The overarching goal of any board of a publicly held company is to enhance stockholder investment. AbbVie could not have abandoned this fundamental precept more egregiously by its proposed "inversion" with Shire. The deal: 1) is boldly unpatriotic by renouncing U.S. corporate citizenship, 2) is too costly ($54.8 billion), 3) significantly dilutes stockholder equity, 4) lacks strategic vision and synergy, 5) may subject future dividends to various UK tax withholdings, and 6) severely penalizes existing shareholders.
For each 500 shares owned when the deal closes (likely 2014) the shareholder will be required to pay an incremental capital gains tax to IRS of up to $6,500 (based on a $55 stock price); Illinois residents will incur an additional $1,400, coupled with permanent forfeiture of the Enterprise Zone dividend exclusion provision.
AbbVie has abdicated its legacy of conservative management that fosters internal growth and smart, strategic acquisitions that increase ownership value. This deal is seriously flawed, with many unanticipated consequences yet to be uncovered.