25th Jun 2014 16:03
LONDON (Alliance News) - US-based drugmaker AbbVie Inc Wednesday set out its case for a takeover of FTSE 100-listed Shire PLC, saying it believes it is offering "Shire shareholders compelling immediate value" by creating a larger, more diversified company with several leading treatment franchises.
AbbVie revealed last week that it had made three indicative offers to the British company, all of which were rejected. It first approached Shire in early May with a GBP39.50 cash and shares offer, that would have valued Shire at GBP23.3 billion a share. Its third and latest offer was GBP46.26 a share in cash and shares, it said, valuing Shire's share capital at GBP27.2 billion.
Shire has said it rejected the approaches because they undervalue the company, and it argued it could deliver better value to its shareholders by staying independent. It pledged to double its annual product sales by 2020 on its own.
However, AbbVie Wednesday said it was confident that its resources and management team would create "superior value" from Shire's assets than the British company would be able to produce independently.
AbbVie said it had been conducting an analysis of Shire's business since the Autumn of 2013, and that its model does not show the same magnitude of pipeline or gastrointestinal franchise potential that Shire's management has expressed.
The company also defended the level of its offer, noting that the recent gains in Shire's share price incorporates a meaningful takeover premium.
"While AbbVie appreciates and values the potential of Shire's pipeline, AbbVie believes that the recent appreciation in Shire's share price already incorporates a meaningful premium resulting from M&A market speculation and AbbVie believes its proposal is reflective of this appreciation," the company said in a statement.
Shire's shares closed up 2.4% at 4,473.21 pence Wednesday afternoon, the second highest gainer on the FTSE 100.
The company said that Shire had declined to engage in further discussions after rejecting its third proposal, but noted it was willing to "move quickly and cooperatively engage with Shire" to achieve a transaction.
AbbVie confirmed that it would seek to re-domicile in the UK as part of the takeover, although the new company would be listed on the New York Stock Exchange. By re-domiciling, AbbVie would be able to lower its corporate tax bill.
Separately, the US company also published a letter it sent to its own employees, saying that a takeover of Shire would accelerate its growth and profitability and give it a leadership position in immunology, rare diseases, virology, neuroscience, metabolic disease and emerging oncology. Critically, it reassured its staff that it would keep its operational headquarters in Lake County where they are now, and there wouldn't be any impact on jobs at that site.
"I know that it's easy to get distracted as the combination strategy plays out, but I ask AbbVie colleagues around the world to stay focused on delivering our business commitments, just as you all did so exceptionally as we prepared for our separation from Abbott," it said in the letter.
As it has gone public with the offer, AbbVie now has until July 18 to make a firm offer.
On Monday, Shire had set out its defence against a takeover offer, reiterating plans to more than double its annual product sales to USD10 billion by 2020.
It said its 'One Shire' consolidation strategy had helped increase its non-GAAP earnings before interest, tax, depreciation and amortisation margins, accelerated its top line product sales growth, improved its pipeline, and had led to strong shareholder return.
Shire on Wednesday strongly advised its shareholders to take no action, saying AbbVie had provided no new proposal and no material new information. It noted again that there can be no certainty a firm offer will be made, or on what terms.
Shire was given a boost early Wednesday, when a US District Court ruled that patents protecting Shire's Vyvanse treatment for Attention Deficit Hyperactivity Disorder had been infringed by five pharmaceutical manufacturers looking to bring out generic competitors. The ruling means Shire's exclusivity over the treatment is protected until the patents end in 2023, or unless the generics companies successfully appeal the ruling.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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