Shire, AbbVie announce $55 billion merger

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AbbVie Inc. has completed a nearly $55 billion acquisition of drugmaker Shire PLC early Friday morning, the companies announced in a joint statement.

The deal, the largest of a year filled with merger and acquisition activity, will allow AbbVie to move its corporate tax headquarters to Britain, a maneuver that would reduce its tax rate substantially.

Shire, based in Ireland but managed in Boston and listed on the London Stock Exchange, had resisted at least four previous takeover overtures by AbbVie, driving the price of the transaction up 53 percent higher than Shire’s closing price on May 2, the day before AbbVie made its first offer.

AbbVie, which was spun off from Abbott Laboratories in January 2013, will retain its operational headquarters in North Chicago.

The deal, expected to close in the fourth quarter, still requires approval from both companies’ shareholders and regulators.

“The combination of AbbVie and Shire is attractive for shareholders of both companies,” said Richard Gonzalez, AbbVie’s chief executive officer, in a statement.

The takeover, he said, will “provide us with enhanced access to cash that we can use to expand our portfolio and fund M&A to supplement organic growth.”

Shire chairwoman Susan Kilsby and board member Dominic Blakemore will join the new AbbVie board.

Fleming Ornskov, Shire’s chief executive, will remain with the company after the deal closes, leading the creation of a rare diseases unit. He will report to Gonzalez.

News of the deal comes as political pressure from the Obama administration and some members of Congress, who are seeking to halt the practice known as inversion.

Treasury Secretary Jacob J. Lew on Tuesday sent a letter to congressional leaders urging them to take immediate action to stop U.S. companies from reincorporating abroad, retroactive to May 2014.

“We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes,” he said.

A bipartisan push for major tax legislation has stalled in Congress and it’s unclear if Lew’s proposal will gain traction.

Sen. Orrin Hatch, a Utah Republican and the ranking member of the Senate Finance Committee, responded in a letter to Lew on Thursday, saying while he shares the secretary’s concerns about corporate inversions, the proposal to halt deals retroactively goes too far.

“That said, there may be steps Congress can take, short of comprehensive tax reform, to address corporate inversions and related issues” that are “less punitive and restrictive to business,” Hatch said, in the letter.

The announcement of the AbbVie-Shire deal also comes on the final day the two companies had to reach an agreement under British takeover rules. If the two sides were unable to agree to terms by Friday, AbbVie would have been forced to walk away for as long as six months.

AbbVie’s fifth offer, of about $91 a share, gained the tentative support of Shire’s board earlier in the week. The two sides had been working since Sunday to refine other parts of the takeover.

Shire would augment AbbVie’s line of treatments, which is greatly dependent on the world’s largest-selling drug, the multipurpose injectable Humira. That drug accounted for about 58 percent of the company’s first-quarter sales, and it’s on track to eclipse $10 billion in annual sales.

Shire specializes in medicines for attention deficit hyperactivity disorder, or ADHD, which account for about 40 percent of its sales. The firm also sells drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other specialty disease areas.