Shire, Abbvie Negotiating Merger Deal In New York

Shire PLC and AbbVie are negotiating a merger agreement after the U.S. research-based pharmaceutical company increased its takeover proposal to approximately $51.5 billion, according to Bloomberg based on information from people familiar with the situation.

Shire executives meet AbbVie CEO in New York

The executives of Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP) and Richard Gonzalez, the CEO of AbbVie Inc (NYSE:ABBV) are meeting to discuss a merger agreement in New York. The negotiations between the parties are still at an early stage, and there is a possibility that it might collapse, according to the sources who requested anonymity.

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AbbVie Inc (NYSE:ABBV) wants to acquire Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP)to be able to transfer its legal business address in the United Kingdom. A merger would reduce its tax rate from approximately 22% to 13%.

In addition, U.S. research-based pharmaceutical company will have a broader line of products beyond its rheumatoid arthritis drug Humira with the merger. Humira accounts 50% of the sales of AbbVie Inc (NYSE:ABBV). Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP)has treatments for rare diseases and attention hyperactivity disorder, which would be a great addition to the portfolio of AbbVie Inc (NYSE:ABBV).

AbbVie’s new offer to acquire Shire

Earlier this week, AbbVie Plc (NYSE:ABBV) submitted its fourth-takeover offer to Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP).

Under the new proposal, the U.S. research-based pharmaceutical company offers to acquire the shares of the Dublin-based drugmaker for GBP 51.15 per share, a 75% premium to the closing price of Shire PLC (NASDAQ:SHPG) (LON:SHP) on April 17.  The proposed acquisition price values the company for a total of $51.5 billion.

In a statement, Gonzalez said, “AbbVie has made a compelling offer to Shire that creates immediate and long-term value to shareholders of both companies. We think its shareholders should strongly encourage the Shire board to engage in constructive dialogue with AbbVie.”

Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP) recently rejected a $46.5 billion takeover offer of AbbVie Inc (NYSE:ABBV) citing the reason that the amount still undervalued the company. Last month, the Dublin-based drug maker hired Citigroup Inc (NYSE:C) to serve as a takeover adviser.

Earlier this year, the Dublin-based drug maker completed its acquisition of Viropharma Inc (NASDAQ:VPHM) for approximately $3.8 billion. Last May, there had been reports that Shire PLC (ADR) (NASDAQ:SHPG) (LON:SHP) is considering to acquire NPS Pharmaceuticals, Inc. (NASDAQ:NPSP).