AbbVie Inc. is expected to announce Friday a $53 billion takeover of Shire PLC.
North Chicago-based AbbVie has pursued Shire, a specialty drugmaker, to broaden its product line and as a way to reduce its tax burden by moving its legal headquarters overseas. The companies have tried to work out a deal since AbbVie increased its cash-and-stock offer to about $53 billion earlier this week.
The main sticking point has been “Shire’s demand for a big break fee” in case AbbVie backs out, The Financial Times reported Thursday. The newspaper said the two sides were close but a final agreement was not guaranteed.
Worries that the US government may move to limit so-called tax inversions – whereby companies move their headquarters offshore to reduce their tax burden – have increased uncertainty around the deal in recent days.
Shire had rejected three unsolicited offers from AbbVie Inc. before asking for a revised proposal earlier this month.
Shire shareholders would own about 25 percent of the combined new company, which exceeds the 20 percent threshold needed to undertake a so-called tax inversion. AbbVie has estimated it could reduce its tax rate from 22 percent to 13 percent by 2016 after AbbVie reincorporates on the British island of Jersey, where Shire is headquartered.
Combined, AbbVie and Shire would rank ninth worldwide in prescription drug sales, according to The Wall Street Journal. The company wold have sales of $23.64 billion, putting it just behind AstraZeneca with $24.52 billion and ahead of Eli Lilly at $20.12 billion, the Journal said based on data from EvaluatePharma.