By Alex Gavrish, Etalon Investment Research; author of "Wall Street Back To Basics"
Shire hires takeover adviser
On June 16th, 2014, Reuters reported that drugmaker Shire PLC ADR (SHPG - Get Report) (SHP) has hired investment bank Citigroup Inc (C) 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 media reports Shire was approached by Allergan, Inc. (AGN) few months before Allergan itself became subject of a takeover bid 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 (VPHM) 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.