AbbVie a step closer to Shire takeover
pharmafile | July 14, 2014 | News story | Sales and Marketing | ADHD, AbbVie, Abbott, Humira, Shire, hep C, takeover
Shire is recommending a new offer from suitor AbbVie that could finally see the US giant merge with the Dublin-based biotech firm after four rejected bids.
The ADHD and speciality firm says in a statement that on Sunday it received a ‘revised approach’ from AbbVie that works out at £53.20 a share, which is equivalent to a total £31 billion ($53 billion) should it be accepted.
In the statement released this morning, Shire says: “The board of Shire has indicated to AbbVie that it would be willing to recommend an offer at the level of the revised proposal to Shire shareholders subject to satisfactory resolution of the other terms of the offer.”
This latest proposal is now AbbVie’s fifth attempt to lure Shire into a takeover since May.
In a deal reminiscent of what Pfizer tried (and failed) to do with AstraZeneca earlier this year, the US group wants the merger so it can base its company in Ireland and the UK to shield offshore cash from higher US tax rates.
Under the terms of the revised cash-and-shares proposal, Shire shareholders would receive £24.44 a share in cash and own around 25% of the combined entity.
The deal is not yet done, but this is the strongest indication yet that Shire is willing to accept a merger now the price for the firm has been raised to a level it deems satisfactory.
Pfizer came under intense scrutiny for its attempt to buy AZ in May after many warned it could jeopardise UK research jobs.
A deal between Shire and AbbVie would be less controversial given that Shire is a much smaller firm with less of an R&D base in the country.
Two heads better than one
AbbVie became a stand-alone company in 2012 after it split from the once single firm Abbott. The two now trade independently, with AbbVie focussing predominately on prescription medicines, whilst Abbott’s business is now based on diagnostics.
After the split AbbVie gained rights to the autoimmune drug Humira (adalimumab), which has become the biggest-selling drug in the world, pulling in $10.7 billion in sales last year and making up 57% of its total sales for 2013.
By acquiring Shire which produces ADHD treatments (which make up around 40% of its sales) as well as expensive rare disorder medicines, it could help shake off its reliance on Humira – something analysts have been urging since the split.
AbbVie is developing new medicines for cancer and most notably for the increasingly competitive hepatitis C market, but Shire’s portfolio is more diverse and comes with more immediate benefits.
Warwick Business School Professor of Practice John Lyon, who was also global vice president of US drug development company Covance, says: “The potential deal with AbbVie, which is fairly priced, affords AbbVie two distinct advantages, firstly it is diversifying its product range which is an appropriate growth strategy and secondly moving its headquarters to the UK will benefit the company from a reduction in the tax take.
“Shire may be headquartered in Dublin, Ireland, but it is managed from Boston, USA – where most of its medicines are sold. It is well known for targeting rare diseases with its medicines where accelerated drug development pathways are sometimes available once an orphan drug status is agreed with the regulatory bodies.
“This is a similar situation to the Pfizer/AstraZeneca attempted transaction, but in this case, the price looks good and the diversification makes sense where global reach is required in the pharma market.
“Maybe this will be the norm for the future – the key being to obtain a fair price and to develop a portfolio of products that fit well together.”
Ben Adams
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