Wednesday, September 17, 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

David Grant doctor’s mission continues

By Ian Thompson | From Page: A1, 3 Comments | Gallery

 
 
Chamber PAC draws candidates to Jelly Belly

By Jess Sullivan | From Page: A2, 1 Comment | Gallery

 
Damaged dog gets going-away party after getting healthy

By Susan Hiland | From Page: A3, 1 Comment | Gallery

 
Suisun City slaying suspect case moves forward

By Amy Maginnis-Honey | From Page: A4

Touro University to host Zombie Run/Walk

By Amy Maginnis-Honey | From Page: A4

 
Land trust organizes Rockville Trails Preserve hike

By Barry Eberling | From Page: A4

 
Police enlist help to find armed bandit

By Jess Sullivan | From Page: A4, 12 Comments | Gallery

 
Chamber to host Suisun City candidates night

By Ian Thompson | From Page: A5

 
 
 
Coastal Cleanup Day targets local waterways

By Barry Eberling | From Page: A6 | Gallery

 
Judge questions juror in Calkins case

By Barry Eberling | From Page: A6

Drama reigns supreme with week’s film debuts

By Amy Maginnis-Honey | From Page: A7

 
Anti-drug programs face funding shortfall

By Ryan McCarthy | From Page: A8, 1 Comment

 
Fairfield police log: Sept. 15, 2014

By Susan Hiland | From Page: A12, 1 Comment

Suisun City police log: Sept. 15, 2014

By Susan Hiland | From Page: A12, 1 Comment

 
Suisun City police log: Sept. 14, 2014

By Susan Hiland | From Page: A12

Suisun City police log: Sept. 13, 2014

By Susan Hiland | From Page: A12

 
Fairfield police log: Sept. 13, 2014

By Susan Hiland | From Page: A12

Fairfield police log: Sept. 14, 2014

By Susan Hiland | From Page: A12

 
Weather for Sept. 17, 2014

By Daily Republic | From Page: B14

.

US / World

Woman in wildfire’s path lost almost everything

By The Associated Press | From Page: A1 | Gallery

 
Lumber town takes stock after wind-driven wildfire

By The Associated Press | From Page: A1 | Gallery

PG&E officials leave posts over improper emails

By The Associated Press | From Page: A8 | Gallery

 
Things to know about California groundwater law

By The Associated Press | From Page: A9

California drivers must give bikes 3-foot buffer

By The Associated Press | From Page: A9, 21 Comments | Gallery

 
San Francisco trying shaming for quake safety

By The Associated Press | From Page: A9

Governor signs first California groundwater rules

By The Associated Press | From Page: A9

 
Robbery suspects tried to make off with $15,600

By The Associated Press | From Page: A10

Top general: US ground troops possible in Iraq

By The Associated Press | From Page: A10 | Gallery

 
Obama: Ebola outbreak a threat to global security

By The Associated Press | From Page: A10

UN: Nearly $1 billion needed now to stop Ebola

By The Associated Press | From Page: A10

 
CDC study: Americans’ bellies are expanding fast

By The Associated Press | From Page: A10, 4 Comments | Gallery

Blacks, Hispanics have doubts about media accuracy

By The Associated Press | From Page: A10, 2 Comments

 
School bus driver killed during safety drill

By The Associated Press | From Page: A10

Hunt on for survivalist charged in trooper killing

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

 
Afghan suicide bomber kills 3 foreign troops

By The Associated Press | From Page: A13

Mexico airlifts tourists after Hurricane Odile

By The Associated Press | From Page: A13

 
Ukraine lawmakers ratify landmark deal with Europe

By The Associated Press | From Page: A13, 1 Comment | Gallery

Iraq parliament rejects interior, defense nominees

By The Associated Press | From Page: A13, 1 Comment

 
.

Opinion

 
Time for utility execs to start worrying

By Thomas Elias | From Page: A11

Editorial cartoons for Sept. 17, 2014

By Daily Republic Syndicated Content | From Page: A11

 
 
Column focus on campaign signs misplaced

By Letter to the Editor | From Page: A11, 13 Comments

.

Living

Today in History: Sept. 17, 2014

By The Associated Press | From Page: A2

 
Community Calendar: Sept. 17, 2014

By Susan Hiland | From Page: A2

My selfish husband neglects and cheats on me. What’s next?

