Shire Selling Off After New Inversion Announcement

Shares of Allergan plc AGN tumbled to a new 52-week low on Tuesday on new fears that the U.S. Treasury Department and Internal Revenue Services made changes to limit U.S.-based companies acquiring international firms to benefit from a more favorable tax rate. ""Today, we are announcing additional actions to further rein in inversions and reduce the ability of companies to avoid taxes through earnings stripping," Treasury Secretary Jacob Lew said in a new statement. "This will have an important effect, but we cannot stop these transactions without new legislation. I urge Congress to move forward with anti-inversion legislation this year," Lew added. Related Link: Betting On The Pfizer-Allergan Merger? You Now Have A 35% Arbitrage Opportunity After New Treasury Fears The news announcement sent a shock-wave across the sector as shares of hire PLC (ADR) SHPG lost more than 2 percent. Ireland-based Shire was said to be an acquisition target by U.S. based firms. For example, North-Chicago based AbVie Inc ABBV announced its intentions to acquire Shire back in July 2014. AbbVie's CEO Richard Gonzalez argued that the acquisition wasn't merely based on a more favorable tax rate. He told analysts, "we wouldn't be doing it if it was just for the tax impact. It's an excellent strategic fit."