Shire's board agrees to £32-bn takeover by AbbVie
18 Jul 2014
The board of UK drug firm Shire has agreed to a £32-billion takeover deal by US rival AbbVie.
According to Shire, the merger would see its shareholders net £24.44 cash for each share.
Shire shares hit a record high on the deadline day for the deal to proceed.
The deal includes a premium of over 50 per cent to the stock price of Shire's closing 2 May, ahead of the initial offer, and 42 per cent increase on an updated 19 June offer.
Shire's share price rose over 2 per cent in late morning Friday trades.
In a joint statement, the companies said, "The boards of AbbVie and Shire are pleased to announce that they have reached agreement on the terms of a recommended combination of Shire with AbbVie."
The deal follows a reversal of Shire's initial opposition to a takeover.
The board of London-listed Shire said on Monday, that it was ready to recommend a deal which would value it at £53.20 per share – an increase of over £2 per share on AbbVie's last bid less than a week ago.
Under the terms of the cash and stock offer AbbVie, which wanted to acquire Shire to cut its tax bill by relocating to the UK and diversify its product line-up, would get 75 per cent of the new entity, which would give Shire investors a greater stake than the 24 per cent proposed earlier.
Meanwhile, according to The Economist, it had been a hectic year for drug companies, with deals worth $230 billion ,
According to acquisitions tracking website Dealogic, drug firms spent $230 in acquisitions in the first half of 2014, a rise of 65 per cent from the same period last year.
According to The Economist, the increase in drug deals was notable for two reasons, the first being the popularity of ''tax inversions'' - the Shire acquisition would allow AbbVie to be domiciled abroad, that would slash its tax rate by almost half.
US treasury secretary Jack Lew urged Congress this week to pass a law ending this ''abuse of our tax system''.
However, the mergers just formed part of the drug industry's efforts to remake itself, The Economist noted.
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