By Kathy Mitchell and Marcy Sugar | From Page: B5

 
Horoscopes: Sept. 17, 2014

By Holiday Mathis | From Page: B5

All the flavors of fall in one twice-baked package

By The Associated Press | From Page: B6

 
Leave them feeling full with nutritious chia seeds

By The Associated Press | From Page: B6, 1 Comment

A late summer Southern classic – tomato pie

By Elizabeth Karmel | From Page: B6

 
.

Entertainment

CBS: Rihanna out of NFL telecast

By The Associated Press | From Page: A7

 
Leonardo DiCaprio named UN Messenger of Peace

By The Associated Press | From Page: A7

.

Sports

Prep volleyball preview: Big goals for city teams

By Paul Farmer | From Page: B1 | Gallery

 
Raiders games are like live reruns

By Tony Wade | From Page: B1, 2 Comments

Kazmir, sloppy Athletics lose 6-3 to Rangers

By The Associated Press | From Page: B1 | Gallery

 
Armijo volleyball team falls to Vintage

By Daily Republic staff | From Page: B1

Peavy, Posey help Giants gain ground in NL West

By The Associated Press | From Page: B1 | Gallery

 
Criticism mounting for Vikings, Adrian Peterson

By The Associated Press | From Page: B2

McIlroy wins PGA player of the year award

By The Associated Press | From Page: B2

 
Grand jury to weigh case of NASCAR’s Tony Stewart

By The Associated Press | From Page: B2 | Gallery

Sacramento Kings to retire Stojakovic’s jersey

By The Associated Press | From Page: B2

 
Broncos, Seahawks top AP Pro32 before rematch

By The Associated Press | From Page: B2 | Gallery

Union appeals Ray Rice’s indefinite suspension by NFL

By The Associated Press | From Page: B2

 
Jaguars sign Rodriguez grad Jensen off practice squad

By Staff and wire reports | From Page: B2

Short stay at NASCAR’s party for AJ and Almirola

By The Associated Press | From Page: B2

 
Hindsight: a Ryder Cup tradition, like no other

By The Associated Press | From Page: B2

Senator ties NFL tax status to Redskins name

By The Associated Press | From Page: B2

 
DA: Josh Gordon gets probation in DWI case in NC

By The Associated Press | From Page: B2

Anheuser-Busch, McDonald’s voice NFL disapproval

By The Associated Press | From Page: B2

 
49ers defense looks to bounce back from tough day

By The Associated Press | From Page: B9 | Gallery

.

Business

NASA picks Boeing and SpaceX to ferry astronauts

By The Associated Press | From Page: B7 | Gallery

 
Web filter lifts block on gay sites

By The Associated Press | From Page: B7

Alibaba risk: China’s rise leaves out investors

By The Associated Press | From Page: B8

 
Corinthian Colleges sued for predatory lending

By The Associated Press | From Page: B8

UPS expects to hire up to 95,000 seasonal workers

By The Associated Press | From Page: B8

 
US CEOs less optimistic about hiring, spending

By The Associated Press | From Page: B8

.

Obituaries

Minnie Watkins Dixon

By Nancy Green | From Page: A4

 
Margaret King

By Susan Hiland | From Page: A4

.

Comics

Pickles

By Daily Republic Syndicated Content | From Page: B4

 
Blondie

By Daily Republic Syndicated Content | From Page: B4

Zits

By Daily Republic Syndicated Content | From Page: B4

 
Baby Blues

By Daily Republic Syndicated Content | From Page: B4

B.C.

By Daily Republic Syndicated Content | From Page: B4

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: B4

For Better or Worse

By Daily Republic Syndicated Content | From Page: B4

 
Peanuts

By Daily Republic Syndicated Content | From Page: B4

Baldo

By Daily Republic Syndicated Content | From Page: B4

 
Frank and Ernest

By Daily Republic Syndicated Content | From Page: B4

Beetle Bailey

By Daily Republic Syndicated Content | From Page: B4

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: B4

Dilbert

By Daily Republic Syndicated Content | From Page: B4

 
Sally Forth

By Daily Republic Syndicated Content | From Page: B4

Garfield

By Daily Republic Syndicated Content | From Page: B4

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: B4

Word Sleuth

By Daily Republic Syndicated Content | From Page: B5

 
Sudoku

By Daily Republic Syndicated Content | From Page: B5

Crossword

By Daily Republic Syndicated Content | From Page: B5

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: B5

Bridge

By Daily Republic Syndicated Content | From Page: B5