Hey out there...I work in a company that will be voting tomorrow if it wants be be acquired or not by Shire. It's quiet sure it will be a yes, so, I need to ask, what's like working for Shire? I have read so many negative posts here...is it that bad? what I should wait for? Thanks for any objective answer.
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Probably acquired by Shire...
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Yes!! Its that bad. Leadership on sales side of Neuro and Opth sucks ass! Bunch of know-nothing, back-stabbing cronies.
Ok thanks...but I don't get it. Shire doesn't have production facilities. Their force and money making comes from sales. If sales are so poorly managed, does it mean that Shire will sink later or sooner? They had been on the business for a while and have enough ressources to buy other companies. I just cannot imagine what life will be for us under their management...????
You won't work for Shire very long. Your company as you know it will be gutted. Hope your present company has an updated severance package.
Flemming went on a spending spree with the fat $1.6B breakup fee he collected from AbbVie. So like a drunken sailor he buys up anything he can. To maintain the growth he needs to keep buying but now it's similar to the Valeant ponzi scheme of acquisitions. He's now resorted to buying companies and gutting them to reduce expenses and then on to the next.
This piece suggests that Shire may soon buy Merck or JNJ so one of these companies can do an inversion. How sickening that an iconic US company that was established in the 1800s would do this? How could Merck or JNJ even considering deleting their heritage as US companies? And how can our government allow them to strip the US of its profitable assets and jobs.??
How Shire can Fuel Another Pfizer-Allergan Type Deal
Shire could emerge as a strategic foreign target for US companies seeking tax avoidance
Jan 21, 2016 at 10:01 am EST
Design By: Omair Raza
By Hadia Taqi on Jan 21, 2016 at 10:01 am EST
How Shire can Fuel Another Pfizer-Allergan Type Deal
Shire could emerge as a strategic foreign target for US companies seeking tax avoidance
Jan 21, 2016 at 10:01 am EST
Design By: Omair Raza
By Hadia Taqi on Jan 21, 2016 at 10:01 am EST
- NASDAQ:SHPG) agreed to merge with Baxalta Inc. in a mega-deal worth $32 billion earlier this month. The combined entity not only establishes the world’s largest rare disease drugmaker, with a market cap exceeding $60 billion, but also provides US companies with a potential tax-inversion target.
Why Tax Inversion is Need of the Hour
The federal tax rate in the US is currently 35% - the highest in the developed world. The actual tax for several US companies can, however, reach higher than 40% after state and local taxes are combined. When Baxalta Inc. (NYSE:BXLT) merges with Dublin-based Shire, the combined entity will pay taxes in Ireland, where the corporate tax rate is only 12.5%. Shire CEO, Flemming Ornskov, has told investors that Baxalta will reduce its tax rate to 16-17% after the deal, from an estimated 23% for the year. The resultant tax inversion deal has escaped the US Treasury’s scrutiny because the foreign company in the Shire-Baxalta case is the larger party of the two. The Treasury’s inversion rules are mostly applicable to situations where US shareholders have at least 60% continuing ownership of the combined entity.
Tax-avoidance deals have long invited scorn from US lawmakers and regulators, as more and more local companies seek low-tax jurisdictions to compete against foreign firms on an equal footing. In the process, they strip the US of its profitable assets and jobs. The most the Treasury can do is release “inversion notices” aimed at making such tax-saving deals harder for companies involved. First of these were sent out in September 2014, causing AbbVie to walk away from a $52 billion agreed merger with Shire. The second set of notices were sent in November last year, to derail the biggest tax-inversion attempted in recorded history - the $160 billion merger between Pfizer Inc. and Ireland-based Allergan PLC (NYSE:AGN).
Being the largest drugmaker in the US, Pfizer’s move to escape US taxes attracted strong criticism from all corners. Senate members, along with presidential candidates, lashed out against the deal, which can potentially lead to the loss of thousands of jobs in the country. However, at the proposed deal terms, Allergan shareholders will end up owning at least 56% of the merged entity, landing the transaction largely out of the scope of the Treasury’s proposed changes.
The Treasury and Internal Revenue Service have further said that the government is planning to propose over 150 pages of tax-inversion regulations in coming months. However, note that the Congress is not likely to pass any anti-inversion legislation until the presidential election in November. Analysts believe that the Pfizer-Allergan merger, if approved by the antitrust regulators, can trigger a law change by 2017. Henrietta Treyz, an analyst at Height Securities told Bloomberg in an interview: “Given it takes six to 12-months to do an inversion deal, if you’re a company that wants to invert, you need to do so right now."
