AbbVie sours on $55B Shire deal after tax changes
AbbVie's board is recommending stockholders vote against its $55 billion takeover offer for drugmaker Shire after tax changes reduced the financial advantages of the deal.
The North Chicago, Illinois-based company said in a statement issued late Wednesday that U.S. Treasury Department-led tax changes have introduced an "unacceptable level of uncertainty" to the transaction and eliminated some of its financial benefits.
The regulations aim to limit a practice known as an inversion in which a U.S. company reincorporates overseas or combines with a foreign company. These deals can help lower a company's U.S. tax bill.
Numerous U.S. companies, many in health care, have announced inversions in recent months.
Shire has insisted AbbVie Inc. go ahead with the takeover and reincorporate on the British island of Jersey, where Shire is incorporated.
"The agreed upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed," said AbbVie's chairman and CEO Richard A. Gonzalez.
AbbVie potentially faces a hefty break fee if the deal doesn't go ahead.