Boston, MA 10/15/2014 (wallstreetpr) – AbbVie Inc (NYSE:ABBV) move to merge with the Britain-based Shire PLC (ADR) (NASDAQ:SHPG) is showing signs of falling apart. The principal reason for forming such an opinion is undoubtedly the latest tax inversion that was cracked down by the establishment.
While AbbVie is dithering and considering the option of scrapping the $51.5 billion worth of a deal struck on July 18, Shire wanted the company to proceed with the deal. AbbVie’s decision would mean a lot to those aspiring to change the residence address of the company to save taxes.
In a statement, AbbVie Inc (NYSE:ABBV) has notified Shire that its Board of Directors would meet on October 20 to consider options available before them. It made its intention known to the Britain company that it would not mind withdrawing the deal altogether or modify its earlier recommendations. The agreement with Shire stipulated three business days of time to consider any change in recommendations.
AbbVie Inc (NYSE:ABBV) indicated that its Board would also look into the aspect of the U.S. Department of Treasury’s planned unilateral tax regulations changes disclosed on September 22 and its impact on the company. It included the basic financial gains of the deal. It was only referring the intention of changing the company’s residential address while retaining all other things such as reporting or functionality of the management.
Bloomberg reported that AbbVie’s latest move came in as a surprise for investors. It was because only last month AbbVie Inc (NYSE:ABBV) had told its employees about its intention to proceed with the deal. Though it has not spelt out its decision clearly, its short communication has created concern among investors.
Implications Of Withdrawal
If the AbbVie Inc (NYSE:ABBV) decided to go ahead with its earlier intention of merging itself with Shire PLC (ADR) (NASDAQ:SHPG), it would become the biggest inversion. It would encourage more companies to engage the same way to bring down its tax burden. It would not be liked by the American Government.
On the other hand, if it decides to scrap the deal, it would make other companies think twice before striking any deal with a similar motive. It would also boost the establishment’s hold on such deals.