Sounds like you guys have been eating a lot of sour grapes. Neither the market or wall street share your opinions. The only problem with this transaction is it got caught in the middle with the Treasury Department putting the clamps on inversions. I am sure all of you have been involved in other mergers and know that a 3% breakup feel is reasonable in any merger agreement. I hope the Board and Executive management of this company do not get shell shocked and continue looking for the next good deal. They definitely need a big deal between now and 2016.
That the Costs to our government for changing the rules in the middle of the game and placing the deal at risk. Not only the break up fee is taxable so are many of the other fees, banking fees and attorney costs incurred.
Abbvie was too anxious to get the deal sealed and the CEO lost credibility with both the public and the shareholders.
I expected the stock to be in a lost worse shape than it currently is in. I figured the shorts would clobber the stock but it is bouncing right around the price pre-merger. Bank of America reconfirmed their buy recommendation. We may still see some downgrades in the next few weeks.
recombinantman, Shire holders would have to pay tax on the portion of cash received but not on the portion of new share issued. I am sure there would be a formula to split their cost basis. Dlore55. In the US any stock inversion deal triggers a capital gain for the shareholder and has nothing to do with a decision of Abbvie Management other than the decision to due a inversion for business reasons. Most companies that do an inversion pay the taxes of the executive management and the board of directors. By paying the taxes it takes out of the equation of individuals making a decision based on their personal finances. If they were to be hit with a big tax bill they may be inclined to vote against the inversion even if it were the right thing to do for the company.
I am not so sure heads should roll. You need to make business decisions with the best information and game rules in place at the time of the decision. This transaction got caught in the middle and that is the cost of doing business. The biggest mis-step was making the announcement that the deal would go forward before all the analysis was completed and the answers were in place. At least they did not let their egos take over and make a bad decision. The break up fees will probably trigger some law suits but I think under the circumstances that would be wrong. The only ones who will win will be the lawyers.
Agree. There are a lot of companies out there and license agreements. Shire deal is not over if Abbvie could get an agreed upon price by doing a straight merger and no inversion. Shire shareholders are getting a wake up call as to the real value of their company.
The merger still may go through but possible no inversion. If this would happen we could expect a new price for the purchase of Shire since the tax benefit would be lost. Then it would be up to Shire to accept or reject the new price. If rejected, then Abbvie would need to come up with the breakup fees unless there was material misrepresentation on Shire's part. Other things could have popped up after Abbvie got in and started reviewing internal documents and books. Maybe the pipeline was not as good as represented or current patents not as strong as lead to believe and the goodwill payment was too high. The Hop Scotch loans with the inversion that Abbvie wanted to use is definately out the door. I would bet that the board has been under strong political pressure as well as the push back by long time Abbott stockholders due to the unfavorable capital gain treatment.
Looks like a reasonable purchase regardless if they do just a straight merger or an inversion. Shire existing products looks to have good growth and potential high growth pipeline. As long as Abbvie keeps the right balance between cash/debt/ and shares for the purchase so as to not distort future EPS. If you have information as to otherwise share with the board.
Hop, you have been negative on the Abt, Abbv and Hsp message boards for years. We do not know what your problems are with these companies other than possibly a early terminated employee or a very unhappy stockholder. If you are an unhappy stockholder than there is a easy solution...Sell. If you are a unhappy past employee than get a life and move on. Credibility is not want of your strong suits on this board.
H, the Abbvie will not be a accounting nightmare. It will be handled the same way as selling all the shares an showing the income as a capital gain. If you would need money to pay taxes sell some shares and keep the rest. You can still offset gains with other losses if you so desire.
Same info that I received from my tax advisers. Also, make certain that what ever year the inversion takes place that you pay state and local taxes in the same year so you can claim the state and local taxes in that same year on your Federal taxes. Makes a difference if you write the fourth Qtr checks on Dec. 31st or Jan. 1st since most of us are on a cash basis. If you wait until Jan 1st you could have ATM increases.The increase AMT amounted over $20,000 for me. Also, you have until April 15th to pay the Federal portion with no penalty. This can allow you to hold the stock for an extra quarter (for those that need to sell some to pay the taxes) to receive the dividends on those share that you may need to sell.
Agree, still looks like an attractive deal. May have over paid some with out the tax advantages. Need new products to offset Humeria. Cash flow for Shire sales in U.S. looks pretty good and should help out Abbvie to stop bringing cash into the U.S. for Dividends, Debt and expansions. It should be a tax free event for shareholders of Abbvie as long as they do not Pull in old shares and re-issue as a new corporation.
Could have a direct impact on the $5.2 Billion sale of some of their Established Pharmaceutical Products to Mylan if Mylan can not do an inversion due to the sale. That is a pretty good size impact.
Ever notice how no one pays any attention to you? Take your sour grapes and make some wine. Maybe that will make you happy.
I live in Ohio. My state and federal tax rate will be around 30%. My costs basis is very low so most of the value of the Abbvie holdings at the time of reissue will be taxed.
Klebad, if a holder must sell shares to pay the tax then the holder forever looses any future gains and dividends on those shares sold. State, local and federal tax liability can be as much as 30% of total value of Abbvie holdings depending on your cost basis in the stock. Some long time Abbott holders have very low cost basis due to several stock splits. Of course the tax is only for non-defered tax accounts. Also, if stock is held for inheritance purposes the cost basis would also be reset and the holder looses this tax advantage.