AbbVie succeeds in its pursuit of Shire with a $53 billion deal which will give the U.S. pharma giant access to Shire's premium medicines for rare diseases, and, potentially, slash its tax bills. David Pollard reports.
Shire rejected four previous bids from AbbVie - but has finally yielded to the courtship and said 'yes' . For the markets, it's a marriage made in heaven Mike Ingram of BGC Partners. SOUNDBITE (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: ''If you look at how the share prices have reacted on both companies, it seems that both of them are winners, and probably the only loser, arguably, is the U.S. government.'' AbbVie is paying the equivalent of over £52 pounds per share for Shire. That's a premium of more than 50 percent to where Shire's share price was before the bids began - the deal worth £32 billion in total. AbbVie is based in Chicago - Shire in Dublin - but now plans to create a combined company in Jersey - a move that will slash its tax bill, and a key synergy. SOUNDBITE (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: ''It will allow the combined companies' effective tax rate to fall from something like 22 percent to 13 percent and there's a substantial dollar you can attach to that.'' Shire makes expensive medicines to treat rare diseases. Adding them to AbbVie's pipeline will reduce its reliance on the arthritis drug Humira - a top-seller which generates nearly 60 percent of AbbVie's revenues - whose patent protection runs out in 2016. But it's the advantages of so-called 'tax inversion' that have really caught the eye of the markets - which are hoping for more deals like it. SOUNDBITE (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: ''You've got something like a trillion dollars of U.S. corporate offshore cash which might be looking for a home and M&A is clearly a way to utilise that.'' America's Pfizer tried a similar tactic earlier this year when it made a bid for Britain's AztraZeneca. Its $118 billion deal was rejected. For AbbVie, 'though, it appears to be a case of fifth time lucky.