AbbVie board ditches planned $55 billion Shire acquisition

Thu Oct 16, 2014 7:58am EDT
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By Ben Hirschler

LONDON (Reuters) - U.S. drugmaker AbbVie (ABBV.N: Quote) has pulled the plug on its plan to buy Dublin-based Shire SHP.L, recommending shareholders vote against the proposed $55 billion takeover following new U.S. tax rules.

Shire stands to be paid a break-up fee of about $1.64 billion, assuming AbbVie's shareholders follow the advice and reject the transaction.

The reversal -- which had been anticipated after Chicago-based AbbVie said it was reconsidering the deal -- hands a major scalp to the U.S. Treasury, which has been fighting to make tax-avoiding acquisitions more difficult.

That has hit the value of other potential takeover targets in Europe and cast a shadow over transactions that have yet to be completed.

But AbbVie's retreat could spark fresh deal-making by Shire, which has a strong track record of acquisitions to fuel its fast-growing business and may now look around to buy other companies, with its firepower boosted by the break-up fee.

The U.S. government's tax proposals are designed to make it harder for American firms to shift their tax bases out of the country and into lower cost jurisdictions in Europe.

"The agreed-upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed," AbbVie's chief executive Richard Gonzalez said in a statement.

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 deals in the pharmaceutical sector.   Continued...

A screen displays the share price for pharmaceutical maker AbbVie on the floor of the New York Stock Exchange July 18, 2014.  REUTERS/Brendan McDermid