Sunday, December 21, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

AbbVie, Shire agree on $55B combination

By
From page B6 | July 19, 2014 |

The drugmaker AbbVie has reached a deal worth roughly $55 billion to combine with British counterpart Shire and become the latest U.S. company to seek an overseas haven from tax rates back home.

The companies said Friday they will create a new company that is incorporated on the British island of Jersey, where Shire currently is incorporated. But the new company will be controlled by shareholders of North Chicago, Illinois-based AbbVie, who will own about 75 percent of the new company’s stock.

Shire shareholders will receive cash and stock valued at about 53.19 pounds ($91.07) for each of their shares. They will then hold the remaining 25 percent stake in the new company.

U.S.-based companies looking to grow through acquisitions have been searching more fervently in recent years for these overseas combinations known as inversions. But the deals are drawing growing concern from President Barack Obama and members of Congress because they cost the United States billions of dollars in tax revenue.

At 35 percent, the United States has the highest corporate income tax rate in the industrialized world, and it also taxes income that is earned in another country and then brought home. That causes some companies to park millions of dollars in overseas accounts.

“Companies like ours need access to our global cash flows,” AbbVie Chairman and CEO Richard A. Gonzalez told analysts on Friday, adding that they need to invest globally and in the United States. “Today, we’re at a disadvantage versus many of our foreign competitors.”

AbbVie executives forecast a tax rate of about 13 percent by 2016 for the new company. AbbVie has said its current rate amounts to roughly 22 percent.

Gonzalez added that AbbVie, which sells the blockbuster anti-inflammatory drug Humira, pursued this deal mainly because it was compelling financially and strategically.

“We wouldn’t be doing it if it was just for the tax impact,” Gonzalez said.

AbbVie, which pulled in $18.8 billion in sales last year, started researching Shire last fall. Shire makes the attention deficit hyperactivity disorder medication Vyvanse as well as rare disease and gastrointestinal treatments.

Shire rejected several unsolicited takeover bids before the two companies started talking about a possible deal earlier this month. Shire said Friday its board recommends that shareholders vote for the latest offer, and the deal will create “a well-positioned and focused specialty biopharmaceutical company.”

The companies expect the deal to close in the fourth quarter.

U.S.-traded shares of Shire PLC climbed 72 cents to $254.16 in late-morning trading Friday. Shares of AbbVie Inc. slipped 2 cents to $53.50, while broader U.S. trading indexes climbed less than 1 percent.

Inversions like AbbVie’s are a prime debate topic in Washington. U.S. Treasury Secretary Jacob Lew told House and Senate leaders earlier this week that Congress should immediately enact legislation retroactive to May that stops the practice while the government works on more comprehensive tax reform.

But Utah Republican Sen. Orrin Hatch said in response that while he agrees on the need for reform, such a move — essentially “constructing a wall around U.S. multinational companies” — carries risks. Those include making the companies more attractive targets for foreign takeovers.

Inversions can take place if shareholders of the foreign entity involved retain more than a 20 percent ownership in the newly merged business. Legally, the foreign company might acquire the U.S. business or the two create a new entity. But the U.S. company often maintains both its corporate headquarters and control of the company.

This overseas move has grown more common among health care companies. Last month, U.S. medical device maker Medtronic Inc. said that it had agreed to buy Ireland-based competitor Covidien for $42.9 billion in cash and stock. The combined company would have executive offices in Ireland, which has a 12.5 percent corporate income tax rate.

The largest drugstore chain in the United States, Walgreen Co., also is considering a similar move with Swiss health and beauty retailer Alliance Boots. Walgreen bought a 45 percent stake in Alliance Boots a few years ago and has an option to buy the rest of the company. Walgreen has said it will discuss its decision later this month or in August.

 

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

The Salvation Army serves 1,000-plus across 2 days

By Susan Hiland | From Page: A1, 7 Comments | Gallery

 
Blue Christmas service offers reflection, hope

By Amy Maginnis-Honey | From Page: A1

Shining bright for all to see: Locals deck out yards, homes

By Amy Maginnis-Honey | From Page: C1, 1 Comment | Gallery

 
Time for annual Solano County quiz

By Brad Stanhope | From Page: A2

Bevy of holiday activities at Western Railway Museum

By Amy Maginnis-Honey | From Page: A3 | Gallery

 
State Fair scholarship applications available

By Amy Maginnis-Honey | From Page: A3

 
Get tested, know your status

By Morgan Westfall | From Page: C4

 
Free New Year’s celebration slated

By Amy Maginnis-Honey | From Page: A5

 
 
New development fees start Jan. 1 in Vacaville

By Amy Maginnis-Honey | From Page: A5

New technology chief will join McNaughton Newspapers

By Tanya Perez | From Page: B7 | Gallery

 
A word of warning for Senator Warren

By Bud Stevenson | From Page: B7, 9 Comments

 
Fairfield police log: Dec. 19, 2014

By Susan Hiland | From Page: A9

Suisun City police log: Dec. 19, 2014

By Susan Hiland | From Page: A9

 
Sky-high price has VA rationing hep C drug

By Tom Philpott | From Page: B10

.

