Shire Rejects AbbVie's $46.5 Billion Takeover Bid
Bloomberg News
Shire Plc (SHP) rejected 's offer to buy the drugmaker for as much 27.3 billion pounds ($46.5 billion) as too low, in the latest attempt by a U.S. company to acquire a lower corporate tax rate. Shire shares gained as much as 16 percent.
AbbVie said it made three escalating offers to buy Shire, and all were rejected. The last bid was 46.11 pounds a share, or 23 percent more than Shire's closing price yesterday, Shire said in a statement today. AbbVie said the offer valued Dublin-based Shire at 46.26 pounds a share, in a statement late yesterday. The drugmaker's board unanimously rejected the offer, no talks are occurring and there can be no certainty a further offer will be made, North Chicago, Illinois-based AbbVie said.
The announcement of AbbVie's bid is the first public admission of interest after years of takeover speculation about Shire, which sells drugs for rare diseases and attention-deficit hyperactivity disorder. The company's profit growth has been the envy of the industry, and its stock has doubled in the last year. Shire expects to more than double its 2013 product sales to $10 billion by 2020, according to today's statement.
'The proposal fundamentally undervalued Shire and its prospects,' Shire Chairwoman Susan Kilsby said in the statement.
Shire rose 12 percent to a record 41.38 pounds as of 10:10 a.m. in London, valuing the company at 24.4 billion pounds, below AbbVie's last offer.
Acquisition Activity
The pursuit of Shire by AbbVie, reported yesterday by Reuters, is the latest attempted merger in a period of increased acquisition activity in the drug and medical device industry. Not including the AbbVie offer, there were deals proposed or completed worth $260 billion in the second quarter, according to data compiled by Bloomberg, five times more than any quarter since at least 2009. Pfizer Inc.'s $117 billion rebuffed bid for AstraZeneca Plc was the largest proposed deal in drug industry history.
Cross-border deals are on the rise as the largest U.S. companies, facing a corporate tax rate that's more than double places such as Ireland, seek lower levies and ways to spend a stockpile of almost $2 trillion in overseas cash.
Medtronic Deal
Medtronic Inc., the Minneapolis-based medical device maker, said this week that it plans to take a legal address in Ireland as part of a $42.9 billion takeover of Covidien Plc, which is run from Mansfield, Massachusetts, but is incorporated in the island nation. Pfizer, the largest U.S. drugmaker, had planned to legally domicile itself in the U.K. if its pursuit of London-based AstraZeneca had been successful.
While Pfizer's bid for AstraZeneca ran afoul of British politicians, who complained the deal would result in research jobs being lost in the U.K., a takeover of Shire may not elicit the same objections. The company is domiciled in Dublin, its management offices are in Basingstoke, England, and Chief Executive Officer Flemming Ornskov and other executives are in Lexington, Massachusetts.
In addition to a more favorable tax rate, buying Shire would give AbbVie access to the fast-growing market for treatments against rare diseases, helping AbbVie branch out beyond its top drug, the arthritis medicine Humira, which generated of its 2013 sales, according to data compiled by Bloomberg.
Escalating Offers
AbbVie's first cash-and-stock offer to Shire was 39.50 pounds a share, and its latest bid increased to 46.26 pounds a share, AbbVie said in its statement. Shire said the offer consisted of 20.44 pounds in cash and 0.7988 of an AbbVie share for every Shire share.
'The offer doesn't look attractive to us at that price,' said Navid Malik, an analyst at Cenkos Securities in London. 'It lowballs the growth that Shire is experiencing. It's one of the fastest-growing pharmaceutical companies in the world.' Other large U.S. drugmakers including Pfizer, Merck & Co. and Bristol-Myers Squibb Co. may be interested in Shire for its drugs to treat rare diseases, Malik said.
The deal falls under U.K. takeover rules, which forced AbbVie to disclose its proposal. The drugmaker will have until July 18 to make a firm offer, or will go into a waiting period where it can't do so for as long as six months.
Adelle Infante, an AbbVie spokeswomen, declined to comment on the details or timing of the offer.
AbbVie, the U.S. drugmaker split last year from Abbott Laboratories, was identified earlier this year as a potential merger partner for AstraZeneca when the U.K. drugmaker was defending the unsolicited bid from Pfizer.
Shire's shares rose earlier this week when John Boris, an analyst at SunTrust Robinson Humphrey in New York, said the Dublin drugmaker would be a target of Allergan Inc., the maker of the wrinkle treatment Botox that is fighting a hostile takeover bid of $45.7 billion from Valeant Pharmaceuticals International Inc.
To contact the reporters on this story: Drew Armstrong in New York at darmstrong17@bloomberg.net; Simeon Bennett in Geneva at sbennett9@bloomberg.net
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Kristen Hallam, Thomas Mulier
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