Business World

Monday 19 March 2018

Shares in pharma firm Shire hike after Allergan takeover bid report

The Allergan plant in Arklow
The Allergan plant in Arklow

Shares in Ireland-based pharma company Shire rose in London after a report that US-based Allergan is preparing a takeover offer to fight off an unsolicited bid from Valeant Pharmaceuticals and activist investor Bill Ackman.

Shares in Shire climbed 3.8pc to £34.10 in London this morning, giving the company a market value of £20bn after Reuters reported details of the proposed takeover.

The company gets about a third of its sales from medicines that treat rare diseases. Pharmaceutical companies are attracted to those so-called orphan drugs because they get exclusive marketing rights as an incentive for their development in the US and Europe, while small patient populations mean fewer participants are needed for trials.

A bid by California-based Allergan, the maker of the Botox wrinkle treatment, would add to this year’s boom in the pharmaceutical industry deals.

“The merits of a possible deal between Allergan and Shire, in our view, would be based on Shire’s attractive exposure to rare diseases as well as significant cost/tax synergies,” Peter Verdult, an analyst at Citigroup wrote in a report today. Jessica Mann, a spokeswoman for Shire, declined to comment.

The company  had previously held talks in recent months with Shire about a potential takeover, but those did not pan out. The sources said Allergan is still interested in a deal with Shire and is planning a fresh approach, with the Valeant bid now also in the background.

Allergan is itself facing an unsolicited bid from Valeant. Valeant teamed up with activist investor Bill Ackman earlier this month to make an unsolicited $47bn offer for Allergan. Valeant has expanded through a series of acquisitions over the past few years. But Allergan has been reluctant to sell to it in part because of Valeant's reputation for cutting costs and spending little on research and development.


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