US suitor AbbVie has been eyeing pharma player Shire since early May. Now, after five times of asking the British pharma company, which is known for its popular method of treating ADD with Vyvanse, has finally said yes. AbbVie gets to partner with Shire which is a FTSE 100 company and in return acquires a British tax rate as well for the combined company. In the current tax scenario in America where native companies are looking to partner with foreign names so as to cut down on their tax rate, tax attorneys say that AbbVie’s move is not a big eyebrow raiser at all.
They are just trying to survive while the White House wastes so much of America’s time and America’s money.
Detailed Discussions Ensue in New York
The two companies are now locked in detailed discussions in New York to discuss the sharing of assets. AbbVie has to pay £24.44 in cash to Shire and allow the British company access to 0.896 of AbbVie shares (effectively giving Shire a 25% control of the combined company). Tax lawyers who have been following recent American conquests of foreign pharma companies say that AbbVie has succeeded where its rival company Pfizer could not.
Stock Price Rises
Pfizer had bid for AstraZenca with an even bigger bid of £63bn but the deal went quickly south. As news of AbbVie’s merger came floating around the corridors of the industry, the share prices for the company quickly rose from 33p to 4,903p in a short span.
AbbVie’s pursuit of Shire has not raised many concerns unlike the Pfizer-AstraZenca deal. One reason for this could be that Shire has a huge market in the US and most of its operations are managed from Boston. The company has its offices in Basingstoke and headquarters in Dublin, but for all purposes and reasons the US is its home.
Mainly American Employees
Most of the Shire’s staff too emanates from America. Shire has been building up a rare diseases unit which AbbVie has been coveting for a long time now. Partnering with Shire will also help AbbVie reduce its dependence on its top-selling drug Humira, which is meant for patients of rheumatoid arthritis. The drug single handedly makes up about 60% of AbbVie’s sales in the US but since it will lose its patent protection in 2016 the company was eager for greener pastures to keep its control of the market.
Merger will also Help with Taxes
Partnerships among business houses and rival companies are made everywhere, but tax attorneys in America are very sure that a huge factor in the American companies partnering with foreign companies is the low rates of corporate taxes abroad. By moving its base to Britain, AbbVie is using the now famous tactic of ‘tax inversion’ to cut its tax losses. AbbVie is only one of the many drug companies that have moved or are in the process of moving abroad to cut down on taxes. Another pharma retail giant Walgreens too has been contemplating the move to foreign shores and many more are expected to join the bandwagon soon.
With Democrats only wanted to raise taxes on hard working companies for the sake to keeping more people tied to the system via their social programs, this should not surprise anyone.