Shire rejects £27bn takeover AbbVie bid

Shire rejected AbbVie’s latest £46.11 cash and share proposal arguing it is“fundamentally undervaluing” the company

Shire has rejected a trio of possible offers worth up to £27.3 billion from a US suitor after vowing to remain independent.

The company, best-known for its Vyvanse blockbuster treatment for attention deficit hyperactivity disorder, faced the approaches from pharmaceuticals firm AbbVie while AstraZeneca was fending off a £63 billion takeover attempt from Pfizer.

Shire today said it rejected AbbVie’s latest £46.11 cash and share proposal, a 23 per cent premium to last night’s close, as “fundamentally undervaluing” the company.

But the shares leapt 14 per cent, or 522p, to 4260p as investors weighed into company, which has long been seen as a takeover target.

Chairman Susan Kilsby underlined the company’s growth prospects with a new target to double annual product sales, which account for the bulk of revenues, to $10 billion (£5.9 billion) by 2020, and urged shareholders to “take no action”.

She said: “The board believes the proposal fundamentally undervalued Shire and its prospects and that as an independent company Shire’s focused growth strategy will continue to deliver significant shareholder value and patient benefits.”

Shire stressed its 19 per cent rise in product sales growth over the past year, and the strong growth of its rare diseases unit, bolstered by the $4.2 billion deal for US company ViroPharma last year. Shire is building up the division as it faces more generic competitors to its ADHD drugs. “Shire has a long track record of delivering for shareholders and addressing unmet patient needs,” she added.

Panmure Gordon analyst Savvas Neophytou said Shire could be worth as much as £55 a share and noted the “distinct lack of the word ‘final’” anywhere in AbbVie’s announcement despite talks no longer taking place. 

He added: “Shire’s rare diseases business is one of the hottest assets in biopharmaceuticals... Given the company’s growth characteristics, a premium valuation is warranted in our view.” The company also highlighted total shareholder returns of 99 per cent over the past year, including reinvested dividends.

Though London listed, Shire is domiciled for tax purposes in Ireland. If successful in the approach AbbVie planned to move its tax base to the UK under an inversion structure to cut its US tax bill, similar to Pfizer’s plans for Astra. Shire’s board also had “concerns regarding the execution risks associated with the proposed inversion structure”.

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