US drugs giant finally seals £32bn takeover of Shire
Friday 18 July 2014
The FTSE 100 big-pharma player Shire celebrated a £32bn takeover by US suitor AbbVie with record results as the two companies beat a Takeover Panel deadline to agree a firm offer.
The UK firm unveiled a 22 per cent rise in quarterly revenues to a record $1.5bn (£877m) and upgraded profit targets for the year as its chief executive Flemming Ornskov called the performance “a testament to the value AbbVie sees in our company”.
AbbVie’s fifth offer for Shire – worth £53.19 in cash and shares – adds to a clutch of major deals in the sector this year. The firm has succeeded in landing a UK target where larger rival Pfizer failed after an unsuccessful and controversial bid for AstraZeneca.
The US company will also pay a break fee of 3 per cent of the value of the offer – worth £960m – to Shire if the deal fails to go through, according to the offer document.
The two companies have been locked in talks in New York over the fine print of the deal, which AbbVie is pushing for to broaden its portfolio and move its tax base to the UK. This would cut its tax rate from 22 per cent to around 13 per cent under a so-called “inversion” deal.
Shire’s chair Susan Kilsby is believed to have been pushing for the big break fee due to increasing political risks around such tax deals as a US Senator has put forward legislation to make them more difficult, potentially reducing AbbVie’s tax benefits.
But AbbVie has also coveted Shire to reduce its reliance on rheumatoid arthritis treatment Humira, which soon loses patent protection. Shire’s best-known product – hyperactivity drug Vyvanse – saw sales rose 20 per cent to $360m over the quarter, but the company also reported strong sales of treatments for rare diseases from the ViroPharma business it bought for $4.2bn last year.
Sales of Cinryze, ViroPharma’s treatment for a rare blood disorder which causes swelling, were up 37 per cent year on year to $129.9m.
Shire was founded in 1986 by a group of five scientists. It is listed on the London Stock Exchange, has its tax base in Dublin but sells most of its products in North America.
AbbVie’s pursuit of Shire started in early May, just as AstraZeneca was fighting off Pfizer. The US firm was formed last year when Abbott Laboratories split into two companies, a medical products business which retained the Abbott name and a pharmaceuticals firm which became AbbVie.
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