Calls for US tax avoidance crackdown rock Shire

16th Jul 2014 16:16

Shares in takeover target Shire took a beating on Wednesday as US lawmakers demanded a crackdown on US companies basing themselves abroad to cut their tax bills.The British drug company's stock closed 79p down at 4786p in London as US Treasury Secretary Jacob Lew urged leaders of the congressional tax-writing committees to stop US firms re-domiciling for tax purposes.Chicago-based AbbVie, which makes rheumatoid arthritis drug Humira, is targeting hyperactivity treatment specialist Shire partly to reduce its tax bill and to help it to diversify into other treatment areas.Shire tentatively backed the latest in a string of offers from AbbVie on Monday, which would value it at about £31bn, and the pair are in talks to formalise the deal ahead of Friday's Takeover Panel deadline.The bid proposal comprises £24.44 in cash and 0.8960 AbbVie shares per Shire share. If a firm offer were made and accepted, Shire shareholders would own a stake worth around 25% of the new combined company.Analysts have predicted the deal would help AbbVie to save $1.3bn in tax by 2020, reflecting lower UK corporate tax rates.It comes less than two months after US rival Pfizer failed in a $118bn bid for another British drug maker, AstraZeneca, which also partly was due to tax issues.PW