British drugmaker Shire has rejected a takeover offer from AbbVie which would have valued the group at around £27 billion.
US firm AbbVie, which said the talks were no longer ongoing, was responding to press speculation which had revealed the talks.
AbbVie's initial cash and share proposal in early May 2014 represented an indicative offer of £39.50 per share for Shire.
The third and latest cash and share proposal represented an indicative offer of £46.26, it said.
Shire said it rejected the takeover proposal because it undervalued the company and its growth prospects.
It said the proposals would deny its shareholders the full benefits of its strategy and warned it also had concerns regarding the execution risks associated with the move to base its tax domicile in the UK.
The company said it expected to more than double its 2013 annual product sales to $10 billion by 2020 and advised its shareholders to take no action in relation to the takeover bid.
AbbVie, which makes rheumatoid arthritis drug Humira, has a market capitalisation of around $86 billion. Shares in Shire closed at £37.38 pounds yesterday, giving it a market capitalisation of £22 billion.
A share offer of 46.26 would give Shire a market cap of £27 billion.
The bid talks come as US healthcare companies look to acquire overseas rivals partly to lower their tax rates.
Founded in 1986 in Britain, Shire conducts most of its business in the US and has been domiciled in Ireland for tax purposes since 2008.
With its tax base in Ireland, where effective corporate tax rates are among the lowest in the world, Shire, with a mid-sized market value, has been seen as a prime takeover target for US drugmakers.
Shire specialises in medicines for attention deficit hyperactivity disorder (ADHD), which account for around 40% of its sales. The firm also sells drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other speciality disease areas.