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Breakingviews: AbbVie inversion in the Shire

Tuesday, Jul 08, 2014 - 03:03

Investors are unimpressed by AbbVie's sweetened offer for Shire. Rob Cyran and Rob Cox discuss the deal.

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So more news on the global -- front sharp pharmaceuticals has been given another offer from out of the formally known as habits. They've up there in detail how much -- share but you -- -- and pounds and about 11% premium from the other thing. Instant thing is that the shares are actually down because the acquire at least not -- actually down as well it's it has had a big justice strategists think that what we've been seeing of course is that shareholders have been. You know basically rooting for emanate deals and even bidding up the shares of the buyers. And they did of course in the first instance not least because this is an inversion wasn't yet the deals predicated on I'd be reducing its -- -- -- in -- From about 20% down -- like thirteen 12%. Big tax savings. Think about 500 million or so for her that it's it's it's it's a real -- -- to do that they have to give a certain amount of it in inequity that I -- at least 20% equity that then you deal is 24% equity senators to -- Charles -- 24% combined company. It's jitters in overseas -- the edge of the -- investors sourcing on your thing your paying too much. Therefore that's reducing the value of the consideration and of course reduces the value for the part -- and the risk of course is that you get in some sort of spiral where it's you know and did the share price goes down -- that's right -- you know. Satellites that we're kind of seeing the limit here how far you can go for it looks that way I mean because -- that there becomes obvious tax savings. -- is not a bad candidate. And it looks like. Abby -- could actually raise their bid slightly however seeing the market push -- that are saying that it's it's probably. It probably they can't -- very much at all OK so let me ask you if you absent the tax synergies were there's just a giant arbitrage. Tax policy. -- these two companies make sense to me now. Now so this this is really being driven by that -- rather than not edit maybe I'll admit that the that the synergies there are pretty much negligible. -- does need some sort of deal because there. Almost all their sales come from one drug and and that they were the drug in -- arm of Abbott labs which is continuing on as a sort of generics. Yet -- like electrician yes that they spun up the drone operations and most of their sales that'd be tough to predict numbers come from one drug. And so they wanted to do you risk the company bit right on buying chartered -- a couple things first it. Gets the tax at a lot lower. I meant I get them into -- new area called orphan diseases these are like drugs for her release really small diseases -- on cost and time. It's a good growth area so that Paula what they're doing -- -- and natural deal -- if you know they're saying. These companies have very similar and put them together and it'll cost savings. It's more about -- refusing an industrial plan not a financial and -- exactly yeah interest and our thanks rob. Will be back with more breaking news tomorrow.

Breakingviews: AbbVie inversion in the Shire

Tuesday, Jul 08, 2014 - 03:03

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