Shire buys US diseases-focused NPS Pharma for £3.4 billion

Deal follows the collapse of US firm AbbVie’s proposed takeover of Shire

Vitamins made by Shire are displayed at a chemist's in northwest London on 11 July, 2014 (Reuters)

FTSE 100-listed drugmaker Shire has agreed to buy rare diseases-focused NPS Pharma for £3.4 billion in its biggest ever acquisition.

The deal follows the collapse of US firm AbbVie’s proposed $55 billion takeover of Shire, after a rule change aimed at clamping down on deals in which US firms redomiciled to take advantage of lower corporate tax rates.

In buying NPS Pharma, known for its medications for short bowel syndrome and hormone disorder hypoparathyroidism, Dublin-based Shire will strengthen its position in the lucrative field of medicines for rare diseases.

Shire’s chief executive Flemming Ornskov said of the transaction: "The acquisition of NPS Pharma is a significant step in advancing Shire’s strategy to become a leading biotechnology company."

Shire $46.00 a share all-cash offer is at a 10 per cent premium to NPS’ closing share price on Friday.

The boards of both companies have unanimously approved the deal, which is expected to close by the end of the quarter.

Shire has secured an $850 million short-term bank facility to help finance the deal.

It can also draw on the $1.6 billion breakup fee it received from AbbieVie after the collapse of its planned takeover.

Additional reporting by Reuters