Shire looking for assurances from AbbVie on execution risks
Shire, an FTSE-100 pharmaceuticals group, wants assurances from AbbVie on execution risks relating to the listed, Chicago, Illinois-based company’s takeover bid, The Daily Telegraph reported.
The newspaper said Shire is looking for reassurances from AbbVie regarding the risks involved in the latter executing its tax inversion strategy, but did not cite a source for the claim.
Shire yesterday, 14 July said it was in detailed negotiations with AbbVie over the US group’s GBP 53.20 (USD 66.82) per share takeover bid. Shire indicated that it would be prepared to recommend the offer if other terms were resolved, the item noted.
AbbVie’s revised offer would give Shire investors about 25% of the merged group, the article said, noting that a tax “inversion” – transferring the enlarged group’s domicile for tax purposes to the UK – requires a 20% stake for shareholders in the target company.
Shire has voiced concerns about execution risks relating to a tax inversion strategy previously, the article said.
The newspaper went on to quote a tax source who said Shire needs to ensure that moving the enlarged group’s domicile to the UK would benefit Shire also.
The tax inversion might also have implications for AbbVie’s US investors in terms of potential capital gains taxes, according to people cited by the report.
Dealmakers cited by the newspaper said Shire could choose to implement a “reverse break fee,” under which AbbVie would be liable to pay Shire in the event that the proposed takeover fails due to tax reasons; or Shire could insert a condition into the deal agreement stipulating that the takeover depends on US taxation remaining the same.
The article added, however, that Shire’s decision to allow AbbVie to conduct due diligence suggests that a deal is inevitable.
AbbVie’s offer values Shire at GBP 31.3bn, according to the report.
Source Daily Telegraph