AbbVie has made a fourth attempt to buy Shire, raising its cash-and-stock offer by 11% to £51.15 per share and the Irish domiciled firm has yet to dismiss it.
The proposal values Shire in the region of around £30.1 billion and AbbVie noted that it is offering a 48% premium on the former’s closing price on May 2, the day before its first offer was made. Also the sweetened terms would give Shire shareholders 24% of the new company, up from 23% with the previous proposal.
The US firm said that since its last bid was rejected and following a presentation on June 25 outlining the rationale for a deal, AbbVie and financial adviser JP Morgan “have met with, or spoken to, a large number of Shire shareholders”, who collectively represent a majority of its outstanding stock.
These chats would appear to have prompted the raised offer and AbbVie chief executive Richard Gonzalez repeated his view that a combination of “two leading companies with leadership positions in specialty pharmaceuticals… would create a global market leader with unique characteristics and a compelling investment thesis”.
He believes AbbVie brings “greater financial strength and R&D experience to this combination that will enable both companies to reach their full potential”. Mr Gonzalez concluded by saying that “shareholders should strongly encourage the Shire board to engage in constructive dialogue”.
Shire has not yet responded, simply noting that it was not informed of the raised offer by AbbVie until everyone else saw it. The company urged its shareholders to take no action, stating that the board will meet to consider the proposal and a further announcement will be made in due course.
Observers are not convinced that this bid will be enough but feel it could prompt talks. Gordon Hamilton, head of healthcare M&A at Cavendish Corporate Finance, argued that the proposed transaction has a much higher chance of succeeding than Pfizer’s recent failed pursuit of AstraZeneca, saying that AbbVie “gaining comfort on Shire’s heightened projections will be key to the deal completing.” Recently, the latter laid out plans to double revenues to $10 billion by 2020.
Mick Cooper at Edison Investment Research said AbbVie’s revised offer “has been raised sufficiently to interest a sizeable fraction of Shire’s investor base, suggesting management will feel pressured to now enter into formal discussions”. However it still falls some way short of the £55 per share touted in some circles as the level where a deal could be struck.
