Shire Rejects AbbVie's £27 Billion Takeover Bid

British drugmaker Shire has rejected a £27 billion ($46 billion) takeover offer from AbbVie, the latest attempt by a US healthcare firm to tap into lower tax rates abroad via an acquisition.

Shire said the £46.26-per-share offer - despite being at a 30% premium to its share price over the past month - not only undervalued its prospects but its board also had concerns regarding the execution risks associated with the proposed (tax) inversion structure, as AbbVie would redomicile in the UK for tax purposes."

Founded in 1986 in the UK, Shire conducts most of its business in the US but has been domiciled in Ireland for tax purposes since 2008.

With no single controlling shareholder, the company specializing in medicines for attention deficit hyperactivity disorder (ADHD) and drugs to treat rare genetic disorders has been seen as a prime takeover target for US drugmakers due to its attractive rare diseases business and its Irish tax base.

The AbbVie offer follows its initial approach in early May with an indicative value of £39.50 per share. Shire had been previously approached by Botox-maker Allergan months before the US group itself became a takeover target for Valeant.

AbbVie's latest takeover offer proposes creating a new US-listed holding company with a tax domicile in Britain, where the government has also introduced tax breaks designed to encourage research and development.

Ireland's corporation tax rate currently sits at 12.5%, one of the lowest in the world, while Britain has been cutting its rate from 28% in 2010 to 21% this year and 20% from 2015, well below the US headline rate of 35 % plus local taxes.

Tax advisers say the British system also enables international companies to lower their tax rates in other ways.