By Alex Gavrish, Etalon Investment Research; author of "Wall Street Back To Basics"
Shire hires takeover adviser
On June 16th, 2014,
reported that drugmaker Shire PLC ADR
(SHPG - Get Report)
has hired investment bank Citigroup Inc
to help defend itself against takeover bids. Company expects to be approached by potential bidders in light of a recent wave of deals in the healthcare sector. For example, according to
Shire was approached by Allergan, Inc.
(AGN - Get Report)
few months before Allergan itself became subject of a
by Valeant Pharmaceuticals Intl Inc
(VRX - Get Report)
(VRX - Get Report)
. Shire might be an attractive target for US firms as it is domiciled in Ireland and enjoys low corporate tax rate.
During January 2014, Shire completed aquisition of Viropharma Inc
for approximately $3.8 billion. The acquisition added CINRYZE to Shire's portfolio of currently marketed products. CINRYZE is a leading brand for the prophylactic treatment of Hereditary Angioedema "HAE" in adolescents and adults. ViroPharma will bring Shire two additional marketed products and other pipeline assets. According to guidance provided by ViroPharma’s management at the time of acquisition, sales in FY 2014 are projected to be $584 millon and EBITDA $166 million. Shire also expects to achieve annual cost synergies of approximately $150 million by 2015. Based on these estimates, Shire paid an EV/EBITDA multiple of approximately x12 in the transaction.
Shire plc is a leading specialty biopharmaceutical company that focuses on developing and marketing innovative specialty medicines that address significant unmet patient needs. The company has grown through acquisitions, completing a series of major transactions that have brought therapeutic, geographic and pipeline growth and diversification. Shire has four commercial unitsin the following specialist therapeutic areas: Rare Diseases, Neuroscience, Gastrointestinal GI and Internal Medicine.
Based on a recent share price, Shire had maket capitalization of $36.3 billion and enterprise value of $37.7 billion. Company is currently valued at an estimated EV/EBITDA multiple of x15 FY 2014 Q1 annualized EBITDA. During first quarter of 2014, Shire generated $246 million in cash flow from operations and $231 million in free cash flow. On June 18th, 2014,
reported that according to some analysts Allergan might make a
for Shire in the near future in order to defend itself against takeover by Valeant. Possible surprise in the form of takeover, reasonable valuation, and attractive growth prospects make Shire an interesting candidate for long-term investor
Shire plc: Reported To Hire Takeover Adviser
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-By Alex Gavrish