(Adds more detail, executive comment)

Aug 5 (Reuters) - Rupert Murdoch's Twenty-First Century Fox decided to pull its offer to buy Time Warner Inc on Tuesday, abandoning plans to create one of the world's largest media conglomerates.

Murdoch, who is Fox's chairman and CEO, cited Time Warner's management and its board's refusal to engage with Fox as one reason for the stunning turn-about.

"Our proposal had significant strategic merit and compelling financial rationale and our approach had always been friendly. However, Time Warner management and its board refused to engage with us to explore an offer which was highly compelling," he said in a statement released after the market closed on Tuesday.

Murdoch also cited the reaction of Fox's share price since the proposal undervalues its shares and "makes the transaction unattractive to Fox shareholders." A Time Warner spokesman did not immediately return a request for comment.

Shares of Fox were up 10.4 percent in after-market trade after closing at $31.30, while shares of Time Warner were down 10.7 percent after closing at $85.19.

Fox said it was initiating a $6 billion share buy back program to be completed in the next 12 months.

"This significant return of capital underscores the Company`s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way," Murdoch said in a statement. (Reporting By Lehar Maan in Bangalore; Editing by Maju Samuel and Andrew Hay)