Shire share price falls as AbbVie confirms acquisition is off the table
Drug-maker Shire saw its share price tumble by a further 10 per cent yesterday, after US company AbbVie confirmed that it had abandoned plans for a $54bn (£32m) acquisition of the firm.
Earlier this week, Shire said that it would be owed “a break fee of approximately $1.64bn” if AbbVie shareholders voted against the offer. The US company had previously been keen to buy Shire in order to reduce its tax bill by moving its base to Britain.
However, the US Treasury is trying to curb tax-avoiding acquisitions such as the proposed Shire deal, and AbbVie’s board has recommended that shareholders vote against the purchase, blaming changes to the rules. The new rules came into play on 22 September, and “introduced an unacceptable level of uncertainty to the transaction”, said AbbVie.
The US firm also stated that the changes eliminated some of the financial benefits of the transaction and “fundamentally changed the implied value of Shire”.
Richard Gonzalez, AbbVie chairman and chief executive, said: “AbbVie has always been financially disciplined and we have rigorous standards in place to ensure transactions are financially sound and deliver compelling stockholder returns.”
He added that although the “strategic rationale” of combining the two companies “remains strong”, the tax changes mean it is no longer in the best interests of our stockholders to proceed.
Shire said that it was considering the current situation, with a further announcement expected in due course.