LONDON -- Shire Pharmaceuticals (IW 1000/802) has accepted a $54-billion takeover bid from AbbVie (IW 500/65) (ABBV), the two companies announced Friday, in a deal aimed at slashing the U.S. giant's tax bill.
The takeover, priced with a 53% premium for Shire stock, comes after Ireland-based Shire reversed its opposition to a deal earlier this week.
"The boards of AbbVie and Shire are pleased to announce that they have reached agreement on the terms of a recommended combination of Shire with AbbVie," the two firms said in a statement.
The offer, comprising £24.44 in cash and 0.8960 AbbVie share per Shire share, is the same as the proposal received by the group last Sunday.
The companies added that the bid was worth the equivalent of £53.19 per Shire share, which represents a premium of 53% to the closing share price on May 2, one day before AbbVie's initial proposal.
Deal Lowers Tax Rate
The deal was expected to reduce AbbVie's effective tax rate to about 13% by 2016, according to the statement.
Nearing midday in London, Shire's share price jumped 1.66% to £48.86 on the capital's FTSE 100 index, which was down 0.41% in value.
AbbVie said that it will "maintain a strong commitment" to growing the shareholder dividend and implementing a "significant" share repurchase scheme.
Shire Pharmaceuticals, which is listed in London and New York but based in Dublin, is a specialist in drugs for the treatment of attention-deficit disorder and rare diseases.
"The transaction will create a well-positioned and focused specialty biopharmaceutical company, with sustainable leadership positions within areas of unmet need, including immunology, rare diseases, neuroscience, metabolic diseases and liver disease and multiple emerging oncology programs," the statement added.
Shire shareholders will own approximately 25% of the combined company following completion of the takeover.
Shire, which provides treatments in areas such as rare diseases and neuroscience and is developing products in other therapeutic areas, had previously rejected offers from AbbVie as undervaluing the company.
Offer 'Reflects Value'
"We believe that this offer reflects the substantial value that we have already created for Shire's shareholders and the strength of our future prospects," said Shire chairwoman Susan Kilsby.
"We believe that the combined group represents an exciting fit of two complementary businesses that will create a new market leader in specialty pharmaceuticals with a portfolio of fast growing products, a promising pipeline and enhanced growth prospects."
She added: "Shire has a long track record of delivering value for both shareholders and patients. Our growth profile has been accelerated under our new management team who have successfully executed a focused strategy."
The group had also previously highlighted concerns over AbbVie's plans to make Britain its home base for tax purposes.
The global pharmaceuticals sector has witnessed a stream of multibillion-dollar deals in recent months, as U.S. companies look to Europe as a way to minimize their tax liabilities.
There were also accusations that the tie-up was a cynical ploy by Pfizer to avoid paying tax on profits if they were sent to the United States. The U.S. group had also proposed to switch its tax base to Britain from the U.S.
By Roland Jackson
Copyright Agence France-Presse, 2014