Dublin-based Shire latest target as tax drives deals
Dublin-based pharmaceutical group Shire has rejected a £27. 3bn (€34bn) takeover offer from AbbVie – the latest sign US companies are aggressively hunting for targets in Europe in order to reap tax savings.
The offer of about £46.11 a share undervalues Shire, the company said in a statement.
That was after its board unanimously rejected the approach. No talks are occurring and there can be no certainty a new offer will be made, Chicago-based AbbVie said in a statement.
Shares in Shire, a specialty drugmaker, rose 14pc to £42.70 a share by lunchtime in London yesterday. The stock's intraday gain was the biggest in more than seven years.
Cross-border deals, many featuring an Irish element, are accelerating as US companies seek lower taxes and ways to spend almost $2 trillion (€1.47 trillion) in overseas cash. The "offer doesn't look attractive to us at that price," said Navid Malik, an analyst at Cenkos Securities in London.
"It lowballs the growth that Shire is experiencing. It's one of the fastest-growing pharmaceutical companies in the world."
AbbVie's offer is the latest of three it made, according to the companies. It consisted of £20.44 in cash and 0.7988 of an AbbVie share for each Shire share.
Shire makes drugs including Vyvanse for attention deficit hyperactivity disorder. It is the second European drugmaker to draw acquisition interest this week.
On June 16 Medtronic Inc agreed to buy Covidien, also based in Ireland and another maker of rare disease drugs, for $42.9bn (€31bn).
In addition to a more favourable tax rate, buying Shire offers access to the fast-growing market for treatments against rare diseases. This would help AbbVie, split off last year from Abbott Laboratories, branch out beyond its top drug, the arthritis medicine Humira, which generated 57pc of its 2013 sales.
Other US companies that may be interested in Shire's stable of rare-disease products could include Pfizer Inc, which failed this year in a $117bn (€86.1bn) bid for London-based Astra- Zeneca Plc, and Bristol-Myers Squibb Co.
While Shire is based in Dublin and has its main executive offices in Basingstoke, England, chief executive officer Flemming Ornskov works in Lexington, Massachusetts.
AbbVie's plan to move its tax domicile out of the US, a so-called tax inversion, raises concern about whether the company will be able to complete the deal, Shire said.
"Shire has a long track record of delivering for shareholders and addressing unmet patient needs," chairman Susan Kilsby said in the statement.
"Our high-performing management team and focused strategy are producing even stronger results, reflected in our recent top-line growth and increased profitability."
Adelle Infante, an AbbVie spokeswomen, declined to comment on the offer.
Shire's stock has doubled in the last year, and today the company said it expects to more than double its 2013 product sales to $10bn (€7.36bn) by 2020.