15th Oct 2014 07:29
LONDON (Alliance News) - Irish drug company Shire PLC Wednesday said it thinks AbbVie Inc should proceed with its recommended GBP32 billion takeover offer for the company, and noted that Shire would be due a break fee of about USD1.64 billion if the deal is called off, but its shares lost more than a quarter of their value on fears the deal will be called off.
US drug maker AbbVie said late Tuesday that it intends to reconsider the recommendation made to its shareholders to adopt the takeover agreement to acquire Shire amid proposed tax rule changes in the US. It had sent Shire a notice about its intention to withdraw or modify its recommendation.
The move comes after a flurry of takeover offers from US companies in the pharmaceutical sector targeting British peers. The US companies were all pledging to incorporate the combined companies in the UK to take advantage of lower tax rates, a practise known as an inversion deal. This prompted US authorities to move to crack down on the practise.
AbbVie said it would consider, among other things, the impact of the US Department of Treasury's proposed unilateral changes to tax regulations that it announced on September 22, "including the impact to the fundamental financial benefits of the transaction".
AbbVie's board will meet on October 20 to makes its decision, making it clear that it has not yet withdrawn its offer, which values Shire at GBP32 billion, or USD54.7 billion.
In its response Wednesday, Shire said its board will meet to "consider the current situation" and it will make a further announcement in due course.
"The board of Shire has not been provided with a detailed analysis of AbbVie's tax assumptions and AbbVie's notice does not quantify the anticipated financial impact of the US Treasury Notice on the combination," it said.
Shire's shares were down 26.9% at 3,760.00 pence early Wednesday, by far the worst performing stock on the FTSE 100.
Shire will be announcing its third quarter results on October 24.
By Steve McGrath; [email protected]; @stevemcgrath1
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