AbbVie and Shire merger agreed

AbbVie and Shire have announced that their long-awaited merger is to go ahead, following AbbVie’s fifth takeover offer.

The deal, which the companies announced on Friday, is worth £32 billion ($53 billion).  The move is also the latest ‘tax inversion’ within the US pharma sector, aimed at cutting AbbVie’s tax bill by relocating to the lower tax regime.  To facilitate the tax inversion, a new holding company ‘New AbbVie’ will be created to merge Shire and AbbVie, and will be incorporate in Jersey, the tax haven island and British Crown dependency, where Shire are currently incorporated.

The companies say New AbbVie will retain its headquarters in Chicago, and will have a ‘strong presence in the US and the UK’.  The move will allow AbbVie to cuts its tax payments from 22 per cent to 13 per cent, but the deal will continue to be controversial for this reason, particularly in the US.

The transaction will mean Shire shareholders are expected to hold about 25 per cent of the shares in the new company, New AbbVie, receiving £24.44 in cash and 0.8960 New AbbVie shares for each Shire share.

AbbVie chief executive Richard Gonzales said of the deal, which values Shire at more than £31 billion: “This is a very significant step that allows us to seek regulatory and shareholder approvals to complete the transaction. The proposed transaction would create a well-positioned and focused biopharmaceutical company, giving us the opportunity to expand and augment our product portfolio, advance our pipeline, accelerate our growth, and create long-term value for our shareholders.”

He stressed that the companies had complementary strategies, focusing on areas of high unmet medical need, with Shire bringing new growth platforms in neuroscience and rare diseases.

Susan Kilsby, chairman of Shire commented: “Shire has a long track record of delivering value for both shareholders and patients. Our growth profile has been accelerated under our new management team who have successfully executed a focused strategy.

“We believe that this offer reflects the substantial value that we have already created for Shire’s shareholders and the strength of our future prospects. We believe that the combined group represents an exciting fit of two complementary businesses that will create a new market leader in specialty pharmaceuticals with a portfolio of fast growing products, a promising pipeline and enhanced growth prospects.”

The deal, which is set to be completed in the fourth quarter of 2014, will see New AbbVie working in areas of unmet need, including immunology, rare diseases, neuroscience, metabolic diseases and liver disease (HCV) and multiple emerging oncology programmes.

The current combined workforce of AbbVie and Shire is approximately 30,000 employees and the combined market cap is approximately $137 billion (as at 18 July).

Links

Shire enters takeover talks with AbbVie

AbbVie reveals Shire rejection of $46 billion bid

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