AbbVie presses case for $46bn Shire takeover

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Ben Hirschler London

Shire, which has spurned a $46 billion (R487bn) takeover offer from US group AbbVie as inadequate, has a new reason to argue it is worth more after a US court backed patent claims on its top-selling drug Vyvanse.

It emerged yesterday that the summary judgment in Shire’s favour, handed down by the US District Court for the District of New Jersey blocks five generic drugmakers from launching cheap copies of the hyperactivity drug before 2023, unless they win the case on appeal.

Although some analysts had assumed the patents would hold, the ruling that Shire’s claims protecting its medicine were both infringed and valid removes an uncertainty, and shares in the London-listed group rose more than 1.5 percent yesterday.

AbbVie is preparing its next move, after having three separate takeover offers rejected.

The US company, eager to buy Shire to cut its tax bill and diversify its drug portfolio, is weighing an increased bid, but plans first to talk to Shire shareholders to explain its case and get their feedback on valuation, according to a person familiar with the matter.

AbbVie was keen to set out the strategic rationale for the deal, as well as the tax benefits of redomiciling in the UK, and the senior management led by chief executive Richard Gonzalez could present to investors as early as this week, he added.

Officials at AbbVie declined to comment on the firm’s plans.

Shire chief executive Flemming Ornskov said on Monday that he was happy for the firm to be sold at the right price, if the board recommended it, as he set out a detailed case as to why the last AbbVie offer of just over £46 (R828) in cash and shares fell far short.

Shire expects its sales to more than double to at least $10bn a year by 2020, fuelled by existing and new drugs, including an important contribution from Vyvanse, which is being studied as a treatment for binge eating in addition to attention deficit hyperactivity disorder.

Investors believe AbbVie will have to raise its offer to win over Shire, with analysts at Jefferies and Barclays arguing the US company could make a Shire deal pay at a price of up to £55 a share, or $55bn.

Some shareholders have made clear they are looking for a price above £50.

Shares in Shire, which hit an all-time high on Friday after news of AbbVie’s takeover offers emerged, rose 1.5 percent to £44.70 by noon in London yesterday, while the European drugs sector slid 0.6 percent.

Shire said the New Jersey court case meant generics companies Actavis, Amneal, Mylan, Roxane and Novartis’s Sandoz unit could not launch until Shire’s patent cover ended in 2023, unless they won the case at appeal.

To appeal successfully, the companies would have to overturn rulings for each of 18 different patent claims. – Reuters


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