AbbVie Can Abandon The Acquisition Of Shire
American pharmaceutical company AbbVie announced its intention to re-evaluate the terms of its offer to purchase the Irish drugmakers Shire. Statement was a reaction to the initiatives of the Ministry of Finance of the United States, aimed at curbing the practice of withdrawal of American companies from taxes through the purchase of foreign assets.
In recent months, a number of American pharmaceutical manufacturers have announced large acquisitions outside the United States or have initiated the process of merging with foreign companies. According to market analysts, the most important effect of these transactions was the reduction of the tax burden on American companies.
Offer to purchase AbbVie Shire has received after long negotiations, approved by the Board of Directors of the Irish company in July this year. Amount of the transaction, that would have satisfied both parties, amounted to $55 billion.
However, in September 2014 the Ministry of Finance of the United States introduced new tax rules aimed at curbing the practice of tax evasion due to the transfer of business abroad. In October, 14 AbbVie stated that the initiative of the Ministry of Finance forced the board of directors of the company to renegotiate in regards of the agreement with Shire in order to re-assess the fundamental benefits of the transaction. The statement says that the decision to abandon the transaction is currently pending.
Guide Shire announced that it will require a penalty payment in case of failure of the transaction by AbbVie. Their sum is estimated to be as high as 1.64 billion dollars.
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