Lew's tax rules prompt AbbVie to weigh financing for Shire deal

Treasury Secretary Jack Lew

U.S. Treasury Secretary Jack Lew hasn't scared Big Pharma away from tax inversion deals altogether. But his new rules limiting the benefits of pharma's latest M&A strategy are having some tangible effects already.

As Bloomberg reports AbbVie ($ABBV) is weighing plans to raise additional financing to cover its takeover of Shire ($SHPG). AbbVie agreed to pay $55 billion to buy the Irish drugmaker, moving its own domicile to that tax-friendly country in the process.

AbbVie had intended to plow some of its offshore cash into the deal. But under Lew's proposals, AbbVie wouldn't be able to access that cash tax-free. Instead, it would owe a 35% tax, the news service notes. So, the Chicago-based drugmaker is looking for alternatives.

Whether AbbVie ends up bringing on new financing depends on the Treasury's plans for implementing Lew's new rules. The company is also mulling the impact to its credit rating if it chooses to borrow more. Moody's Investors Service said Wednesday that it may review the credit implications of pharma's pending inversion deals if the rules prompt changes in terms.

Since Lew announced his proposed rules earlier this week, there's been plenty of speculation about their impact on deals like AbbVie's--or Mylan's ($MYL) buyout of Abbott Laboratories' ($ABT) drug rights, or Pfizer's ($PFE) potential second round of bidding for AstraZeneca ($AZN), or Pfizer's potential back-up bid for Actavis ($ACT). This is the first visible sign of a company actually considering changing its plans.

- read the Bloomberg story

Special Report: Pharma's top 10 M&A deals of 2013

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