AbbVie Officially Abandons Shire
Published: Oct 21, 2014
October 21, 2014
By Riley McDermid, BioSpace.com Breaking News Staff
The dream is officially over for the $55 billion marriage between American biotech AbbVie and smaller Irish firm Shire Pharmaceuticals. A week after blaming U.S. regulators for introducing more stringent tax measures that scuttled the deal, AbbVie’s board of directors has officially voted to kill the deal.
If approved by shareholders, the failed deal will cost AbbVie around $1.6 billion, the third largest breakup fee in financial history.
AbbVie recommended last Thursday that shareholders reject the $55 billion deal after pressure from the Treasury Department over so-called “tax inversion” deals became untenable. The deal was also likely thwarted by a decision made by the Irish government Monday to close lucrative tax loopholes for foreign countries domiciled in Ireland.
AbbVie executives had some scathing words for American lawmakers and regulators looking to turn back the clock on lucrative tax breaks offered abroad.
"The unprecedented unilateral action by the U.S. Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today,” said Chief Executive Officer Richard Gonzalez.
“The U.S. tax code is outdated and is putting global U.S.-based companies at a disadvantage to foreign competitors in an area of critical importance, specifically investing in the United States,” he said in the statement. “Comprehensive tax reform is essential to create competitiveness and to stimulate investment in the economy."
The two companies had announced in July of this year that they intended to merge. Chicago-based AbbVie is the manufacturer and marketer of the blockbuster arthritis drug Humira, which will lose U.S. patent protection in 2016.
Because AbbVie's Board of Directors has withdrawn its recommendation to proceed with the transaction, AbbVie said it expects its shareholders will follow suit, effectively ending the deal.