Sandoz Ltd., a Swiss chemical and drug company, has dropped its bid to take over McCormick & Co., the Baltimore spice maker, for about $428 million.

McCormick officials said Sandoz instead will sell the nearly 5 percent of nonvoting McCormick stock it acquired last fall in the open market back to the spice company for $28 a share. At the time of Sandoz' purchase, McCormick was selling in a range of $17 to $19 a share.

Sandoz had offered $37 a share for McCormick stock as part of its takeover attempt.

Under a new agreement, the two companies will "explore research agreements, joint-venture opportunities and other business arrangements which may be in the mutual interest of both companies," a McCormick spokesman said.

"I guess it finally got to the point where they believe that we are sincere when we say we want to remain an independent company," said Harry K. Wells, McCormick's chairman.

McCormick also has agreed to drop a suit it filed earlier this year charging Sandoz with violating state and federal securities laws in the way in which it conducted its takeover attempt.

Sandoz had countersued, saying McCormick's management was disregarding the interests of its shareholders in resisting its offer and that the company had failed to file proper disclosures with the Securities and Exchange Commission. As part of the new understanding, Sandoz has agreed it will not attempt to acquire McCormick for five years.

Sandoz is a $2.4 billion-a-year multinational conglomerate. Its U.S. subsidiary is a holding company, Sandoz United States Inc. McCormick & Co. had sales of $457 million last year.