AbbVie tables $46.5bn takeover offer for Shire

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Brooke Sutherland New York

ABBVIE revealed a $46.5 billion (R480bn) takeover bid for Shire last week in the first public acquisition approach for the specialty drugmaker after years of takeover speculation.

Shire rejected the offer, but AbbVie was considering raising it, two sources said at the weekend. It might have some competition. Bristol-Myers Squibb and Allergan were among possible counter-bidders, Leerink Partners said.

American acquirers are on the hunt for cross-border targets that can help them avoid high American corporate taxes. With its Dublin address, Shire fits that bill and also offers suitors an arsenal of fast-growing rare disease treatments that will help boost sales 32 percent over the next three years.

Shire may warrant as much as $260 a share in a takeover, 36 percent higher than the US price on June 19, the last trading day before the offer, says Susquehanna International.

Shire is the latest takeover target in a record wave of health-care mergers this quarter. There have been about $230bn of deals proposed or announced in the industry since the end of March, including Medtronic’s purchase of Covidien this month and Merck’s takeover of Idenix Pharmaceuticals at one of the highest premiums on record.

Shire makes attention deficit hyperactivity disorder drugs. AbbVie said last week that Shire rejected three escalating offers. Its latest offer consisted of £20.44 (R371) in cash and 0.7988 of an AbbVie share for each Shire share.

Sources said AbbVie was considering raising its offer again or presenting its case directly to Shire shareholders.

“I’d be very surprised if this is over,” said Alistair Campbell at Berenberg Bank. “Shire has been speculated as a target for quite some time with many other companies potentially bidding for it. Now that we publicly know AbbVie has made an offer, it may bring other people to the table.”

Allergan, Bristol-Myers or Pfizer could step in with offers, Jason Gerberry, an analyst at Leerink, wrote in a report.

For Allergan, buying Shire and redomiciling in Ireland might help it fend off advances from Valeant Pharmaceuticals International, said Vamil Divan, an analyst at Credit Suisse Group

Shire was not a bad company, but its tax structure put it in an advantageous position to ask for very high premiums relative to what “we would expect for this type of deal”, Divan said. – Bloomberg


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