£32bn takeover under threat

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The £32bn takeover of a UK pharmaceuticals firm is in danger of collapse as a result of a tax crackdown announced by the White House.

AbbVie said last night that its board will meet on Monday to reconsider the purchase of Basingstoke-based Shire, which is best known for its drugs to treat attention deficit disorder.

The Illinois-based firm agreed the purchase of Shire in July when it said the combined company would be domiciled in the UK in a move taking advantage of a lower corporate tax rate.

Since then the US has announced it will crack down on the tax inversion practice, which has already seen a large number of firms use foreign takeovers as a way of lowering their tax bills.

The tax inversion policy had been under consideration by Pfizer earlier this year when it bid for AstraZeneca before it was forced to drop its interest.

AbbVie said its board will consider, among other things, the impact of the US Treasury’s changes to tax regulations, including the “impact to the fundamental financial benefits of the transaction”.

Shire said it believes AbbVie should proceed with the deal and points out that a break fee of around 1.6 billion US dollars (£1 billion) will be payable by AbbVie if the US firm pulls out of the transaction.

Earlier this month, North Carolina-based Salix Pharmaceuticals terminated a merger deal with Cosmo that would have seen the two companies relocate in Ireland.

But this week, Swindon-based Synergy Healthcare - set up 23 years ago to reduce HIV infection rates in operating theatres - sold out to US rival Steris in a 1.9 billion US dollar (£1.2 billion) deal. The newly merged group is set to relocate for tax purposes to the UK.

Shire provides treatments in areas such as rare diseases and neuroscience and is developing products in other therapeutic areas. Its best selling product is hyperactivity drug Vyvanse, which achieved revenues of 1.2 billion US dollars (£753m) last year.