmacy and retail group.

The transaction was initially valued at A$8.8bn when announced in December 2023, but Sigma’s share price has since more than tripled.

Sigma’s decision to withdraw also prolongs uncertainty for the 177-year-old UK retailer, which was first put up for sale in 2022.