US / World

 
Air Force admits nuke flaws, but will fixes work?

By The Associated Press | From Page: A1

 
Officials: Missing dog was dyed to deceive

By The Associated Press | From Page: A5

Immigrants build document trails to remain in US

By The Associated Press | From Page: A5

 
California officer kills teen after machete attack

By The Associated Press | From Page: A5, 2 Comments

 
4 teens die in fiery head-on crash in Pennsylvania

By The Associated Press | From Page: A6

 
2 dozen injured in southern Indiana bus crash

By The Associated Press | From Page: A6

Texas ranchers seeking alternative incomes

By The Associated Press | From Page: A7, 1 Comment

 
North Korea proposes joint probe over Sony hacking

By The Associated Press | From Page: A10

2 car bombs rock southern Sweden’s city of Malmo

By The Associated Press | From Page: A10

 
Bombings kill 12 in Iraq

By The Associated Press | From Page: A10, 1 Comment

US sends 4 Afghans back home from Guantanamo

By The Associated Press | From Page: A10

 
Panama’s Noriega in prison 25 years post-invasion

By The Associated Press | From Page: A10

Burying the dead after Pakistan’s school massacre

By The Associated Press | From Page: A11

 
A chance to breach divide for young in Cuba and US

By The Associated Press | From Page: A12

.

Opinion

Editorial Cartoon: Dec. 21, 2014

By Daily Republic Syndicated Content | From Page: A8, 1 Comment

 
New school finance strategy lacks accountability

By Dan Walters | From Page: A8

Season’s greetings from the Obamas

By Alexandra Petri | From Page: A8, 1 Comment

 
Sound off for Dec. 21, 2014

By Daily Republic | From Page: A8

 
.

Living

Today in History: Dec. 21, 2014

By The Associated Press | From Page: A2, 4 Comments

 
Vatican offers olive branch to US nuns

By The Associated Press | From Page: C3, 1 Comment

Why celebrate Christmas?

By Noel Reese | From Page: C3, 2 Comments

 
Horoscopes: Dec. 21, 2014

By Holiday Mathis | From Page: C4

Should I ask grandson why we weren’t included in wedding photos?

By Kathy Mitchell and Marcy Sugar | From Page: C4

 
.

Entertainment

Publisher hopes to sell books through Twitter

By The Associated Press | From Page: C6

 
Chris Colfer has multi-book deal

By The Associated Press | From Page: C6

Jerry Lee Lewis: Sustained by brief blaze of glory

By The Associated Press | From Page: C6

 
Review: ‘Five’ by Ursula Archer is intriguing

By The Associated Press | From Page: C6

PUBLISHERS WEEKLY BEST-SELLERS

By The Associated Press | From Page: C6

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

Interim coaching jobs present challenges in bowls

By The Associated Press | From Page: B1

 
49ers squander 21-point lead in 4th straight loss

By The Associated Press | From Page: B1

New Giants 3B McGehee eager to play back home

By The Associated Press | From Page: B1

 
No. 11 Lady Vols trounce No. 7 Stanford 59-40

By The Associated Press | From Page: B3

Eagles near elimination, fall 27-24 to Redskins

By The Associated Press | From Page: B3

 
Raiders place cornerback Brown on injured reserve

By The Associated Press | From Page: B3

Big moves bring big hope for Chicago baseball

By The Associated Press | From Page: B4

 
US skier Nyman wins Gardena downhill for 3rd time

By The Associated Press | From Page: B4

Vonn wins women’s World Cup downhill in France

By The Associated Press | From Page: B4

 
This date in sports history for Sunday, Dec. 21, 2014

By The Associated Press | From Page: B5

 
.

Business

Your info has been hacked. Now what do you do?

By The Associated Press | From Page: B7

 
On the money: 4 ways to hold on to your cash when renting a car

By The Associated Press | From Page: B7

 
Recalls this week: Bean bag chairs, toy monkeys

By The Associated Press | From Page: B8

 
Scarecrows outnumber people in dying Japan town

By The Associated Press | From Page: B12

.

Obituaries

Dominic C. Scolaro

By Nancy Green | From Page: A4

 
Barbara Jean Bidstrup Braker

By Nancy Green | From Page: A4

Perry Michael Smetts

By Nancy Green | From Page: A4

 
Luzdivina B. Banks

By Susan Hiland | From Page: A4

Arnold Howard Evans

By Susan Hiland | From Page: A4

 
Anthony Hanson Elder

By Susan Hiland | From Page: A4

Marian Kay Zutz

By Nancy Green | From Page: A4

 
Bart Ferro

By Nancy Green | From Page: A4

.

Comics