U.S. drugmaker AbbVie finally wins Dublin's Shire with $55 billion deal

Fri Jul 18, 2014 8:23pm EDT
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By Paul Sandle

LONDON (Reuters) - U.S. drugmaker AbbVie Inc bought Dublin-based Shire Plc on Friday in a 32 billion pound ($54.7 billion) deal that will allow it to slash its tax bill by relocating to Britain.

The London-listed company, which makes expensive medicines to treat rare diseases, fought off four earlier bids from AbbVie until the U.S. firm raised its price to 52.48 pounds per share - made up of 24.44 pounds in cash and 0.8960 new AbbVie shares.

Chicago-based AbbVie is buying Shire to cut both its U.S. tax bill and its reliance on arthritis drug Humira, the world's top selling medicine which loses U.S. patent protection in 2016. AbbVie, which generates nearly 60 percent of its revenue from Humira, had until Friday to announce a firm offer for Shire, extend the deadline or walk away under UK takeover rules.

It now plans to create a company listed in New York, incorporated in Jersey, the Channel Islands, and tax-domiciled in Britain, which will pay an effective tax of about 13 percent by 2016, sharply lower than its current rate of about 22 percent, making the deal one of the biggest driven by the tactic known as tax inversion.

America's Pfizer Inc tried to pull off the same trick earlier this year when it made a bid for Britain's AstraZeneca plc though its $118 billion deal was rejected.

Calls for political action to stop tax inversion deals are growing in the United States. U.S. Treasury Secretary Jacob Lew urged Congress this week to take steps to discourage companies moving their tax domiciles aboard, saying "economic patriotism" was needed.

Dick Durbin, the No. 2 Democrat in the U.S. Senate, criticized AbbVie for moving after using taxpayer-supported medical research to become one of the United States’s most profitable companies.

"It was our government’s patent office which protected their discoveries and guarded their right to make a profit,” said Durbin of Illinois. “Now AbbVie is ‘moving’ to an Irish island to escape paying the U.S. taxes it owes.”   Continued...

Vitamins made by Shire are displayed at a chemist's in northwest London July 11, 2014.    REUTERS/Suzanne Plunkett