Tax crackdown risks £32bn buyout
The £32bn takeover of a leading UK pharmaceuticals firm is in danger of collapse because of a tax crackdown announced by the White House.
AbbVie said this week that its board would meet on Monday to reconsider the purchase of Basingstoke-based Shire, which is best known for its drugs to treat attention deficit disorder.
The Illinois-based firm agreed the purchase of Shire in July when it said the combined company would be domiciled in the UK in a move taking advantage of a lower corporate tax rate. However, since then the US has announced it will crack down on the tax inversion practice, which has already seen a large number of companies use foreign takeovers as a way of lowering their tax bills.
The tax inversion policy had been under consideration by Pfizer earlier this year when it bid for AstraZeneca before it was forced to drop its interest.
AbbVie said that its board would consider, among other things, the impact of the US Treasury’s changes to tax regulations, including the “impact to the fundamental financial benefits of the transaction”.
Shire said that it believed AbbVie should proceed with the deal, and it pointed out that a break fee of around $1.6bn (£1bn) would be payable by AbbVie if the US decided to pull out of the transaction..
Shares in Shire dived by 28% after the announcement.
AstraZeneca shares, meanwhile, were down by 4%.
