Caroline Chen New York
AbbVie had made a fourth offer for Shire, raising the price to £30.1 billion (R556bn) in an effort to bring Shire to the negotiating table, the drug maker that split last year from Abbott Laboratories said yesterday.
AbbVie increased the offer by 11 percent to £51.15 a share in cash and stock.
AbbVie made three previous bids, escalating to £27.3bn, a price that Shire’s board unanimously rejected, saying it undervalued the company.
“AbbVie has made a compelling offer to Shire that creates immediate and long-term value to shareholders of both companies,” AbbVie chief executive Richard Gonzalez said.
“We think its shareholders should strongly encourage the Shire board to engage in constructive dialogue with AbbVie.”
Buying Shire would allow Chicago-based AbbVie to have its tax domicile in the UK, which has a lower tax rate than the US. Shire’s added array of rare-disease treatments would also diversify AbbVie’s product portfolio, which is dominated by a single medicine, the arthritis therapy Humira.
Flemming Ornskov, Shire’s chief executive, has argued to keep his company independent, projecting that product sales would double to $10 billion (R108bn) by 2020 as Shire expands in drugs for eye maladies and other rare diseases.
Ornskov has also touted his résumé, including bringing the blockbuster eye drug Lucentis to Novartis, and cost cutting and improved profit in his first year as Shire’s boss, hoping to convince investors to leave Shire’s management with him.
Shares in Shire advanced 1.3 percent to trade at £47.13 at 1pm in London yesterday.
AbbVie put the value of its previous bid at £46.26 a share.
Besides rare-disease treatments, Shire makes drugs for attention deficit-hyperactivity disorder including Vyvanse and Adderall XR. These treatments accounted for 39 percent of Shire’s revenue last year.
AbbVie’s bid for Shire is the latest attempted merger in a period of increased acquisition activity in the drug and medical device industry.
Not including AbbVie’s bid, there were deals proposed or completed worth $260bn in the second quarter, five times more than any quarter since at least 2009. Pfizer’s $117bn rebuffed bid for AstraZeneca was the largest proposed deal in drug industry history.
Companies such as Bristol-Myers Squibb and Allergan might also be interested in pursuing Shire, analysts have said.
While Shire’s tax domicile is in Dublin, AbbVie has said the combined firm would be domiciled in the UK. – Bloomberg