Durbin cheers as AbbVie scraps tax deal

Senate Majority Whip Dick Durbin (D-Ill.) on Thursday cheered an Illinois-based pharmaceutical company’s decision to scrap a planned offshore tax deal.

{mosads}“AbbVie’s decision is good news for Illinois and good news for America,” Durbin said in a statement. “Like Walgreens before them, AbbVie decided that inversion wasn’t in the best interests of their company. Nor is it in the best interests of our state and country.” 

Late Wednesday, AbbVie’s board advised that its shareholders vote against a proposed merger with Shire, an Ireland-based pharmaceutical company. Walgreens, the pharmacy chain based in Illinois, decided in August not to reincorporate in Switzerland.

Shire had urged AbbVie to follow through on the deal, but Richard Gonzalez, the U.S. company’s chief executive, said new rules from the Obama administration meant the merger no longer made sense.

“AbbVie has always been financially disciplined and we have rigorous standards in place to ensure transactions are financially sound and deliver compelling stockholder returns,” Gonzalez said.

“Although the strategic rationale of combining our two companies remains strong, the agreed upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to proceed.”

The new rules from the Treasury Department, announced last month, make it harder for companies to access offshore cash without paying U.S. taxes.

Both senior administration officials and top congressional Democrats have said that lawmakers need to act to truly curb inversions, but AbbVie’s decision is the strongest sign yet that Treasury’s rules are having an impact.