Abbvie calls off Shire takeover

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A second major takeover of a UK drugs company has been scuppered after the board of US firm AbbVie called off its £32bn pursuit of Shire.

The Illinois-based company recommended its shareholders vote against the deal because changes in US tax law made the purchase less attractive.

Shire, best known for its drugs to treat attention deficit disorder, will receive a break fee of £1​bn​ once a meeting of AbbVie shareholders is held to rubber-stamp the decision.

In May, Viagra maker Pfizer was left frustrated after its final offer of £69​bn for AstraZeneca was deemed inadequate.

AbbVie 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 when it bid for AstraZeneca.

AbbVie chief executive Richard Gonzalez said: “AbbVie has always been financially disciplined and we have rigorous standards in place to ensure transactions are financially sound and deliver compelling stockholder returns.

“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.”

The meeting of AbbVie’s board was brought forward after Shire waived a three-day notice period for the meeting to be held because it wanted to remove uncertainty for shareholders and staff.