AMERICAN drug firm AbbVie has pulled out of a £32billion deal to buy Basingstoke-based pharmaceutical firm Shire plc after the US Treasury announced new tax rules.

The Chicago-based company’s decision follows US tax changes. Rules unveiled in September aim to crack down on American businesses moving their headquarters overseas to avoid US taxes.

When the proposed merger was announced in July, the two drug manufacturers had planned to base the new company’s headquarters in Jersey, in The Channel Islands, where corporate tax is lower.

In a statement last week, Richard Gonzalez, AbbVie's chairman and chief executive, said: “The agreed-upon valuation is no longer supported as a result of the changes to the tax rules, and we did not believe it was in the best interests of our stockholders to proceed."

AbbVie will pay Shire, which has a UK base on Hampshire International Business Park, in Chineham, a £990million break-up fee.

Upbeat about Shire’s future, the company’s chairman Susan Kilsby said: “Shire has an exceptional track record of delivering value and growth.

“This growth profile has been accelerated by our new management team executing a clear and focused strategy.

“Importantly, we have maintained this momentum since July and made material progress across our business.

“Whilst we are disappointed that the offer will not now complete, we continue to enjoy excellent prospects as we execute our plan to double Shire’s product sales to $10billion by 2020.”

Shire, which is headquartered in Dublin, is listed on the London Stock Exchange, as well as New York’s NASDAQ and the Toronto Stock Exchange and has large operations in America. It is primarily known for making drugs to treat rare diseases and employs around 400 people in Basingstoke.

Following the collapse of the AbbVie takeover deal, Shire’s interim chief financial officer James Bowling has left the company to work as CFO at water company Severn Trent.

Flemming Ornskov, Shire's chief executive officer, said: “James has helped to build and lead a high-quality finance team at Shire. We are very grateful to him for his interim leadership over the past seven months, and his many contributions to Shire in almost 10 years with the company.”