Tags: AbbVie | Treasury | Lew | tax inversion

AbbVie Slips on Treasury's Deal Crackdown as Stock Futures Slide

Tuesday, 23 September 2014 07:56 AM

U.S. stock-index futures fell as a government crackdown on tax-saving mergers sent AbbVie Inc. lower and amid escalating conflict in the Middle East.

The drugmaker slipped 4.7 percent in early New York trading after the Treasury Department disclosed plans to limit tax-driven deals. Mylan Inc. and Abbott Laboratories dropped at least 1.5 percent. Alibaba lost 1.7 percent, indicating the Chinese e-commerce company will fall on its third day of trading. Alibaba shareholder Yahoo! Inc. retreated 1.8 percent. Nasdaq 100 Index futures dropped 0.3 percent.

Contracts on the Standard & Poor’s 500 Index expiring in December lost 0.3 percent to 1,981.9 at 7:09 a.m. in New York. The equity benchmark gauge fell the most in more than six weeks yesterday, led by a decline among small companies, as sales of existing homes slipped and China’s finance minister damped stimulus hopes. Russell 2000 Index futures slid 0.4 percent today as Dow Jones Industrial Average futures contracts retreated 0.2 percent.

“There are a lot of geopolitical worries going around,” said William Hobbs, head of equity strategy at Barclays Plc’s wealth-management unit in London. “The Middle Eastern situation feels like it’s not going to go away very quickly. The Islamic State is a significant and very organized military threat.”

The U.S. and Arab allies Saudi Arabia, Jordan, the United Arab Emirates, Qatar and Bahrain launched a series of airstrikes against Islamic State positions in Syria along the Iraqi border, the Pentagon said in an e-mailed statement. Meanwhile, the Israeli army said it shot down a Syrian fighter jet after it penetrated Israeli air space over the Golan Heights.

Record Reached

The S&P 500 reached a record last week as the Federal Reserve maintained a commitment to keep interest rates near zero for a considerable time after completing asset purchases in October.

Data at 9:45 a.m. New York time may show U.S. manufacturing output accelerated this month, economists forecast. The Markit Economics preliminary September index probably rose to 58, from 57.9 in August, according to the median projection. Readings exceeding 50 indicate expansion.

AbbVie lost 4.7 percent to $55.95. The company agreed in July to buy Dublin-based Shire Plc in a 32 billion pound ($52.4 billion) deal where it planned to move its legal address abroad to lower its taxes.

Mylan slipped 1.8 percent to $45.70, while Abbott declined 2.1 percent to $42.50. Mylan said in July it agreed to buy Abbott’s generic drug business in developed markets and would form a new company incorporated in the Netherlands to cut taxes.

Alibaba fell 1.7 percent to $88.40. The company soared 38 percent on its trading debut on Sept. 19 and fell 4.3 percent yesterday. Yahoo retreated 1.8 percent to $37.95.

Ascena, Salix

Ascena Retail Group Inc., the owner of of the Dressbarn and Lane Bryant clothing chains, tumbled 12 percent to $14.60 in late New York trading. Earnings per share for its 2015 financial year will be 90 cents to $1, the company said yesterday. Analysts projected $1.24 on average.

Salix Pharmaceuticals Ltd. jumped 7.8 percent to $172.30 in premarket trading. Allergan Inc. is in talks to acquire the company to help it fend off a hostile takeover offer from Valeant Pharmaceuticals International Inc., people with knowledge of the matter said.

Herbalife Ltd. climbed 2.2 percent to $41.09 in Germany. The stock slumped 10 percent yesterday amid speculation that Carl Icahn was selling shares in the company. The investor hadn’t sold a stake, nor an option position, Fox Business Network’s Charles Gasparino said, citing people he didn’t name.

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AbbVie decline in early New York trading after the U.S. Treasury disclosed plans to limit tax-driven deals. The drugmaker agreed in July to buy Dublin-based Shire in a $52.4 billion deal where it planned to move its legal address abroad to lower its taxes.
AbbVie, Treasury, Lew, tax inversion
Tuesday, 23 September 2014 07:56 AM
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