Shares in the London-listed drugs maker Shire plunged 22 per cent after its US suitor AbbVie said it could walk away from a $55bn (£34bn) takeover bid because of changes to tax rules in the States.
Shire could become the largest victim so far of new laws ordered by President Barack Obama last month to stop US companies using so-called inversion takeovers to slash their corporate tax bills.
AbbVie said its board will meet by next Monday to “reconsider” the deal with particular consideration of the “US Treasury’s proposed unilateral changes to the tax regulations”.
The stock market very clearly decided that the deal will be called off, with Shire’s shares sliding 1,128p to 4,012p. They had been as high as 5,455p at the start of last month and are now back to pre-bid levels.
But Shire hit back, saying it believed “AbbVie should proceed with the recommended offer on the agreed terms”. It also pointed out that AbbVie would have to pay a $1.6bn break fee if it pulled out.
Shire also said it had not been given a “detailed an-alysis of AbbVie’s tax as- sumptions” and noted that the US firm had not quantified the impact of the change in its announcement.
Although Shire is currently domiciled in Dublin for tax reasons, AbbVie had planned to move the tax base to the UK. The Chicago-based group was also keen to buy Shire in order to diversify its drug portfolio, as its blockbuster anti-arthritis drug Humira is due to come off patent in the US in 2016. Shire specialises in drugs for attention deficit disorder as well as rare diseases.
Earlier this month the US drugs firm Salix pulled out of a merger with Italy’s Cosmo. Today, AstraZeneca, which had been targeted by Pfizer in an inversion deal, saw its shares drop more than 3 per cent, as analysts warned it was a bad sign for a deal.
“If Pfizer doesn’t get the full benefit of lower taxes, they should reduce their price, and that’s something Astra will never accept. These new inversion rules are definitely a negative,” Odile Rundquist, at Helvea, told Bloomberg.
Another potential target, artificial-joints maker Smith & Nephew, fell by 5 per cent.Reuse content