SAINT HELIER (dpa-AFX) - U.S. drugmaker AbbVie Inc. (ABBV) said Tuesday that it has made a fourth offer to acquire Ireland-based rival Shire Plc (SHP.L, SHPG), raising its offer by about 11 percent to 51.15 pounds per share. The company urged Shire shareholders to strongly encourage its board to engage in constructive dialogue with AbbVie.
Under AbbVie's revised indicative proposal, Shire shareholders will receive 22.44 pounds in cash and 0.8568 ordinary shares of New AbbVie for each Shire share held by them. The revised offer represents an indicative value of 51.15 pounds per share or $87.56 per share, as of July 7, 2014.
AbbVie's latest offer represents an increase of about 11 percent or approximately 3 billion pounds to its prior indicative offer value of 46.26 pounds per share. It also represents a 48 percent premium to Shire's closing share price of 34.67 pounds on May 2, 2014, the last practicable date prior to AbbVie's initial proposal.
AbbVie said it strongly encourages Shire shareholders to consider its fourth proposal and communicate their perspective to Shire's board in view of the July 18, 2014 deadline. AbbVie added that it is willing to move quickly and cooperatively to engage with Shire with a view to achieving a transaction for the benefit of all shareholders.
AbbVie noted that its financial advisers have met with or spoken to a large number of Shire shareholders, who collectively represent a majority of Shire's outstanding shares. The majority of these shareholders are longer-term holders of Shire and include the majority of Shire's largest shareholders.
AbbVie's move to launch a sweetened offer for the fourth time comes after Shire rejected AbbVie's $46.5 billion offer in mid-June, saying its board decided unanimously that the proposal fundamentally undervalued the company and its prospects. Shire also said the proposal was 'unsolicited and highly conditional.'
AbbVie was formed in January 2013 following a separation from Abbott Laboratories (ABT). A deal will help AbbVie to redomicile in Ireland, which has a much lower tax rate than the U.S. The statutory tax rate in the U.S. is currently 35 percent, while it is 12.5 percent in Ireland.
In addition, the deal would give AbbVie access to Shire's growing stable of treatments for rare diseases, while its flagship arthritis drug Humira, which accounts nearly 60 percent of its sales, is set to lose U.S. patent protection at the end of 2016.
AbbVie noted that the revised indicative proposal will increase the ownership that will be held by Shire shareholders to about 24 percent of a new holding company of the combined group, New AbbVie. AbbVie's previous offer meant Shire shareholders would own about 23 percent of the merged company.
As per UK rules, AbbVie has to announce a firm intention to make an offer for Shire by July 18, 2014 or announce that it does not intend to make an offer.
North Chicago, Illinois-based AbbVie made an initial cash and share offer in early May 2014 that represented an indicative offer of 39.50 pounds for each Shire share. Later, AbbVie sweetened the offer, and the third cash and share proposal represented an indicative amount of 46.26 pounds for each Shire share, or a total value of $46.5 billion.
Several U.S. healthcare companies, are increasingly looking at inversions as an option to escape the high rate of U.S. corporate taxes, while the U.S. overhauls its healthcare system under the Affordable Care Act.
Some of these companies are sitting on huge cash hoards in their overseas subsidiaries and would be heavily taxed if they repatriated these funds to the U.S. However, U.S. lawmakers are now targeting legislation aimed at curbing U.S. companies from doing inversions.
In the most recent tax inversion deal, medical device maker Medtronic, Inc. (MDT) agreed to acquire Dublin, Ireland-based smaller rival Covidien plc (COV) in a cash and stock deal valued at about $42.9 billion.
U.S. drugmaker Pfizer Inc. (PFE) recently made an abortive $116.6 billion takeover bid for British drug maker AstraZeneca plc (AZN, AZN.L) through an inversion. Parsippany, New Jersey-based Actavis plc (ACT) relocated to Ireland through an inversion.
ABBV closed Monday's trading at $57.40, down $0.82 or 1.41 percent on a volume of 4.59 million shares.
SHPG shares closed Monday's trading at $237.47. In Tuesday's pre-market trades, the stock is up $1.78 or 0.75 percent to $239.25.
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