LONDON (Reuters) - London-listed pharmaceutical firm Shire plc said it believed U.S. suitor AbbVie should proceed with its $55 billion takeover despite a change to U.S. regulations which curbed the tax benefits of the tie-up.
Chicago-based ABBVIE (ABBV.NY)said on Wednesday it would reconsider a recommendation to its shareholders to back the SHIRE (SHP.LO)takeover. It had previously been eager to buy Shire, partly due to the opportunity to reduce its U.S. tax bill by moving its tax base to Britain.
Last month however the U.S. government announced tough new rules on corporate "inversion" deals - tie-ups which allow companies to escape high U.S. taxes by reincorporating abroad, prompting concerns about the attractiveness of the deal.
Shares in Shire fell 2.5 percent on the day when the new tax rules were announced.
AbbVie said its board now planned to meet on Oct. 20 to consider whether to withdraw or modify its recommendation on the deal with Shire.
Shire, which also said its trading had remained strong, urged AbbVie to stick to its original plans.
"The board of Shire believes that AbbVie should proceed with the recommended offer on the agreed terms in accordance with the Cooperation Agreement," Shire said on Wednesday.
"The board will meet to consider the current situation and a further announcement will be made in due course."
Shire also noted in its statement on Wednesday that AbbVie would be required to pay it a fee of around $1.6 billion should the U.S. company's investors not vote to approve the takeover.
Shire said that it had not been provided with a detailed analysis of AbbVie's tax assumption.
AbbVie's proposed acquisition of Shire was not solely driven by tax benefits, it also wanted to reduce its reliance on Humira, the world's top selling arthritis drug which loses U.S. patent protection in 2016.
(Reporting by Paul Sandle and Sarah Young; editing by Kate Holton)
