EC Oks 'dead' Abbvie-Shire takeover deal
The Commission announced its decision last night explaining that a single firm owning the monoclonal antibody (mAb) biopharmaceutical Humira and the small molecule pill Mezavant, both of which treat ulcerative colitis (UC), raised no competition concerns.
“The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Shire Inc. of Ireland by AbbVie Inc. of the US. AbbVie is a biopharmaceutical company active worldwide in the discovery, development, manufacture and sale of pharmaceutical products.”
Unfortunately for the EC, which began reviewing the deal in mid-September, the approval comes a few hours after AbbVie executives decided buying Shire no longer made sense and advised shareholders accordingly.
The change of heart was prompted by US Department of Treasury changes to tax rules.
“Although the strategic rationale of combining our two companies remains strong, the agreed upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed,” AbbVie’s CEO Richard Gonzalez said in a statement.
The tax rules affect the deal in a “significant manner,” the company said, eliminating a number of financial benefits including the ability to access current and future global cash flows efficiently.
Though there is still a chance a merger could happen, the “transaction is likely dead,” Jefferies analyst Peter Welford said in a note.
“The withdrawal of recommendation does not itself "kill" the merger, but we believe it is likely both parties may now agree with the UK Takeover panel to let the agreement lapse.”
The commission’s conclusion “the transaction would not raise competition concerns since Mezavant and Humira do not compete with each other” would only be considered consolation by the most charitable observer.
According to various reports, AbbVie’s decision to pull out of the Shire deal is likely to cost around $1.6bn.