UK drug firm Shire approves AbbVie's £30-bn takeover offer

UK drug firm Shire has recommended its US rival AbbVie's after its most recent offer of £53.20 per share, BBC reported.

According to the board of the UK pharmaceutical company, it would be recommending the offer to shareholders.

The US company started bidding for Shire in May. According to commentators the deal was attractive for AbbVie, as it could shift out of the US to the UK and dramatically cut its tax bill.

AbbVie had hiked its offer to £51.15 per share last Tuesday. The new offer would see Shire shareholders own around 25 per cent of the combined new firm  (See: UK drug maker Shire confirms merger talks with AbbVie).

Shire said in a statement, "The board of Shire has indicated to AbbVie that it would be willing to recommend an offer at the level of the revised proposal to Shire shareholders, subject to satisfactory resolution of the other terms of the offer."

Shire shares were up 5.9 per cent to close at £48.70 in London on Friday, valuing the company at £28.7 billion, while AbbVie shares closed at $54.95 (down 0.76 per cent).

According to the board, it was in "detailed discussions" with AbbVie though there was no certainty of a formal offer.

According to commentators Shire, known mostly for its attention deficit hyperactivity disorder (ADHD) drugs and rare diseases portfolio, is an attractive target for AbbVie, which is looking to diversify its product range in addition to lower UK tax rate - as was the case with Pfizer, which made a failed bid for AstraZeneca.

In the event the deal moved ahead, Illinois-based AbbVie would move its legal address to the UK, cutting its corporate tax rate from 22 per cent to 13 per cent. The UK founded Shire is today managed in Boston, headquartered in Dublin and generates most of its sales in the US.

Shire's board had rejected four earlier proposals from AbbVie, on the ground of undervaluation of the company. However, shareholders had been pressurising the board to go to the negotiating table, arguing that £51 was good value.

According to reports, Richard Gonzalez, chief executive and chairman of AbbVie, had spoken to key Shire investors and they were "generally supportive" of his company's £30 billion offer, The Guardian newspaper reported.