US Drug Maker AbbVie Makes $54B Bid for Shire PLC

The drug company is set to buy Shire PLC in an effort to lower its tax rate by about 50 percent.
4:21 | 07/18/14

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Transcript for US Drug Maker AbbVie Makes $54B Bid for Shire PLC
Okay. It is Friday July 18 marked a New York opening today's big number fifty. Four billion dollars that is how much US truck maker at the inning. -- ready to hand over to -- Shire PLC one of the largest deals ever for US company but a former rival. Why. -- lower the tax for everyone I'm Dan Butler New -- -- -- -- the details on this huge deal. Yahoo! finance -- Shibani Joshi should Bonnie happy Friday morning TO. Happy Friday Dan Hawkins that this is a very big deal because a major merger break it down force 54 billion dollars. 54 billion dollars your right -- is one of the biggest deals really seen in in the Biotech farming industry it's something that we're seeing a lot of a lot of consolidation in the industry right now. Basically here's what it comes down to the Chicago based at these gonna -- the Dublin based. Company Shire PLC for 54 billion dollars and the company had resisted takeover attempts for the last two months. There -- four offers on the table but finally they came to an agreement IE overnight. Not an easy deal to do in this combination makes a number denying that the largest drugmaker that's out there. And again -- -- a lot of consolidation in the industry they're gonna continue to see this it's happening in the media industry it's happened in the -- industries right now. And this is just the latest one are. And the big question that everyone wants it now is the fact that this is to lower the tax rate for you write this this is a process and that's act called inversion and this is happening a lot right now -- in the United States has the largest of the biggest corporate tax rate. In the developed world in the world at 35%. And it's a disadvantage for a lot of large companies out there -- so what they're trying to do. And this is completely written into the tax code it's completely legal. They are going about changing their sort of tax structure by buying other countries changing their state -- -- country of residence. By buying foreign companies we've seen this happen with a lot of big pharma companies out there. They get a lower tax rate and they have more of a competitive advantage. And in this specific -- -- I'm happy is going to lower its tax rate cut it in half it will reduce it from twenty some -- percent. To thirteen some odd percent and that tree and translates into millions and millions of dollars in savings for the corporation that. What -- -- I mean -- 50% reduction on that. -- one of the drugs that makes you Mara obviously helps in the treatment of arthritis so a lot of folks here -- United States are familiar with that because Abby is not exactly a household name it's not the -- -- iCloud goes Smith come. But this deal I mean this really was down to the wires you were saying -- For a window at six months so although lawyer -- -- all the banker risen and all the corporate executives were -- step in -- in a corporate conference room yesterday. And eking out a deal they finally came to agreement again forties and offers on the table all rejected the finally. -- deal is announced and I again this is just something that we're seeing more and more arrive it's happening. And because they wanna be more competitive because -- industries consolidating and they want -- lower taxes and this is something. That a lot of big figure had Damian add the Treasury Secretary has come out and said something Janet Yellen had -- something. And interestingly in -- that sparking debate and sort of the public arena rained out. A lot of major companies certainly get a lot of -- for all but -- -- of -- political -- -- -- the stock however investors react in this a lot of SF has. In an anticipated says kind of -- indicate to indicate if he will Shire shares were up about percent in the half in overnight trading so. Not a lot of movement because again we've we've heard about this and we've been -- to -- -- this before 54 billion dollars Shibani Joshi forgot who financed by -- have a great weekend thanks stands India of course you can keep up with latest headlines right here on You know watching the big number doubt that's -- New York.

This transcript has been automatically generated and may not be 100% accurate.

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