AbbVie hits out at US Treasury as Shire bid dies

Following AbbVie’s recommendation to its shareholders to vote against the takeover of Shire last week, Shire’s board has agreed to terminate the Cooperation Agreement and release AbbVie from its obligations to proceed with the offer.

Shire’s board believes a speedy resolution is in the best interests of its shareholders, employees and stakeholders.

As a result, the offer period will now end and AbbVie will be subject to Rule 35.1 of the Takeover Code, which means AbbVie is prohibited from making any offer for Shire without the consent of the Takeover Panel for a period of 12 months from 20 October.

AbbVie’s chairman and CEO Richard Gonzalez slammed the recent US tax changes, which had been a major factor in the company’s decision not to proceed, and called for full tax revision: “The unprecedented unilateral action by the US Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today. The US tax code is outdated and is putting global US-based companies at a disadvantage to foreign competitors in an area of critical importance, specifically investing in the United States. Comprehensive tax reform is essential to create competitiveness and to stimulate investment in the economy.”

The turnaround means AbbVie is now obliged to pay Shire a break fee of approximately $1.635 billion today.

Reassuring the markets about Shire’s prospects as an independent company following the deal’s collapse, Shire chair Susan Kilsby said: “Shire has an exceptional track record of delivering value and growth. This growth profile has been accelerated by our new management team executing a clear and focused strategy. Importantly, we have maintained this momentum since July and made material progress across our business. Whilst we are disappointed that the offer will not now complete, we continue to enjoy excellent prospects as we execute our plan to double Shire’s product sales to $10 billion by 2020.”

The company reported record quarterly revenues for Q2 2014, increasing guidance for earnings growth for the second time in the year to low-to-mid 30 per cent growth in 2014. Shire’s trading since the end of Q2 has remained strong.

Since AbbVie’s original offer, Shire has secured US FDA acceptance for filing with priority review of a sNDA for Vyvanse for adults with binge eating disorder; a ruling in its favour in the District Court for New Jersey that certain claims of patents protecting Vyvanse were both infringed and valid; a strategic licensing and collaboration agreement with ArmaGen and a $248 million cash refund from the Canadian revenue authorities, with a further $162 million due in late 2014.

Shire will announce its Q3 results on 24 October 2014.

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AbbVie withdraws Shire bid following US tax changes

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