AbbVie's board recommended that shareholders vote against a $52 billion takeover of Shire, saying tax-rule changes would undermine the deal's rationale.
“Although the strategic rationale of combining our two companies remains strong, the agreed-upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed,” AbbVie CEO Richard A. Gonzalez said in a statement.
Shire is considering the situation and will make a further announcement “in due course,” the company said today.
AbbVie also has been concerned about the potential for more changes to U.S. laws, whether through executive-branch action or legislation in Congress, that will increase future tax bills, people familiar with the matter have said.
The price AbbVie agreed to pay for Shire was the highest it was able to offer, and the loss of some tax benefits and the related prospect of having to borrow more for the merger have eroded its attractiveness, the people said.
AbbVie said Oct. 14 it was reconsidering its support for the acquisition. The cash-and-stock offer values Shire at about 55.07 pounds ($80.03) a share based on yesterday's closing price for AbbVie.