U.S. drugmaker AbbVie (NYSE:ABBV) bought Dublin-based Shire on Friday in a 32 billion-pound ($54.7 billion) deal that will allow it to slash its tax bill by relocating to Britain.
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The London-listed company, which makes expensive medicines to treat rare diseases, fought off four earlier bids from AbbVie until the U.S. firm raised its price to 52.48 pounds per share - made up of 24.44 pounds in cash and 0.8960 new AbbVie shares.
Chicago-based AbbVie is buying Shire to cut both its U.S. tax bill and its reliance on arthritis drug Humira, the world's top selling medicine which loses U.S. patent protection in 2016. AbbVie, which generates nearly 60 percent of its revenue from Humira, had until Friday to announce a firm offer for Shire, extend the deadline or walk away under UK takeover rules.
It now plans to create a combined company incorporated in Jersey, the Channel Islands, which will pay an effective tax of about 13 percent, sharply lower than its current rate of about 22 percent, making the deal one of the biggest driven by the tactic known as tax inversion.
America's Pfizer Inc tried a similar tactic earlier this year when it made a bid for Britain's AztraZeneca plc
Shire's board had said on Monday it was ready to recommend the higher offer from AbbVie, signaling the end of a lengthy courtship.
AbbVie's agreed price represents a premium of about 53 percent to Shire's share price on May 2, the last business day before AbbVie's first offer, which was rebuffed by Shire.
Shares in Shire, which will own about 25 percent of the combined group, rose 1.9 percent to 48.99 pounds by 1027 GMT on Friday after the agreed deal was announced.
Separately, Shire raised its earnings guidance for the year on Friday, to low-to-mid 30 percent growth, from mid-to-high 20 percent growth. The company, which also produces hyperactivity drug Vyvanse, reported record revenue of $1.5 billion for its second quarter and a 42 percent jump in its preferred earnings measure of non-GAAP adjusted earnings per ADS to $2.67.
Commenting on the final takeover deal, AbbVie chairman and chief executive Richard Gonzalez said the combination would have a best-in-class product development platform, a stronger pipeline and better R&D capabilities.
"The combination of AbbVie and Shire is attractive for shareholders of both companies," he said.
Shire was advised by Goldman Sachs, Morgan Stanley, Deutsche Bank, Evercore and Citi, while AbbVie was advised by J.P.Morgan.