AbbVie closes in on £31bn takeover of Shire
AbbVie is closing in on a £31bn takeover of Shire in what would be the latest example of a US company buying a European rival as a way to lower its tax bill. The two sides were on Monday thrashing out final details of the deal after London-listed Shire said it was prepared to recommend a £53.20-a-share bid made by AbbVie over the weekend.
The Chicago-based drugmaker, best known for its Humira rheumatoid arthritis medicine, has until Friday under UK takeover rules to make a firm offer to shareholders. If successful, the takeover would add to the trend of US companies, particularly in the healthcare sector, using foreign acquisitions as a vehicle to move their tax domicile overseas – putting offshore cash out of reach of the US taxman. Analysts at Barclays estimated the deal would provide an estimated $1.3bn in tax savings for AbbVie by 2020. The US company intends to keep its main headquarters in Chicago but would move its tax base to the UK – a tactic known as an inversion. Others to have struck similar deals this year include Medtronic, the US medical device maker, which agreed last month to buy Dublin-based Covidien for $42.9bn. AbbVie looks set to succeed where Pfizer failed in its £69.4bn bid for AstraZeneca of the UK in May. Whereas Pfizer faced stiff political opposition because of AstraZeneca’s importance to the UK science base, most of Shire’s employees and research is based in the US. Lex live: AbbVie/Shire: The inversion version
Shire Pharmaceutical is getting ready to recommend an offer from AbbVie to its shareholders – on AbbVie’s fifth attempt. Tax inversion – AbbVie leaving the US to domicile in the UK with Shire – will be a big part of any deal. Lex wonders how big. Continue reading However, the takeover of Shire would remove one of the fastest growing FTSE 100 companies from the UK investment landscape, nearly three decades after it started life selling calcium supplements above a shop in Basingstoke, southern England. Shire has long been seen as one of the most attractive midsized takeover targets in the pharmaceuticals industry with its portfolio of rare disease drugs as well as a market-leading position in the treatment of attention deficit hyperactivity disorder. Mick Cooper, analyst at Edison Investment Research, said the proposed offer “seems a fair price that represents good value for both companies’ shareholders”.
The latest proposal is AbbVie’s fifth attempt to lure Shire into a takeover since the courtship began in May. Under the terms of the revised proposal, Shire shareholders would receive £24.44 a share in cash and own approximately 25 per cent of the combined entity. The 46 per cent cash portion of the offer is slightly increased from 44 per cent in the previous offer. For AbbVie, the acquisition would reduce its dependence on its Humira rheumatoid arthritis drug, which accounts for 60 per cent of sales and loses patent protection at the end of 2016. The company was spun off from Abbott Laboratories last year.