iNVEZZ.com, Tuesday, July 22: Shire’s (LON:SHP) chief executive Flemming Ornskov is due to receive just under $10 million after agreeing to remain with the rare disease specialist following its takeover by US drugmaker AbbVie (NYSE:ABBV). Shire’s share price has lost more than one percent in London so far this morning.
‘Golden hello’ for Flemming Ornskov
Flemming Ornskov will receive an amount of $9.9 million (£5.8 million), equivalent to approximately 150 percent of his annual total compensation, after agreeing to lead Shire’s integration within the merged company, AbbVie has said.
Shire and AbbVie agreed a takeover deal last week which will see the US drugmaker pay £24.44 in cash for each Shire share and 0.8960 shares in the combined group, representing an indicative value of £52.48 per share. (Shire share price surges on last-minute takeover deal with AbbVie)
AbbVie noted that Ornskov, who fought off four earlier bids by the US group, had also agreed to oversee the creation of a rare disease business unit within the combined company. He will be based in Switzerland and will report directly to AbbVie’s chief executive Richard Gonzales.
The Dane has made rare diseases a key area for Shire after joining the company in May last year. Ornskov last month set out Shire’s defence against AbbVie, promising investors that the UK company’s current products would generate sales of at least $7 billion by 2020, with $3 billion more coming from drugs still in the group’s pipeline.
AbbVie defends tax inversion plans
The Financial Times on Friday quoted AbbVie’s Gonzales as defending the North Chicago-based company’s plans to shift its tax residence to the UK following the merger with Shire, and urging US politicians to consider comprehensive tax reform rather than trying to block American companies from relocating offshore.
“At the moment we’re at a disadvantage to other [international] companies,” Gonzales said, referring to US corporate tax rates. “Companies like ours need access to cash flows and need to be able to make investments around the world but particularly in the US.”
AbbVie has said that the merged group would be incorporated in Jersey in the Channel Islands and have its tax residence in the UK, with the move projected to reduce its average tax rate from about 22 percent to 13 percent. New AbbVie’s main administrative base, however, would remain in Chicago, with its shares listed on the New York Stock Exchange. Shire, which is currently quoted on the London Stock Exchange, would be reregistered as a private company.
While the tie-up between the two drugmakers has prompted a political backlash in the US on account of AbbVie’s tax inversion plans, it is unlikely to face the same opposition in the UK as Pfizer Inc’s (NYSE:PFE) failed attempt to acquire AstraZeneca (LON:AZN) earlier this year. Despite its LSE listing, Shire, which is headquartered in Dublin but incorporated in Jersey, has fewer than 500 employees in the UK and conducts most of its operations in the US.
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