AbbVie announces fourth proposal for Shire

The latest transaction is valued at $51 billion

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NORTH CHICAGO, Ill.—In light of Shire plc’s ongoing disinterest, AbbVie has increased its offer in hopes of appealing to shareholders, announcing a revised proposal of £22.44 in cash and 0.8568 ordinary shares of New AbbVie for each share of Shire stock. The newest proposal—AbbVie’s fourth in the acquisition attempt—is valued at $51 billion, representing a roughly 11-percent increase over its previous indicative proposal.
The revised proposal follows talks between AbbVie, its financial advisor and Shire shareholders who hold a majority of Shire’s outstanding shares. Under this latest proposal, Shire shareholders will have a 24-percent ownership in New AbbVie (the new holding company that would result from combined group). It is also a premium of 75 percent over Shire’s closing share price of £29.25 on April 17 and a 48-percent premium over its share price of £34.67 on May 2, the last practicable date before AbbVie’s first proposal.
Completion of the proposal would be subject to approval from AbbVie’s shareholders as well as regulatory officials and other customary closing conditions.
“This transaction is a combination of two leading companies with leadership positions in specialty pharmaceuticals that would create a global market leader with unique characteristics and a compelling investment thesis. AbbVie will bring greater financial strength and R&D experience to this combination that will enable both companies to reach their full potential for their shareholders and patients in need across the globe,” Richard Gonzalez, chairman and CEO of AbbVie, commented in a statement. “AbbVie has made a compelling offer to Shire that creates immediate and long-term value to shareholders of both companies. We think its shareholders should strongly encourage the Shire board to engage in constructive dialogue with AbbVie.”
This follows Shire’s June 20 announcement that it had rejected AbbVie’s third proposal, which had an aggregate value of roughly $46 billion. Shire met with AbbVie to hear details on key aspects of the proposal, but in the wake of the meeting, Shire’s board of directors still voted unanimously to reject the proposal, which it claimed undervalued Shire and its prospects for future growth. As Shire expects its 2013 annual product sales to more than double, with the result of sales of $10 billion by 2020, the company said that acquisition by AbbVie would “deny Shire shareholders the full benefits of Shire’s growth strategy.”
Shire has been making acquisitions of its own this year, with two transactions announced in the past two months and three so far this year. In early May, it was announced that Shire would be acquiring Fibrotech for $75 million up front, with the potential for certain contingent payments if development and regulatory milestones are met. The transaction netted Shire a number of candidates targeted towards fibrosis, including a Phase 1 compound for the treatment of diabetic nephropathy. The same month, Shire also announced its pending acquisition of Lumena Pharmaceuticals, which supported its interest in orphan diseases with a number of compounds for the treatment of rare cholestatic liver disease.

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