DUBLIN—Shire plc noted June 20 that it had rejected a roughly $46 billion acquisition offer, the third so far from AbbVie Inc., making a point as it did so to refer to the initial offer from May 30 an "unsolicited and highly conditional proposal...regarding a possible cash and share offer for Shire."
Based on AbbVie's 30-day volume weighted average share price of $54.10, the most recent proposal represented a premium of 23 percent to Shire's share price on June 19 and a premium of 30 percent to Shire's 30-day volume-weighted average share price.
Shire noted the rejection of the previous two proposals as well and added that at AbbVie's request, Shire met with AbbVie to enable AbbVie to explain key aspects of the proposal. Following this meeting, the board of Shire decided unanimously to reject the proposal on the basis that it undervalued the company and its prospects.
The board also expressed concerns regarding the execution risks associated with the proposed inversion structure, as AbbVie would redomicile in the United Kingdom for tax purposes.
In particular, the board of Shire noted that the proposal "fundamentally undervalued Shire and its prospects as a leader in rare diseases and specialty markets" and that new management has achieved a "step-change in Shire's performance," resulting in "significantly accelerated growth and increased shareholder returns over the last 12 months."
Based on AbbVie's 30-day volume weighted average share price of $54.10, the most recent proposal represented a premium of 23 percent to Shire's share price on June 19 and a premium of 30 percent to Shire's 30-day volume-weighted average share price.
Shire noted the rejection of the previous two proposals as well and added that at AbbVie's request, Shire met with AbbVie to enable AbbVie to explain key aspects of the proposal. Following this meeting, the board of Shire decided unanimously to reject the proposal on the basis that it undervalued the company and its prospects.
The board also expressed concerns regarding the execution risks associated with the proposed inversion structure, as AbbVie would redomicile in the United Kingdom for tax purposes.
In particular, the board of Shire noted that the proposal "fundamentally undervalued Shire and its prospects as a leader in rare diseases and specialty markets" and that new management has achieved a "step-change in Shire's performance," resulting in "significantly accelerated growth and increased shareholder returns over the last 12 months."
Furthermore, Shire expects to more than double its 2013 annual product sales to $10 billion by 2020 and it believes the acquisition proposal would, if Shire pursued it, "deny Shire shareholders the full benefits of Shire's growth strategy."
Susan Kilsby, chairman of Shire, said: "Shire has a long track record of delivering for shareholders and addressing unmet patient needs. Our high-performing management team and focused strategy are producing even stronger results, reflected in our recent top-line growth and increased profitability. With an expanded portfolio focused on high-growth opportunities, an efficient cost base and an enhanced innovative pipeline, we have put in place a platform for long-term value creation. We believe that Shire has a strong independent future. The board believes the proposal fundamentally undervalued Shire and its prospects and that as an independent company Shire's focused growth strategy will continue to deliver significant shareholder value and patient benefits."
Shareholders have been strongly advised to take no action in relation to the proposal.
Susan Kilsby, chairman of Shire, said: "Shire has a long track record of delivering for shareholders and addressing unmet patient needs. Our high-performing management team and focused strategy are producing even stronger results, reflected in our recent top-line growth and increased profitability. With an expanded portfolio focused on high-growth opportunities, an efficient cost base and an enhanced innovative pipeline, we have put in place a platform for long-term value creation. We believe that Shire has a strong independent future. The board believes the proposal fundamentally undervalued Shire and its prospects and that as an independent company Shire's focused growth strategy will continue to deliver significant shareholder value and patient benefits."
Shareholders have been strongly advised to take no action in relation to the proposal.
SOURCE: Shire plc
