NEW YORK – U.S. pharmaceutical firm AbbVie Monday officially pulled the plug on its proposed $54 billion takeover of Irish competitor Shire and said it would pay the European company a $1.6 billion breakup fee.
AbbVie (IW 500/65) (ABBV) said the transaction became untenable due to the "unacceptable level of risk" following new U.S. Department of Treasury rules intended to discourage deals in which U.S. companies merge with foreign competitors to shift their headquarters to countries with a lower tax rate.
AbbVie said it agreed to pay Shire (IW 1000/764) the breakup fee of $1.635 billion for "all losses and damages in connection with this transaction."
AbbVie called on Washington to enact comprehensive U.S. tax reform.
The unprecedented unilateral action by the U.S. Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today."— AbbVie CEO Richard Gonzalez
"The unprecedented unilateral action by the U.S. Department of Treasury may have destroyed the value in this transaction, but it does not resolve a critical issue facing American businesses today," said AbbVie CEO Richard Gonzalez.
"The U.S. tax code is outdated and is putting global U.S.-based companies at a disadvantage to foreign competitors in an area of critical importance, specifically investing in the United States."
Shire accepted AbbVie's bid in July. But AbbVie announced last week that its board withdrew support for the deal in light of the U.S. rules.
Copyright Agence France-Presse, 2014
