Sunday, February 1, 2015
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

 
Solano County confirms 1st local case of measles

By Staff and wire reports | From Page: A1, 2 Comments

 
SPCA begins caring for more than 100 rescued dogs

By Kevin W. Green | From Page: A1, 4 Comments | Gallery

 
Top workers, top students – and succulent crab

By Susan Hiland | From Page: A2

 
Partial Fairfield freeway road closure starts Monday

By Ryan McCarthy | From Page: A3

DUI patrols set for Super Bowl Sunday

By Ryan McCarthy | From Page: A3

 
Armijo students savor catered Fuddruckers lunch

By Susan Hiland And Susan Winlow | From Page: A3 | Gallery

Fairfield police log: Jan. 29, 2015

By Susan Hiland | From Page: A9

 
Suisun City police log: Jan. 29, 2015

By Susan Hiland | From Page: A9

 
.

US / World

Man charged in California family’s deaths will be own lawyer

By The Associated Press | From Page: A3

 
Stanford University to get $50 million to produce vaccines

By The Associated Press | From Page: A3

PG&E releases thousands of emails with state regulators

By The Associated Press | From Page: A4

 
Yosemite park fee hikes coming in March

By The Associated Press | From Page: A4

San Francisco coroner says human remains are from 1 man

By The Associated Press | From Page: A4

 
French fracture laid bare as 8-year-old praises terrorists

By The Associated Press | From Page: A5

 
US mulls Middle East-North Africa category for 2020 Census

By The Associated Press | From Page: A5

Balloon crew makes history crossing Pacific Ocean

By The Associated Press | From Page: A5

 
Murder trial begins 35 years after 6-year-old vanished in NY

By The Associated Press | From Page: A5

Judge: Funeral home wrongly sold Lee Harvey Oswald’s casket

By The Associated Press | From Page: A5

 
Jordan awaits proof hostage is alive after swap deadline

By The Associated Press | From Page: A5

 
Judge expresses doubt about constitutionality of no-fly list

By The Associated Press | From Page: A5

 
.

Opinion

Solano College news makes me sick

By Letter to the Editor | From Page: A8, 2 Comments

 
GOP should plan for post-Obamacare world

By Ramesh Ponnuru | From Page: A8, 16 Comments

 
Editorial Cartoon: Jan. 31, 2015

By Daily Republic Syndicated Content | From Page: A8

.

Living

Today in History: Jan. 31, 2015

By The Associated Press | From Page: A2

 
Community Calendar: Jan. 31, 2015

By Susan Hiland | From Page: A2

Horoscopes: Jan. 31, 2015

By Holiday Mathis | From Page: B7

 
My recently widowed mother is already thinking about re-marrying

By Kathy Mitchell and Marcy Sugar | From Page: B7

Five ways 3D-printed food will change the way we eat

By The Washington Post | From Page: B10, 1 Comment

 
.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: B5

 
Shakira gives birth to 2nd baby with Spanish football star

By The Associated Press | From Page: A7

 
List: 10 Super Bowl ads you’ll be talking about

By The Associated Press | From Page: A7

Rod McKuen, mega-selling poet and performer, dies at 81

By The Associated Press | From Page: A7

 
Miranda Lambert leads ACM Awards with 8 nominations

By The Associated Press | From Page: A7

.

Sports

 
Mustangs ride away from Indian’s home court with 66-60 victory

By Marcus Lomtong | From Page: B1 | Gallery

 
Hayward, Utah Jazz upset Golden State Warriors 110-100

By The Associated Press | From Page: B1

LeBron returns, Love, Irving team for 44, as Cavs top Kings

By The Associated Press | From Page: B1

 
Ko takes lead at LPGA opener, closes in on golf history

By The Associated Press | From Page: B2

Djokovic beats Wawrinka to reach fifth Australian Open final

By The Associated Press | From Page: B2

 
Kings’ Cousins to replace Kobe Bryant in All-Star game

By The Associated Press | From Page: B2

Laird leads as Tiger shoots 82 and misses the cut

By The Associated Press | From Page: B2

 
Seau, Warner, Pace first-time Hall eligibles

By The Associated Press | From Page: B2

N.H. Speedway general manager faces lewdness charge

By The Associated Press | From Page: B2

 
Judge: Jury can watch Super Bowl unless Hernandez mentioned

By The Associated Press | From Page: B2

Blackhawks Hall of Famer Stan Mikita has brain disorder

By The Associated Press | From Page: B2

 
Carroll says decision is Sherman’s if baby arrives early

By The Associated Press | From Page: B3

NFL’s Goodell seeks to look past ‘tough year,’ to future

By The Associated Press | From Page: B3

 
This date in sports history for Jan. 31, 2015

By The Associated Press | From Page: B4

 
.

Business

US consumer confidence at highest level in a decade

By The Associated Press | From Page: A1

 
Companies steering clear of Super Bowl name

By The Associated Press | From Page: B5, 1 Comment

.

Obituaries

Danica Gojkovich Ryder

By Nancy Green | From Page: A4

 
Anneliese Edith (Luckner) Fraser

By Nancy Green | From Page: A4

.

Comics

Frank and Ernest

By Daily Republic Syndicated Content | From Page: B6

 
Baldo

By Daily Republic Syndicated Content | From Page: B6

Rose is Rose

By Daily Republic Syndicated Content | From Page: B6

 
Baby Blues

By Daily Republic Syndicated Content | From Page: B6

Sally Forth

By Daily Republic Syndicated Content | From Page: B6

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: B6

Wizard of Id

By Daily Republic Syndicated Content | From Page: B6

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: B6

Beetle Bailey

By Daily Republic Syndicated Content | From Page: B6

 
Pickles

By Daily Republic Syndicated Content | From Page: B6

Blondie

By Daily Republic Syndicated Content | From Page: B6

 
Zits

By Daily Republic Syndicated Content | From Page: B6

Garfield

By Daily Republic Syndicated Content | From Page: B6

 
Peanuts

By Daily Republic Syndicated Content | From Page: B6

B.C.

By Daily Republic Syndicated Content | From Page: B6

 
Dilbert

By Daily Republic Syndicated Content | From Page: B6

Word Sleuth

By Daily Republic Syndicated Content | From Page: B7

 
Sudoku

By Daily Republic Syndicated Content | From Page: B7

Crossword

By Daily Republic Syndicated Content | From Page: B7

 
Bridge

By Daily Republic Syndicated Content | From Page: B7

Cryptoquote

By Daily Republic Syndicated Content | From Page: B7

 
.

Home Seller 1/31/2015

Quirky add-ons a common feature of celebrity homes

By The Associated Press | From Page: HSR2

5 ways to make a kitchen more germ-free

By The Associated Press | From Page: HSR3

Average US rate on 30-year mortgage rises to 3.66 percent

By The Associated Press | From Page: HSR3

Real estate transactions for Jan. 31, 2015

By Daily Republic | From Page: HSR3