He said: "We did make an offer for Colin Larkin and that offer has been rejected and unfortunately it's now in the public domain probably because they want to talk the price up but that's not going to happen. The financial terms of the offer will not be increased."
Pearson says that no new bid will be made, but will "wait and see if anything develops longer term."
Meanwhile 31-year-old striker Robert Taylor, who spent numerous spells out on loan from Wolves last season, had been on City's shortlist. However, the club have chosen not to go for the former Leyton Orient, Brentford, Gillingham and Manchester City attacker.
Pearson confirmed: "Robert's a player we looked at and he's got a lot of ability and he's got a good track record in the lower divisions.
"We've made a decision over the last couple of days not to proceed with that deal."