Print
The board of Shire Pharmaceuticals has entered into negotiations with AbbVie on a potential takeover of the U.K. specialty pharmaceutical after AbbVie sweetened its offer to $53.6 billion over the weekend. If successful, it will be the largest biopharma M&A deal since the megamergers of 2009, and the largest tax inversion deal by a drugmaker to date. Shire said it was willing to recommend AbbVie’s fifth and latest offer of $91.09 a share (£53.2) if other terms of the offer can be resolved.
Under the proposed terms of the revised offer, AbbVie would pay $41.85 (£53.2) in cash and 0.8960 shares of new AbbVie per Shire share. Shire shareholders would hold about 25 percent of the combined company, with AbbVie holding the rest. This is well above the 20 percent minimum required to establish headquarters in Ireland. AbbVie CEO Richard Gonzalez noted last month that moving to Ireland could reduce its corporate tax rate to 13 percent.
If it succeeds in taking over Shire, AbbVie will join the rush of U.S. life sciences companies shifting their tax domiciles overseas in order to reduce their tax bills, with total deal value of such deals topping $134 billion. Besides AbbVie’s potential $53.6 billion deal for Shire, life sciences tax inversion deals include Actavis’ $25 billion takeover of Forest Laboratories, Medtronic’s $42.9 billion acquisition of Covidien, and most recently, Salix’s $2.9 billion deal for Cosmo Technologies.
A combined AbbVie-Shire will join the ranks of the top ten drugmakers by prescription revneu with prescription revenues of $23.7 billion and a market capitalization of about $133 billion, according to Evaluate Pharma.
The deal will raise AbbVie’s ranking in neurology as it gains Shire’s psychiatric pipeline and top selling ADHD drug Vyvanse, which had sales of $1.2 billion in 2013. AbbVie’s top selling arthritis drug Humira had sales of $10.7 billion in 2013.
Neither company has agreed to a binding offer yet, but they are talking. Under UK rules, AbbVie must make a firm bid for Shire by Friday, July 18 or step down.
July 14, 2014
http://www.burrillreport.com/article-abbvie_inches_closer_to_acquiring_shire_.html
