Ben Hirschler London
AbbVie chief executive Richard Gonzalez has pressed the case for his $46 billion (R496bn) pursuit of drug maker Shire in discreet meetings with shareholders in London this week and is now weighing his next move, according to people familiar with the matter.
Shire shareholders who met with Gonzalez said that he had reiterated the case for a deal, arguing that AbbVie would create more value from Shire’s assets than the hyperactivity and rare diseases specialist could do on its own.
One person described the meeting he attended as fairly uneventful, with AbbVie giving no indication on the possibility of raising its offer – a move that is widely expected in order to get the deal done.
Gonzalez, who under UK takeover rules has until July 18 to make a firm bid for Shire or walk away, has flown back to Chicago for the US long holiday weekend.
AbbVie declined to comment on the meetings.
Shire has rejected three separate proposals from the US group, arguing the last offer of £46.26 (R854) a share in cash and stock fundamentally undervalued the company.
While AbbVie has yet to budge on price since Reuters first revealed its bid interest on June 19, it has stated that a deal at £46.26 would lift its earnings “materially” – a comment taken by analysts as a signal that it can afford to pay more.
“I’m certainly expecting a revised offer – they are not going to come to the shareholders like this and then disappear,” said Navid Malik, the head of life sciences research at Cenkos Securities, who has a £52 target for the shares.
Shire shares were 0.8 percent higher at £45.81 in early trade in London yesterday.
Sources familiar with the situation said Gonzalez was ready to consider bidding more but first wanted to explain his case direct to major Shire shareholders and urge them to put pressure on Shire to engage, while also getting to hear their views on valuation.
AbbVie has already made clear it wants to start serious talks with Shire and gain access to its books to get more clarity on sales prospects for certain key drugs, although it has not ruled out going hostile.
In contrast to Pfizer’s recent high profile and unsuccessful bid for AstraZeneca, AbbVie’s pursuit of Shire is much more low key, reflecting the US company’s publicity-shy nature and the lack of a big political dimension to the proposed takeover.
Gonzalez eschewed media interviews during his round of meetings with investors this week.
“One of the challenges with the Pfizer situation was it was very high profile because of the size of the deal and the large infrastructure [that] AstraZeneca has in the UK,” Malik said. “AbbVie is taking a more discreet approach.”
Shire, while founded in Britain, is today managed out of Boston, headquartered in Dublin and has most of its sales in the US, resulting in a minimal business footprint in the UK. AbbVie is eager to buy Shire, both to reduce taxation by redomiciling in Britain – a tactic known as inversion – and to diversify its drug portfolio. The US firm gets nearly 60 percent of its revenue from rheumatoid arthritis drug Humira, the world’s top-selling medicine, which loses US patent protection in 2016. – Reuters