Shire reportedly hires Citi expecting takeover bids

Drugmaker Shire, which is based for tax purposes in Ireland but operates from Wayne and Exton, reportedly hired investment bank Citi because it expects larger pharmaceutical companies to make takeover offers in the wake of other tax-induced deals.

Reuters reported Shire hired Citi. Citi declined comment, according to Reuters.

Shire's best selling drug is Vyvanse, which is prescribed to treat attention deficit hyperactive disorder.

Over the weekend, medical device maker Medtronic said it would pay $42.9 billion for rival Covidien in large part because Covidien is registered in Ireland, and Ireland has lower corporate taxes than the United States.

Tax-motivated takeovers have been in vogue, especially among healthcare companies that have money parked in foreign banks and don't want to pay tax to bring it back to the United States. In the lexicon of accounting, it is called a tax inversion.

Pfizer was recently thwarted in its $120 billion attempt to buy AstraZeneca, which is based in the United Kingdom and has a lower tax rate than Pfizer does with headquarters in Manhattan. In November, Endo Pharmaceuticals bought Paladin Labs, Inc., which allowed it to register in Ireland, though it left most of its operational leadership in Malvern.

Relatively few employees would, or have, moved to Ireland under such deals. The main difference is taxes paid to the U.S. government versus a foreign nation.

Reuters reported that its review of takeovers showed about 50 such inversion deals had been done in the past 25 years, with half occurring since the 2008-2009 financial crisis abated. Ireland gets many of those newly domiciled countries because its corporate tax rate is 12.5 percent, while the U.S. rate is 35 percent.

"Any halfway decent, EU-based company will be looked at very seriously. The latest deals have upped the ante. The metric of purely strategic rationale has been put aside – anything is possible," one sector banker said, according to Reuters. The banker added that two or three more possible inversion deals could happen soon.