Seeking Alpha

AbbVie, Shire close on $53B deal

  • After many weeks of takeover talks, AbbVie (NYSE:ABBV) has finally closed on a $53B deal with Shire (NASDAQ:SHPG) in the pursuit of a strategic tax inversion and new drug portfolio.
  • Under the cash-and-stock deal, AbbVie will pay £52.48 per share for Dublin-based Shire, consisting of £24.44 in cash and 0.8960 of new AbbVie shares.
From other sites
Comments (13)
  • awcabot
    , contributor
    Comments (64) | Send Message
     
    Does this mean that Abbvie will trade as an ADR? Does this mean as shareholders we get to pay 35% tax instead of the current 15% on dividends?
    18 Jul 2014, 07:01 AM Reply Like
  • Rudester
    , contributor
    Comments (2673) | Send Message
     
    Good questions.
    18 Jul 2014, 10:43 AM Reply Like
  • smurf
    , contributor
    Comments (4489) | Send Message
     
    Well, at least being domiciled in the UK we won't have to worry about foreign withholding taxes on the dividends.
    18 Jul 2014, 10:56 AM Reply Like
  • tomlos
    , contributor
    Comments (1207) | Send Message
     
    Depends on where one lives... If you are living in the US as I am, then yes we don't have to worry about the withholding taxes.
    18 Jul 2014, 11:55 AM Reply Like
  • robgra
    , contributor
    Comments (447) | Send Message
     
    You didn't really think they had the shareholders in mind when they did this, did you?
    18 Jul 2014, 02:04 PM Reply Like
  • Rudester
    , contributor
    Comments (2673) | Send Message
     
    The answer is that they intend for the New Abbvie to be traded on the NYSE.

     

    The combined company, "New Abbvie" will be incorporated in Jersey (a British isle and Shire's current incorporation location) and be a holding company of the Abbvie and Shire groups. The New Abbvie operational headquarters will remain in the US.

     

    Pursuant to the merger, AbbVie Stockholders will receive one New AbbVie Share for each AbbVie Share.

     

    A call to AbbVie's investor relations reveals that they've been caught flat footed and they are hoping to put something up –hopefully next week– on their web site.
    18 Jul 2014, 04:37 PM Reply Like
  • jayridescarbon
    , contributor
    Comments (290) | Send Message
     
    According to this article, Ireland has a 20% tax on dividends paid to US shareholders.

     

    http://bit.ly/runcVH
    18 Jul 2014, 03:20 PM Reply Like
  • Minutemen
    , contributor
    Comments (1531) | Send Message
     
    Jay: Ireland has a dividend withholding tax (DWT) exemption treaty (double taxation treaty) with the U.S. No foreign taxes paid on the dividend. See this link for the Ireland double taxation treaty and list of countries exempt (includes U.S.):
    http://bit.ly/1tfdvsZ

     

    Here are the terms of the DWT exemption: http://bit.ly/1teni2B

     

    Includes the following:

     

    Qualifying non-resident persons

     

    "A person (other than a company) who is neither resident nor ordinarily resident in the State and who is resident for tax purposes in country with which Ireland has a double taxation treaty (a tax treaty country) or in another EU Member State"

     

    Bottom line: no foreign withholding on the ABBV dividend.
    18 Jul 2014, 04:30 PM Reply Like
  • jayridescarbon
    , contributor
    Comments (290) | Send Message
     
    Thanks, M. Would we need to file a form with our brokerage or is the process automatic with a major brokerage like Fidelity?
    18 Jul 2014, 07:59 PM Reply Like
  • Minutemen
    , contributor
    Comments (1531) | Send Message
     
    Jay: You don't need to do anything. The exemption status means there is never any foreign tax withheld to begin with, so nothing to file.
    19 Jul 2014, 08:45 AM Reply Like
  • Chris Zocca
    , contributor
    Comments (270) | Send Message
     
    The issue for US shareholders is not foreign dividend taxes but rather capital gains taxation. If this deal is structured as a tax inversion, then it is my understanding that US shareholders will owe capital gains taxes on the difference in value between their original cost basis for ABBV shares and the fair market value of the "New Abbvie Shares" on their first day of trading. For long time shareholders like myself, the capital gains tax hit will be substantial.
    18 Jul 2014, 06:43 PM Reply Like
  • Minutemen
    , contributor
    Comments (1531) | Send Message
     
    Chris: But not it shares are held in an IRA (as mine are).
    19 Jul 2014, 08:42 AM Reply Like
  • biz modl
    , contributor
    Comments (134) | Send Message
     
    hi folks,

     

    I use a type of fourier analysis of price series to get technical direction and momentum. by my charts, abbv is finishing a downward move that started on 7/8. while the direction is still down and momentum is ok (but falling), this is not quite the time to take a position in abbv. a few days of data should provide more data on whether abbv could reverse or start another leg down.

     

    have fun, biz
    18 Jul 2014, 07:39 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs