AbbVie has disclosed that it has made no fewer than three takeover offers for Shire in recent weeks that have all been rejected by the Irish pharma company’s board.
The latest offer of £46.26 ($78.89) per share – in a combination of cash and AbbVie stock – values Shire at $46bn and comes after AbbVie opened bidding for the company with a £39.50 per share last month.
AbbVie confirmed its interest in a statement yesterday, but stressed that no discussions between the two companies are currently ongoing and there is “no certainty that any firm offer will be made”. Under the UK’s corporate takeover regulations AbbVie has until July 18 to table a formal bid.
As with Pfizer’s aborted takeover attempt for AstraZeneca (AZ), if AbbVie does not table a bid by the deadline it will be prevented from approaching Shire again for six months.
Shire has become the subject of serial merger and acquisition (M&A) speculation in recent years on the back of strong revenue growth and increasing operational efficiencies under the direction of recently-appointed chief executive Flemming Ornskov. It was most recently linked to a possible merger with Allergan, which is itself fighting off a hostile takeover attempt by Valeant.
Shire responded to the disclosure with its own statement this morning which described AbbVie’s offer as “highly conditional” and significantly undervaluing its “prospects as a leader in rare diseases and specialty markets”.
The Dublin-based company’s chairman, Susan Kilsby, said that with an “expanded portfolio focused on high-growth opportunities, an efficient cost base and an enhanced innovative pipeline,” Shire has a “strong independent future”.
The company said it expects to be able to double its 2013 annual product sales to $10bn by 2020, pointing to a 19 per cent increase in sales and eight-point increase in profit margins in the last 12 months.
Commenting on the development, Edison Investment Research analyst Mick Cooper said it was “no surprise Shire’s board has rejected the proposals so far, as AbbVie has only offered relatively modest premiums”.
“It was only a matter of time before an offer for Shire occurred, given the well-publicised benefits of tax inversion and its strong growth,” he added.
Meanwhile, Navid Malik of Cenkos Securities told Bloomberg the offer “doesn’t look attractive to us at that price,” and suggested other drugmakers such as Pfizer, Merck & Co and Bristol-Myers Squibb (BMS) may be interested in the company.