AbbVie raises offer for Shire to $51.5B
Drugmaker AbbVie Inc. made a fourth offer to buy Shire Plc, raising the price to about $51.5 billion in an effort to force negotiations. Shire said its board would meet to discuss the bid.
Drugmaker AbbVie Inc. made a fourth offer to buy Shire Plc, raising the price to about $51.5 billion in an effort to force negotiations. Shire said its board would meet to discuss the bid.
AbbVie increased its cash-and-stock offer about 11 percent after meeting with Shire's top shareholders, AbbVie said Tuesday. Shire, which has facilities in Wayne and Exton, said in a statement that it had not been given AbbVie's latest proposal ahead of time and that the company advised investors to take no action.
AbbVie chief executive officer Richard Gonzalez talked with Shire's top 20 shareholders before the new bid and said that in his opinion, they back the deal.
"I met with the majority of Shire shareholders, and they understand the strategic rationale," he said by telephone Tuesday. "I believe they are generally supportive of the transaction, and this offer is responsive of their feedback."
Buying Shire would allow North Chicago, Ill.-based AbbVie to move its legal address to the U.K. and take advantage of lower corporate tax rates there to drop its tax rate to 13 percent from about 22 percent. Shire's array of rare-disease treatments and drugs for attention deficit hyperactivity disorder would also give AbbVie a wider array of products beyond the rheumatoid arthritis injection Humira, which accounts for more than half of sales.
Shire's tax domicile is in Dublin; its main executive office is in Basingstoke, England; and its CEO, Flemming Ornskov, works in Lexington, Mass.
Gonzalez would not say if the offer was AbbVie's last and said AbbVie was not in talks with Shire's board.
"We have asked for, on multiple occasions, engagement," he said. "We are not engaged with Shire currently."
AbbVie has made three previous bids of as much as $46.8 billion, a price Shire's board unanimously rejected, saying it undervalued the company's prospects for increasing sales of its rare-disease medicines.
AbbVie can sweeten the deal by increasing the cash-to-stock ratio, said Navid Malik, a London-based analyst at Cenkos Securities Plc.
"The market's quite disappointed with the cash component," Malik said. "A lot of the shareholders in Shire are invested in Shire because it's a high-growth story. They probably want to be compensated for holding paper which, for a combined pharmaceutical company, may not grow as fast."
Ornskov, Shire's CEO since May 2013, has argued for keeping the company independent, projecting that product sales will double to $10 billion by 2020 as Shire expands in drugs for eye maladies and rare diseases.
Ornskov has also touted his resume, including bringing the blockbuster eye drug Lucentis to Novartis AG, and cost cutting and improved profit in his first year as Shire's CEO, hoping to persuade investors to leave Shire's management with him.
