AbbVie’s decision to pay a $1.64 billion merger breakup fee to Dublin-based Shire PLC rather than face the sudden tax disadvantages of a corporate inversion was a normal risk assumed by a company’s board, the Delaware Court of Chancery has ruled in denying stockholders access to AbbVie’s records on the deal.
AbbVie was mulling a merger with Shire PLC in 2014 in an effort to switch its country of citizenship from the United States to a country with a tax structure the pharmaceutical company viewed more favorably. But when the U.S. Department of Treasury took a decidedly less favorable view of corporate inversions through its regulatory implementation, the tax advantages of the AbbVie-Shire merger disappeared.
