Actavis will forgo backing from Swedish buyout firm EQT as it prepares to square off against larger peer Teva in the bidding for generic drug maker Ratiopharm, several people familiar with the auction said.

Actavis has called off its plan to collaborate with EQT and will now rely entirely on its biggest creditor, Deutsche Bank , for funding the planned takeover of the world's fifth-largest generics maker, the sources told Reuters.

U.S. drug major Pfizer, which until recently was also said to be eyeing Germany's Ratiopharm, appears to have abstained from the decisive round of bids, the people added.

"The offer from Actavis is the highest so far and is close to €3 billion," one source said. That would make the deal the biggest generics takeover since Teva's $7.5 billion purchase of U.S. rival Barr, announced in July 2008.

Heir Ludwig Merckle put Ratiopharm on the block as part of concessions made to creditors by his father Adolf Merckle, who committed suicide in January 2009 after ceding control of his business empire to lenders during the financial crisis.

Deutsche Bank has approved Actavis' decision to go it alone, in a wager that a Actavis-Ratiopharm tie-up would lift its chances of recouping its loans. However, Deutsche Bank would have to swap some of its debt for an equity stake in the combined company, one source said.

Actavis owes the lender more than €4 billion as a result of the 2007 buyout of Actavis by Icelandic billionaire Bjorgolfur Thor Bjorgolfsson. The debt-laden company failed to find a new owner last April.

Ratiopharm, Actavis, EQT and Teva declined comment. Officials at Pfizer were not immediately available for comment.

A takeover contract for Ratiopharm could be drawn up by the end of March, one source told Reuters this week. Analysts say Israel's Teva, the world's largest generics maker, has deeper pockets and stands to gain more from potential cost cuts at family-owned Ratiopharm than does Actavis.

Teva's finance chief Eyal Desheh said on Tuesday that acquisitions remained an integral part of company strategy, particularly outside the U.S. Ratiopharm could be Teva's fast track to the No. 1 spot in Germany's generics market, the world's second biggest, where Teva now trails Novartis's Sandoz unit with its Hexal brand, Ratiopharm, and Stada.

Actavis, in turn, would become the world's third-largest generics player if it clinched the deal, up from No. 5 now, according to Credit Suisse estimates.