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AbbVie moves in on Shire with $46 billion bid

Published on 20/06/14 at 07:44am
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AbbVie is looking to acquire Ireland-based speciality biopharma firm Shire in a deal that could shore up the US company’s long-term growth prospects.

In a statement to Pharmafile AbbVie says it 'notes the recent press speculation' over a bid and “confirms it made an indicative approach to Shire, with a merger proposal which was rejected by the Board of Shire”.

The firm adds: “There can be no certainty that any firm offer will be made. Discussions are no longer ongoing.”

AbbVie’s initial cash and share proposal came in early May this year and represented an indicative offer of £39.50 for each Shire share.

AbbVie’s third and latest cash and share proposal represented an indicative offer of £46.26 for each Shire share, totalling £27.2 billion ($46.5 billion), but the Irish company has not accepted the bid.

Since then the companies have held talks in recent weeks following AbbVie’s approach, Reuters reports, but there is no guarantee the discussions will lead to any transaction. It is also possible that other suitors will emerge for Shire.

Bulking up

AbbVie became a stand-alone company in 2012 after it split from the once single firm Abbott. The two now trade independently, with AbbVie focussing predominately on prescription medicines, whilst Abbott’s business is now based on diagnostics.

After the split AbbVie gained rights to the autoimmune drug Humira (adalimumab), which has become the biggest-selling drug in the world, pulling in $10.7 billion in sales last year and making up 57% of its total sales for 2013.

By acquiring Shire which produces ADHD treatments (which make up around 40% of its sales) as well as expensive rare disorder medicines, it could help shake off its reliance on Humira – something analysts have been urging since the split.

AbbVie is developing new medicines for cancer and most notably for the increasingly competitive hepatitis C market, but Shire’s portfolio is more diverse and comes with more immediate benefits.

In a deal reminiscent of what Pfizer was hoping to achieve with a potential $117 billion deal with AstraZeneca, acquiring Shire would also mean that AbbVie could base its HQ in Ireland which has a significantly lower tax rate than the US, helping it save hundreds of millions of dollars a year.

Pfizer had wanted to make the same move with UK-based AstraZeneca, but was also rebuffed in May.

The drugmaker will have until 18 July to make a firm offer, or will have to wait another six months to approach Shire again, under UK trading rules.  

Ben Adams

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