Board says deal undervalues the company and its growth potential

Shire is the latest pharmaceutical company to be targeted for a multi-billion dollar takeover deal from a firm looking to transfer its tax residence outside the US. AbbVie made three efforts at proposing a deal, with the largest worth around $27 billion (£16 billion) in a combination of cash and shares.

Shire’s board rejected the first two proposals outright, but met with AbbVie to clarify the terms of the third proposal, before once again rejecting it unanimously. Shire claimed in a statement that the offer ‘fundamentally undervalued Shire and its prospects as a leader in rare diseases and speciality markets’. Shire’s biggest selling product is Attention Deficit Hyperactivity Disorder drug Vyvanse (lisdexamfetamine), but in recent years it has built up a portfolio of treatments for rare diseases.

Shire’s board also expressed concerns about the tax structure of the deal, which would see the new company move its base to the UK – Shire is currently registered in Ireland, after relocating to benefit from reduced tax rates. In a filing with the US Securities and Exchange Commission, AbbVie confirmed that it is no longer in negotiations with Shire. However, that does not preclude further developments – under UK takeover rules, AbbVie now has until 18 July to make a firm offer for Shire, take its proposal direct to shareholders, or withdraw its interest.

This is the latest in a string of attempts to use mergers to escape the US tax regime. Pfizer failed in its bid to buy AstraZeneca, but device specialist Medtronic successfully wooed rival Covidien.

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