AbbVie cools on $55 billion Shire deal after U.S. tax changes

Wed Oct 15, 2014 5:15pm EDT
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By Paul Sandle and Ransdell Pierson

LONDON (Reuters) - U.S. pharmaceutical company AbbVie said it was reconsidering its $55 billion takeover of Shire in the wake of U.S. government moves to curb deals designed to cut taxes, wiping as much as $13 billion off the London-listed firm's stock price.

Chicago-based AbbVie said late on Tuesday it was responding to the U.S. proposals which aim to make it harder for American firms to shift their tax bases out of the country and into lower cost jurisdictions in Europe.

AbbVie's move for Shire, a leader in drugs to treat attention deficit disorder and rare diseases, was announced in July amid a spate of similar takeover deals in the pharmaceutical sector.

It proposed creating a new U.S.-listed holding company with a tax domicile in Britain, which applies low tax rates to patent income and has passed laws that make it easy for companies to shift profits into tax havens.

The news hammered shares in Shire, sending them down 23 percent, to where they were before the deal talks emerged in June.

Shares in larger rival AstraZeneca, which had rebuffed a $118 billion takeover bid from U.S. drugmaker Pfizer Inc, fell 2.9 percent.

AbbVie said its board will meet on Monday to consider the impact of the U.S. Department of Treasury's proposed unilateral changes to tax regulations announced last month, and to also consider whether to withdraw or modify its recommendation on the Shire deal.

Shire urged AbbVie to push ahead, pointing out that the U.S. drugmaker might have to pay a breakup fee of $1.64 billion were it to renege on its recommendation for the deal to shareholders.   Continued...

A sign sits in front of Shire's manufacturing facility in Lexington, Massachusetts July 18, 2014.  REUTERS/Brian Snyder