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AbbVie Inc. (NYSE:ABBV) May Withdraw Back From the Acquisition Of Shire Plc. (ADR) (NASDAQ:SHPG)

Boston, MA 10/16/2014 (wallstreetpr) – The drug maker Shire Plc. (ADR) (NASDAQ:SHPG) has lost about one-third of its market share in a trading at New York Exchange on Wednesday. The reason of the fall was news that AbbVie Inc. (NYSE:ABBV) who was about to acquire Shire may step back from this deal of acquisition worth about $54 billion.

It is believed that the AbbVie Inc. (NYSE:ABBV) is considering this step due to its board’s recommendation according to which AbbVie should go ahead as per the recommended offer and agreed terms and conditions. The shares of the Shire Company collapsed on this news bashing the investors including one of the largest hedge funds of the nation. This is seemed to be one of the biggest accepted mergers of the year that is about to decline.

Waive Off the Notice

Meanwhile, Shire says that it would waive off the provision of a three day advance notice in order to decrease the uncertainty, anxiety for shareholders and employees and other related stakeholders. Currently, notice is required to be served before the board of pharmaceutical leading company AbbVie Inc. (NYSE:ABBV), before it can consider changing its recommendation on the same. The waiver would help the company to think again with its decision that whether to go ahead with the deal as decided originally or not.

Not So Attractive

During the revaluation of its decision, AbbVie Inc. (NYSE:ABBV) says that it is difficult for American companies to decrease taxes by making overseas deal called as inversions. The US rules have changed in this regard. According to the estimates by Analyst, shire is currently trading on the value of stand-alone. The company’s shareholders didn’t expect this kind of a major fall. Previously, Shire had protected four chronological price increases for taking the offer with Abbvie, so as to get a premium of 53% on the London price before closing of one of the biggest deals. However, new rules on inversion make it less attractive for Abbvie to go ahead. Even after considering the strategic benefits, it is hard to justify the premium amount of the deal. Shire says that if the shareholders vote against the deal and Abbvie directors withdraws back, then the company has to own a breakup fee worth $1.635 billion.

Published by Christine Lawrence

Christine Lawrence is a financial analyst. She loves analyzing socioeconomic trends in the background of financial moves. She has overall seven years of experience in Auditing, Finance and Writing.

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