Shire PLC Still In AbbVie’s Sights; Sweetened Offer Coming


It’s always a good idea to keep in mind that with M&A activity, like opera, it’s not over till the fat lady sings. According to Bloomberg, AbbVie Inc (NYSE:ABBV) is not throwing in the towel yet in it’s efforts to buy Shire PLC (ADR) (NASDAQ:SHPG).

AbbVie’s earlier offers for Shire

AbbVie Inc (NYSE:ABBV) has already made three bids for UK-based Shire PLC (ADR) (NASDAQ:SHPG) over the last few months, with Shire management rejecting each offer as insufficient. According to two people close to negotiations, AbbVie is planning to raise its buyout offer for drugmaker Shire one more time, and making its case directly to shareholders.

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Shire released a statement today saying that its management team had discussions with AbbVie, but had rejected all offers to buy the company. Shire said the most recent $46.5 billion offer still undervalued the firm, which is anticipating rapid growth and a doubling of current sales by 2020.

One of the sources said that Shire was not interested in a deal and refused to name a price at which its BoD would agree to sell.

The sources say AbbVie Inc (NYSE:ABBV) believes Shire PLC (ADR) (NASDAQ:SHPG) shareholders will pressure the BoD to seriously consider a sweetened bid, and are planning to officially announce an increase in their offer as early as next week. AbbVie also plans to make a detailed presentation on the benefits of a transaction for Shire shareholders to turn up the heat on management.

Tax benefits of deal

One reason AbbVie wants to make a deal is to take advantage of Shire PLC (ADR) (NASDAQ:SHPG)’s Irish tax domicile, which would result in a significantly lower tax rate U.S. pharmaceutical company.

Jennifer Smoter, spokesperson for AbbVie, had not returned a call seeking comment by press time. Shire had no further comment beyond today’s statement.

This deal mirrors a trend over the last few years, where U.S. companies have been acquiring rivals in the U.K. and other European countries with lower tax rates to decrease their taxes. U.S. law requires American companies to pay taxes on earnings from their overseas operations, unlike many other countries, and changing legal domicile would move overseas earnings and cash out of the reach of the IRS.