|
 Shire said it was ready to recommend the deal, the latest in a list
of mergers proposed by U.S. firms seeking to cut their tax rates,
and which comes less than seven weeks after the collapse of Pfizer
Inc's $118 billion bid for AstraZeneca Plc, also motivated in part
by tax factors.
Chicago-based AbbVie, which wants to buy Shire to cut its tax bill
and diversify its product line-up, increased its offer to 53.20
pounds per share on Sunday, following a request from the
Dublin-based group which had rejected four previous bids.
Citing people familiar with the matter, Reuters had reported on
Saturday that Shire, a maker of drugs for rare diseases, had asked
AbbVie to sweeten its offer to near 53 pounds per share in order for
it to recommend the deal.
Shire said the new bid comprised 24.44 pounds in cash and 0.8960 new
AbbVie shares for each Shire share and would result in Shire
investors owning around 25 percent of the combined entity.
"The proposed offer seems a fair price that represents good value
for both companies’ shareholders," said Mick Cooper, an analyst at
Edison Investment Research. Shares in Shire, founded in 1986, hit a
record high of 50.45 pounds in mid-morning trading.
AbbVie is eager to buy Shire both to reduce its U.S. tax bill by
moving its tax base to Britain - a tactic known as inversion - and
to diversify its drug portfolio.
The U.S. group gets nearly 60 percent of its revenue from rheumatoid
arthritis drug Humira, the world's top-selling medicine, which loses
U.S. patent protection in late 2016.
Analysts at Barclays estimated the move would provide an estimated
$1.3 billion tax savings by 2020, reflecting lower UK corporate tax
rates.
TAX SAVINGS
AbbVie has proposed creating a new U.S.-listed holding company with
a tax domicile in Britain, whose corporate tax rate is set to drop
as low as 20 percent from 2015, well below the U.S. headline rate of
35 percent plus local taxes. The UK government has also introduced
tax breaks designed to encourage research and development.
"We expect the majority of the tax savings to be realized within the
first two years," Barclays analysts said.
"Strategically AbbVie acquires Shire's quality growth assets in
platforms including rare diseases, neuroscience and ophthalmology,
easing investor concerns about over-reliance on Humira and offering
future growth opportunities."
[to top of second column] |
Analyst Alistair Campbell at banking group Berenberg said there were
few other British pharmaceutical companies that would suit a tax
inversion takeover.
"The company has to be of a certain size, because around 20 percent
of the shareholders post deal must be shareholders in the target
company, so you can't go for small companies," he said. "Glaxo is
too big, Astra has had an approach from Pfizer and Shire has now
gone."
Smith & Nephew Plc, Europe's largest maker of artificial joints, has
been seen as a possible contender, with U.S.-based Stryker Corp
forced to say it would not bid for the group after reports linking
it with a deal circulated in May.
Sweden's Meda AB rejected an improved takeover offer from U.S.
generics firm Mylan Inc in April, which could have helped
reduce taxes.
The approach for Shire, founded in Britain, has been far less
controversial than the move for AstraZeneca. Headquartered in
Dublin, it is managed from Boston, Massachusetts, and has most of
its sales in the United States, resulting in a relatively small
business footprint in Britain.
Shire Chief Executive Flemming Ornskov had said he was happy for the
company to be sold at the right price, but like AstraZeneca in its
defense against Pfizer, he had set out a detailed case as to why it
was worth a lot more than AbbVie was originally offering.
($1 = 0.5877 British Pounds)
(Editing by Louise Heavens and David Holmes)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed. |
