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Alex Gavrish This article was authored by Alex Gavrish, founder and CEO of Etalon Investment Research, and author of "Wall Street Back To Basics."

Hedge funds lose after Shire plc deal is cancelled

On October 20th, 2014, AbbVie Inc and Shire plc announced that they had agreed to terminate their proposed merger. The main reasons for cancellation were the adverse tax changes that would destroy the financial benefits of the transaction. According to agreement between companies, AbbVie will have to pay Shire a break-up fee of $1.64 billion. As widely reported in the financial media, investors gasped at the estimated losses a few hedge funds experienced, Paulson & Co being the main one among them. According to media reports, his funds held a 4.7% stake in Shire, and suffered losses of about $783 million as of October 15th, 2014. Without blinking an eye, on October 20th, Paulson’s hedge fund announced its proposal that Allergan should buy Shire if AbbVie no longer wants it. As simple as this. Paul Singer, manager of hedge fund firm Elliott Management, who is also believed to own a large stake, is considering suing AbbVie for killing the merger with Shire. And just in case this will not work, some hedge funds hav......................

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