OR WAIT null SECS
AbbVie to pay Shire $1.635 billion break fee for terminating purchase agreement.
Shire plc announced in a statement on Oct. 20 that it has agreed with AbbVie to terminate the July agreement under which AbbVie would acquire Shire. On Oct. 16, AbbVie’s board of directors confirmed that it had withdrawn its recommendation to stockholders of its offer for Shire as a result of tax changes announced by the US Treasury.
“In light of the AbbVie Board's decision to change its recommendation and to advise its own shareholders to vote against its Offer, Shire believes that there is now no realistic prospect that this condition will be satisfied. As a result, the Board of Shire believes that it is in the best interests of its shareholders, employees and other Shire stakeholders for the situation to be resolved as quickly as possible," the Shire statement reported.
Under terms of the termination agreement, AbbVie will pay Shire a $1.635 billion break fee by Oct. 21.
In a separate statement, Abbvie reported: “The Company’s decision was based upon its assessment of the Sept. 22, 2014 notice issued by the U.S. Department of Treasury, which re-interpreted longstanding tax principles in a uniquely selective manner designed specifically to destroy the financial benefits of these types of transactions. The notice introduced an unacceptable level of risk and uncertainty given the magnitude of the proposed changes and the stated intention of the Department of Treasury to continue to revise tax principles to further impact such transactions.”
"Shire has an exceptional track record of delivering value and growth. This growth profile has been accelerated by our new management team executing a clear and focused strategy. Importantly, we have maintained this momentum since July and made material progress across our business. Whilst we are disappointed that the offer will not now complete, we continue to enjoy excellent prospects as we execute our plan to double Shire's product sales to $10 billion by 2020," said Susan Kilsby, chairman of Shire, in the Shire statement.