AbbVie assures staff Shire merger to go ahead

Following the tightening of tax regulations in the US to discourage tax inversion mergers with international companies, AbbVie CEO Richard Gonzalez has told employees that the takeover of Shire will still go ahead.

In a letter to Shire staff on Monday, published in The Wall Street Journal, Gonzalez talked with enthusiasm about the £31 billion deal, which was agreed in July. He said he was ‘more energised than ever about our two companies coming together’, citing ‘shared traits and values’.

‘When we first considered Shire joining together with AbbVie it was because we saw the opportunity to lead and grow in important therapeutic areas. It was also because we saw a complementary pipeline that would be positioned to enhance innovation,’ he stated in the letter. ‘But more than that, we saw people who shared our vision. I’m happy to say I’m more confident than ever about the potential of our combined organisations,’ Gonzalez concluded.

There had been speculation over whether the merger would proceed, following the tax changes announced by US Treasury Secretary Lew in September, but in another note sent to his AbbVie colleagues on the same day, Chris Turek, vice president of enterprise strategies, reaffirmed that it would go ahead and would be likely to close in the fourth quarter.

It remains to be seen how the deal will be financed, as AbbVie had previously planned to use offshore cash. Under the new rules, this would no longer be tax-free and could mean the company faces a 35 per cent tax bill if it follows this route.

Other similar high profile deals that could be affected by the tax rules clampdown include Mylan’s purchase of drug rights from Abbott and the possible second attempt by Pfizer to buy AstraZeneca.

Links

US tax inversion crackdown hits pharma

Senator to table anti-tax inversion bill

Pfizer declares end to AstraZeneca bid… for now

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