Shares in London-listed pharmaceutical company Shire rose nearly 12% following news that it rejected a merger proposal from US rival AbbVie, citing its huge growth potential in the near future.

Shire shares are trading up 11.96% as at 9:43 am BST.

US pharmaceutical giant AbbVie earlier confirmed that it had approached Shire with a merger proposal three times, which was rejected by Shire's board.

The final offer valued Shire at about £27bn ($45.9bn, €33.8bn) or £46.26 per share. The initial cash and stock deal proposed in early May valued each Shire share at £39.50.

Shire confirmed its rejection of the proposal, which also involved a new US-listed holding company with a UK tax domicile.

"At AbbVie's request, Shire met with AbbVie to enable AbbVie to explain key aspects of the Proposal. Following this meeting, the board of Shire decided unanimously to reject the proposal on the basis that it fundamentally undervalued the company and its prospects," Shire said in a statement.

Shire added that the proposal would deny its shareholders full benefits of its growth strategy, under which it expects to double annual product sales to $10bn by 2020.

It noted that the company had significantly accelerated growth and increased shareholder returns over the last 12 months.

"Our high-performing management team and focused strategy are producing even stronger results, reflected in our recent top-line growth and increased profitability," said Susan Kilsby, chairman of Shire.

"With an expanded portfolio focused on high-growth opportunities, an efficient cost base and an enhanced innovative pipeline, we have put in place a platform for long-term value creation. We believe that Shire has a strong independent future."

With its tax base in Ireland, Shire has been an acquisition target of US drugmakers that are trying to shift tax base to European countries due to the high corporation tax rate in the home country.

Shire generates about 40% of its sales from medicines for attention deficit hyperactivity disorder. In addition, the firm has developed drugs treating rare genetic disorders, and is developing unique treatments in ophthalmology and other specialty disease areas.

Shire currently has a market capitalisation of £22bn, while AbbVie is valued at about $86bn.