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AbbVie starts talks with Shire after raising bid to $53.6 billion

"You only want me for my tax residency," the jilted bride sobbed as she clutched her $1.6 billion check."You only want me for my tax residency," the jilted bride sobbed as she clutched her $1.6 billion check.
"You only want me for my tax residency," the jilted bride sobbed as she clutched her $1.6 billion check.Bloomberg--Getty Images

AbbVie Inc. has finally persuaded the U.K.’s Shire Pharmaceuticals (SHPG)  to accept its advances, after raising its bid for the company a fourth time to $53.6 billion.

Shire’s board said in a statement Monday that it would recommend shareholders accept the new bid “subject to satisfactory resolution of the other terms of the offer”, and that “detailed talks” between the two companies’ boards have already started.

However, it noted that “there can be no certainty that any firm offer will be made.”

It didn’t say what “other terms of the offer” were outstanding, but it is common for such negotiations to focus on the distribution of top jobs in the new company. A spokesman for Shire declined to comment.

If accepted, the deal will be the biggest yet in the flurry of deals in which U.S. pharma and healthcare companies have bought–or tried to buy–foreign ones in search of more attractive corporate tax regimes, shading Medtronic Inc’s (MDT) $49.6 billion bid for Covidien Plc (COV) in June.

Analysts argue that the deal has its own merit, irrespective of the tax angle, in as much the combined company will have a broader global reach and has few overlaps in terms of product range.

That lack of overlap will reduce the risk that Shire would have to make big cuts in its own research capabilities as a result of any future rationalisation. That concern had been at the heart of U.K. political resistance to Pfizer Inc’s (PFE) ultimately unsuccessful bid for AstraZeneca Plc (AZN) in May.

AbbVie’s latest offer is just under 4% higher than the one it made last week.

Shire said that under the new bid, its shareholders would receive 24.44 pounds ($41.77) in cash, up from GBP22.44 in last week’s offer. In addition, they’ll receive 0.8960 AbbVie shares for every Shire share. That’s a minimal increase from the previous offer but enough to give Shire shareholders “around 25% “of the combined company, Shire’s board said.