UK drug maker Shire confirms merger talks with AbbVie

UK drugmaker Shire has confirmed having had merger talks with US rival AbbVie, which had re-approached it with improved terms.

AbbVie was was spun-off from Abbott in early 2013.

"Shire confirms it has held a meeting with representatives of AbbVie," the company said in a statement.

According to the drug maker, the talks held in New York were at an early stage.

"There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made," the company added.

"Shareholders are strongly advised to take no action in relation to AbbVie's proposal."

According to media reports earlier, the companies were in talks for a £30 billion merger, which would change North Chicago, Illinois-based AbbVie's tax regime to the UK.

The move is expected to cut the company's corporate tax rate to 13 per cent from the current 22 per cent.

In June, Shire rejected a £27-billion merger proposal from AbbVie, valuing each Shire share at £39.50.

"The board of Shire decided unanimously to reject the proposal on the basis that it fundamentally undervalued the company and its prospects," Shire said in a statement.

The company added that the proposal would deny its shareholders full benefits of its growth strategy, under which it expected to double annual product sales to $10 billion by 2020.

It added that the company had significantly accelerated growth and upped shareholder returns over the last 12 months.

Shire generates around 40 per cent of its sales from medicines for attention deficit hyperactivity disorder.

Additionally it develops drugs treating rare genetic disorders, is working on developing unique treatments in ophthalmology and other specialty disease areas.

Bloomberg News quoted people with knowledge of the matter as saying, AbbVie chief executive officer Richard Gonzalez met in New York City with officials from Dublin-based Shire for the discussions, which were at an early stage. The people asked not to be identified discussing a private matter.

According to them, the talks might not lead to an agreement.

Under the deal, North Chicago, Illinois-based AbbVie would move its legal address to the UK, where Shire had a number of executive offices - cutting AbbVie's corporate tax rate to 13 per cent from about 22 per cent.

According to commentators, the UK Shire's disease treatments and drugs for attention deficit hyperactivity disorder would also give AbbVie an expanded portfolio beyond the rheumatoid arthritis injection Humira, which accounts for more than half of its sales.

AbbVie made a fourth offer for Shire on 8 July, valuing the company at $51.5 billion.

The UK company, led by chief executive officer Flemming Ornskov, had rejected the earlier offers, saying they undervalued the prospects of its rare-disease medicines.