AbbVie succeeds in Shire courtship with $53 billion deal

Acquisition means AbbVie can reduce its US tax bill by moving base to Britain

Tablets of Shire’s Adderall. Abbvie is paying about £52.48 per share for Shire. Photo: Bloomberg

Tablets of Shire’s Adderall. Abbvie is paying about £52.48 per share for Shire. Photo: Bloomberg

 

US drugmaker AbbVie bought Dublin-based Shire on Friday in a $53 billion-pound 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 US firm raised its price to £52.48 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 UStax bill and its reliance on arthritis drug Humira, the world’s top selling medicine which loses US patent protection in 2016. AbbVie, which generates nearly 60 per cent 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 combined company incorporated in Jersey, the Channel Islands, which will pay an effective tax of about 13 per cent, sharply lower than its current rate of about 22 per cent, making the deal one of the biggest driven by the tactic known as tax inversion.

America’s Pfizer tried a similar tactic earlier this year when it made a bid for Britain’s AztraZeneca though its $118 billion deal was rejected.

Shire’s board had said on Monday it was ready to recommend the higher offer from AbbVie, signalling the end of a lengthy courtship.

AbbVie’s agreed price represents a premium of about 53 per cent to Shire’s share price on May 2nd, the last business day before AbbVie’s first offer, which was rebuffed by Shire.

Shares in Shire, which will own about 25 per cent of the combined group, rose 1.9 per cent to £48.99 pounds in trading on Friday after the agreed deal was announced.

Separately, Shire raised its earnings guidance for the year to low-to-mid 30 per cent growth, from mid-to-high 20 per cent growth. The company, which also produces hyperactivity drug Vyvanse, reported record revenue of $1.5 billion for its second quarter.

Commenting on the final takeover deal, AbbVie chairman and chief executive Richard Gonzalez said tax benefits were not the main reason it bought Shire. He said that tax was “clearly a benefit”, but it was not the primary rationale behind the $55 billion deal, adding that the tie-up had compelling financial and strategic attractions.

Reuters