AbbVie has upped the stakes in its bid to acquire Shire with a fourth offer valuing the company at a sizeable £30bn ($51bn).
The £51.15-per-share bid is an 11 per cent increase on AbbVie’s last rejected offer and comprises £22.44 in cash and 0.8568 ordinary shares in the combined company – dubbed ‘new AbbVie’ – for each share held in Shire.
Dublin-headquartered Shire said it had not been informed of the raised bid ahead of the announcement by AbbVie and recommended its shareholders take no action while its board considers the proposal.
Shares in Shire fell on the announcement of the sweetened bid, perhaps because investors had been hoping for a higher figure. Analysts at Jefferies suggested AbbVie might have to raise its bid to around £55 to either win over the Irish drugmaker’s board or lure shareholders into a hostile takeover.
AbbVie’s chief executive Richard Gonzalez told Bloomberg he believes the top 20 Shire shareholders are in support of the deal, which will create “a global market leader [in specialty pharmaceuticals] with unique characteristics and a compelling investment thesis”.
“AbbVie will bring greater financial strength and R&D experience to this combination that will enable both companies to reach their full potential,” he said in a statement detailing the new offer.
AbbVie has until July 18 to table a formal offer for Shire under the UK’s ‘put up or shut up’ takeover rules, and wants shareholders who back the transaction to put pressure on Shire’s board to start formal negotiations as soon as possible.
Despite the fact that Shire is a FTSE-listed company, prospect of a takeover have not been met with the same reservations in the UK that accompanied Pfizer’s aborted bid for AstraZeneca (AZ) earlier this year. This is likely due to the company being managed and making most of its revenues in the US, while it has only paid tax in Ireland, where there is a more favourable corporate tax rate, since 2008.
Aside from Shire’s profitable attention-deficit hyperactivity disorder (ADHD) franchise and fast-growing rare disease therapy portfolio, AbbVie also wants to take advantage of Shire’s low corporate tax rate, a process known as tax inversion that was also a driver for Pfizer’s pursuit of AZ.
In its defence against Pfizer’s advances AZ made much of the possibility that the rising number of inversion deals may prompt new legislation in the US to curtail the practice. The House Ways and Means Committee and the Senate Finance Committee are reported to be looking into the matter.
Meanwhile, on this side of the Atlantic business secretary Vince Cable has been quizzed in the House of Lords about the possible merits of public interest test for mergers involving pharma companies.
Shire has argued that it is doing very well as an independent company, telling investors last month it is on course to double its annual sales to $10bn by 2020.