Doing Away with a Cluster Risk

The appetite of American corporations for European firms seems insatiable, even though their acquisition desires cannot always be satisfied. Medtronic, the medical technology firm, was recently successful, for example, in convincing its Irish rival Covidien of the advantages of a merger. General Electric has also clearly succeeded with its takeover offer for the French company Alstom. The pharmaceutical company, Pfizer, on the other hand, failed in its attempt to absorb its British-Swedish rival AstraZeneca.

Now a new transatlantic tug-of-war seems to be in the offing. The U.S. pharmaceutical company AbbVie wants to buy out its competitor, Shire, which is housed in Ireland, for $46 billion. As with previous transactions or advances, tax considerations seem to play a significant role in this case as well. According to its own statements, AbbVie wants to move its head office to the United Kingdom after a successful purchase, and so escape the grasp of the American treasury. The American firm can meanwhile claim valid nontax reasons for a takeover of Shire. With Humira, a drug meant to treat rheumatoid arthritis, AbbVie has a blockbuster, which — with a turnover of nearly $11 billion, or 58 percent — also represents a cluster risk. It will be even more of one when the patent protection runs out in 2016.

AbbVie could take from Shire not just an attractive portfolio of special products for treating rare diseases, but also know-how regarding how to overcome a cluster risk. A few years ago, the Irish firm struggled with an unprofitable product range and a strong dependency on drugs for hyperactivity. Since then, the portfolio is more widely diversified: Shire has managed this by means of, among other things, acquisitions.