Shire succumbed to an increased $53 billion takeover offer from AbbVie this morning, signalling the conclusion to a long-running courtship largely motivated by tax.
Shire said it was ready to recommend the deal, the latest in a list of mergers proposed by US firms seeking to cut their tax rates, and which comes less than seven weeks after the collapse of Pfizer's $118 billion bid for AstraZeneca, also motivated in part by tax factors.
AbbVie, which wants to buy Shire to cut its tax bill and diversify its product line-up, made the new offer yesterday after the London-listed group rejected four earlier offers.
The new bid, at £53.20 per Shire share, comprises £24.44 in cash and 0.8960 shares of new AbbVie shares and will result in Shire investors owning around 25% of the combined new firm.
Shares in Shire, founded in 1986, hit a record high of £50.45 in mid-morning trading.
AbbVie is eager to buy Shire both to reduce its US tax bill by moving its tax base to Britain - a tactic known as inversion - and to diversify its drug portfolio.
The US group gets nearly 60% of its revenue from rheumatoid arthritis drug Humira, the world's top-selling medicine, which loses US patent protection in late 2016.
Analysts at Barclays estimated the move would provide an estimated $1.3 billion tax savings by 2020, reflecting lower UK corporate tax rates.
