AbbVie Said to Weigh Higher Offer as Shire Rejects $46.5 Billion

Jun 20, 2014 8:53 am ET

June 20 (Bloomberg) -- AbbVie Inc. is considering raising its takeover offer for drugmaker Shire Plc a fourth time, and presenting its case to Shire’s shareholders after the company rejected a $46.5 billion bid recently, said two people with knowledge of the matter.

Shire said today that its management team had discussions with AbbVie and rejected three offers to buy the company. In its statement, Shire said the offer undervalues the company, which is planning to double sales by 2020.

AbbVie management believes that Shire shareholders will pressure the company to examine a bid and are considering a bump in their offer as early as next week, the people said. AbbVie also plans to make a presentation on the benefits of a transaction to generate interest from Shire shareholders and to pressure management, the people said.

The company hopes to agree a deal to take advantage of Shire’s Irish tax domicile, which would give the U.S. pharmaceutical giant a lower tax rate.

AbbVie spokeswoman Jennifer Smoter did not immediately return a call seeking comment. A representative for Shire declined to comment beyond today’s statement.

US companies have been looking to acquire rivals in the U.K. and other European countries with lower tax rates to decrease their tax burden to the federal government. American companies must pay tax on earnings from their overseas operations, and changing the tax domicile would move overseas earnings and cash out of the reach of the US Internal Revenue Service.

The two companies had multiple meetings, including between AbbVie Chairman Rick Gonzalez and Shire Chair Susan Kilsby, one of the people said. Shire was not willing to do a deal and did not name a price at which its board would agree to sell, the person said.

--With assistance from Albertina Torsoli in Geneva and Michelle Fay Cortez in Minneapolis.