Sector News

AbbVie to employees: We’re definitely merging with Shire, new tax rules aside

September 30, 2014
Life sciences
Just days after rumors emerged that AbbVie was looking for additional financing to cover its planned $55 billion takeover of Ireland’s Shire, the company is going to great lengths to reassure employees that the deal is a go.
 
Doubts had been raised about how AbbVie would finance the merger after U.S. Treasury Secretary Jack Lew proposed new rules limiting companies from engaging in tax inversions, but AbbVie CEO Richard Gonzalez clearly wants employees to believe he’s not concerned.
 
Gonzalez traveled to Shire’s offices in Chicago and Lexington, MA, last week for a series of meet-and-greets that included an “Integration Team Planning Kickoff Meeting,” according to a letter he sent to Shire employees on Monday. Printed by The Wall Street Journal, the letter cites the potential of the merged companies to “lead and grow in important therapeutic areas” and “enhance innovation.”
 
Titled “An Inspiring Visit,” Gonzalez’s letter said, “I’m more energized than ever about our two companies coming together, especially because I can already see many shared traits and values in the people at AbbVie and Shire.”
 
The letter, of course, makes no mention of Lew’s new rules and what impact they may have on the deal. AbbVie had planned to use offshore cash to help finance the merger, but under Lew’s proposed rules, the company wouldn’t be able to do so tax-free. Instead AbbVie could face a 35% tax bill. It’s all part of Lew’s plan to stem the growing tide of U.S. companies that are trying to dodge high corporate tax bills by merging with foreign companies and moving their headquarters overseas. AbbVie is reportedly now considering a different funding route.
 
Ever since Lew announced the planned changes early last week, speculation has abounded about which M&A deals would be most in danger. Mylan’s purchase of drug rights from Abbott Laboratories could be impacted, as could Pfizer’s potential second bid for AstraZeneca. If AbbVie is indeed looking for alternative financing, it would be as clear a sign as any that Treasury’s threatened changes are forcing U.S. companies to rethink overseas mergers.
 
AbbVie is still aiming for the Shire deal to close in the fourth quarter, according to an upbeat letter that Chris Turek, vice president for enterprise strategies, sent to its own employees. Turek said the Shire meetings made it “clear that we have many shared traits and values as well as similar cultures. Both companies have a strong commitment to the patient and both integration planning teams are committed to successful preparation for Day One.”
 
By Arlene Weintraub
 

Related News

April 10, 2021

Genentech aims high with new diversity goals, including doubling hires and spending $1B with diverse suppliers

Life sciences

Quita Highsmith, Genentech’s chief diversity officer, is helping the pharma double down on diversity and inclusion goals with a new 2025 plan. 

April 10, 2021

Merck CEO Frazier joins army of Black execs speaking out on restrictive voting-rights laws

Life sciences

Merck CEO Kenneth Frazier teamed up with former American Express executive Kenneth Chenault to protest a voting-rights law passed recently in Georgia.

April 10, 2021

Zimmer Biomet bundles robotic surgery, apps and digital health programs into one orthopedics package

Life sciences

By bringing together big data and robotic procedures, the ultimate goal of the connected suite is to take some of the guesswork out of orthopedic medicine. 

Send this to a friend