Shire have rejected a £27bn takeover from Chicago based drug maker AbbVie
AbbVie have confirmed that a £27bn approach to acquire London listed pharmaceutical company Shire has broken down. AbbVie released a statement this morning confirming that they had been in merger talks with Shire since May and had raised their offer from £39.50 a share to £46.26 however AbbVie also stated in the statement that discussions over this deal were no longer taking place.
AbbVie are based in North Chicago and were formed from a spin off of Abbott Laboratories last year. AbbVie’s main product is a rheumatoid arthritis drug called Humira, which the company heavily relies on with the drug accounting for more than half of its revenue.
The Shire board felt that the offer undervalued the company and that the proposal would have denied the full benefits of Shire;s growth strategy from shareholders. Shire also believe that they are going to be doubling in annual sales to around $10bn by 2020.
As reported in a previous article this news is not unexpected as we found out that Shire had teamed up with investment bank Citi for advice on possible takeover bids. The FTSE 100 has also confirmed that AbbVie deal proposed an inversion structure, in which AbVie would be able to use this deal to relocate its tax domicile to the UK. These inversion deals are becoming ever more popular and there has been calls for a change of laws to stop this from happening.
Under British takeover rules AbbVie has now until July 18th to make a firm offer for Shire or walk away from the deal.
The rumours that surround Shires future have increased as a wave of deals have happened in the pharmaceutical sector; with Pfizer’s interest in AstraZeneca and also GlaxoSmithKline asset swap deal with Novartis. It had also been speculated that Shire could fall into the hand of U.S. group Allergen, who themselves are facing a hostile bid from rival Valeant.
A large proportion of U.S. companies that include Pfizer have been eyeing up their British and Irish competition in these inversion deals, so they can lower their tax rates with Ireland having one of the lowest amounts of corporation tax in the world. The reason why Shire looks so attractive to suitors as well is that is based in Ireland but has huge focus in the U.S. markets.
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