Given the genuine disadvantage offered by US tax laws to local firms, many companies might still be willing to go through any lengths for a reduced tax bill. The larger companies, with operations spreading across the world, suffer the most, since they cannot repatriate ex-US income back home without incurring huge US taxes. Pfizer Inc. (NYSE
FE) has previously said that it has as much as 70-90% of its cash piles stashed overseas, with no easy way of accessing them. Over the years, many bigger US companies including Pfizer have been avoiding US taxes by shifting profits to overseas tax-haven subsidiaries, and at the same time reporting losses or meager profits in their US operations. Pfizer, for instance, reported over $9 billion in US losses and more than $43 billion in ex-US profits between 2010 and 2012.
Where Shire Comes In
By merging with Baxalta, Shire will increase its market cap from barely $36 billion to nearly $63 billion. The company has closed seven takeovers over the last two years and will be adding an eighth one in June - the $5.4 billion buyout of the biotech firm Dyax Corp. Mr. Ornskov has said earlier that the company will continue seeking more strategic assets, even after digesting Baxalta’s addition. Shire currently has the cleanest balance sheet among its specialty pharmaceutical peers. It debt-to-EBITDA ratio of 0.33x is also among the lowest, especially compared to Valeant’s 5.3x and Endo International’s 5.4x. The company’s payable debt-to-free cash flow position is stable enough to finance multiple buying opportunities in the future. Several drugmakers, including Europe’s biggest biotech Actelion, and a smaller US biotech Intercept Pharmaceuticals, are rumored to be potential takeover interests of Shire.
If Shire continues adding more companies to its portfolio, it will eventually be large enough to acquire a US company, like Johnson & Johnson (JNJ) or Merck & Co, that may be looking to reduce their tax bills. Large US drug-makers can find it nearly impossible at this point to find a big enough inversion target.
JNJ may have over $37 billion in cash and cash equivalents on its balance sheet, but it will have to find a foreign firm at least 25% its size to avoid the Treasury’s anti-inversion consequences. Merck may also greatly benefit from inversion, considering it pays an effective tax rate of 27.9% and has up to $60 billion of its 2014 profits stuck overseas. Given the current sizes of these two US companies, a tax inversion target has to be in the $100 billion range. Although several foreign companies fall in the bracket, including GlaxoSmithKline, Novartis, Sanofi, Bayer AG and Roche Holding Ltd, many of these will be unwilling to sell. If Shire accumulates the required size through its serial buyouts, it can easily make the list as well.
The Baxalta deal will also boost Shire’s drug portfolio consisting of gastrointestinal and attention deficit disorder products, with a leading position in rare-disease treatments. The said market is estimated to grow more than 60% in the next five years to $176 billion, as per market researcher EvaluatePharma. Shire expects to deliver over $20 billion in sales by 2020, and have a combined pipeline comprising 30 potential drug launches, capable of adding an estimated $5 billion to sales. While JNJ management recently ruled out a merger based entirely on tax savings, the company might not be able to ignore the strategic value in a possible Shire deal.
While there are still risks attached to Shire’s aggressive six-month long Baxalta pursuit, the possibility of a bigger tax inversion deal in the future may make it worth the trouble. Baxalta’s core hemophilia franchise faces challenging competitive threats, that can possibly make the deal value-destructive for Shire. At the same time, the deal still awaits IRS review, which can slap a huge tax liability on Shire if it goes wrong.
Shire’s Baxalta bid also incorporates $18 per share of cash component, which can potentially disrupt the tax-free nature of Baxalta’s July spinoff from Baxter International. Shire management has assured investors that since the transaction had a strong business purpose, it cannot be seen as a device to funnel cash to shareholders. However, IRS can still view the spinoff as such a device, if they prove that Baxter had knowledge of Shire’s takeover interest in Baxalta before its separation.
Shire shares trade 13.6% down since the start of this year, against a 15.6% decline of the iShares NASDAQ Biotechnology Index (IBB). Baxalta stock, at the same time, has gained 3.2% against a 6.5% fall of NYSE ARCA Pharmaceutical Index (DRG).
OMG! If I leave Merck to take a job with Shire I could end up right back at Merck in a year? Why bother.
We were acquired as everything indicated. Now waiting for restructuring and what it will mean for us.