LONDON (ShareCast) - US drug company AbbVie is taking over Shire in a deal valuing the UK group at £32bn, the pair said on Friday.

AbbVie has agreed to offer £53.19 a share for Shire, representing a premium of about 53% to the Shire share price of £34.67 on May 2nd, which was the last day before AbbVie made the first of its five offers for Shire.

The US group, which is buying Shire to cut its tax bill and broaden its product range, said the deal would create "a well-positioned and focused speciality bio-pharmaceutical company".

The combined group would have leading positions in markets with growth potential such as immunology, rare diseases, neuroscience, metabolic diseases and liver disease (HCV) and multiple emerging oncology programmes, the two companies said.

Shire shareholders are expected to own about a quarter of the combined company, dubbed "New AbbVie", with AbbVie investors holding the rest.

AbbVie said: "It is AbbVie's intent, upon completion of the transaction, to maintain a strong commitment to a growing dividend and to implement a significant share repurchase programme."

Shire Chairman Susan Kilsby said: "We believe this offer reflects the substantial value we have already created for Shire's shareholders and the strength of our future prospects."

Richard A. Gonzalez, Chairman of the Board and Chief Executive Officer of AbbVie said the new company would have attractive free cash flow and would be able to underpin its earnings per share growth and improve investor returns.

"The combination would provide us with enhanced access to cash we can use to expand our portfolio and fund M&A to supplement organic growth," he said.

Shares in Shire rose 98p or 2% to 4904p by 11:09 in London.

PW

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