- The fallout since the $55 million AbbVie-Shire deal was called off in October is piling up, as it becomes apparent that many banks and hedge funds has very large positions in Shire.
- Citi lost around $20 million and Credit Suisse lost $6 million over the canceled deal. Many other banks, such as Goldman Sachs, also took huge losses.
- Many hedge funds have become more risk averse in response to the AbbVie-Shire situation.
It was like a domino effect. There have been a spate of M&As recently in the pharmaceutical industry, including many that were clearly set up as tax-inversion deals. Had the AbbVie-Shire deal gone through, the effective tax rate for AbbVie would have decreased to 13% by 2016.
Instead, the deal was called off in October once the crackdowns on tax inversions started. And the consequences have been costly and contentious—and will probably change behavior. Even AbbVie, which is looking at other potential acquisition opportunities, is not interested in a deal as large as $55 billion.