With a bid reaching nearly $55 billion and some goodies for the top execs, AbbVie ($ABBV) was finally able to get Ireland-based Shire ($SHPG) to surrender its independence, a portfolio of attention deficit hyperactivity disorder and rare disease drugs, and its low Irish tax base.
Shire shareholders get £52.48 a share in cash and stock, which Bloomberg says is 53% above its closing price on the day before the 10 weeks of courtship by AbbVie began. That amounts to £32 billion ($54.8 billion).
"The beauty of this AbbVie-Shire deal is that everybody gets out of this deal in even better shape than they entered it," said Guillaume van Renterghem, an analyst at UBS AG in London.
Everyone, that is, other than the U.S., which loses much of the corporate taxes from the combined company as a result of the fact that it will be taking up residence in the U.K., although key management remains in the U.S. Its tax base will fall to 13% from 22% as a result of the so-called tax inversion, saving the company an estimated $1.3 billion by 2020.
Shire CEO Flemming Ornskov gets a chunk of change for completing the deal. He will receive a $9.9 million retention bonus to stay and lead the combined company's rare disease business, the companies said. That equals 150% of his annual total compensation.
AbbVie gets diversification, at least some. It currently generates more than half of its revenues from arthritis drug Humira, which loses patent protection in 2016. Shire's ADHD drugs, like Vyvanse and Adderall XR, account for 39% of its revenues, Bloomberg points out. But AbbVie also gets rare disease drugs, like Replagal, to treat Fabry disease, as well as some products in the pipeline, like Premiplex for a potentially blinding eye disorder in infants, a candidate that has blockbuster status already predicted for it, Jason Gerberry, an analyst at Leerink Partners, points out to Bloomberg.
"We're creating a unique, diversified biopharmaceutical company," AbbVie's chief executive, Richard Gonzalez, said in a statement. "The combined company would benefit from a best-in-class product development platform, a stronger pipeline and more enhanced R&D capabilities."