This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Shire Opens Door to Takeover by AbbVie

Stocks in this article: SHPG ABBV

LONDON (The Deal) -- Irish drugs maker Shire (SHPG - Get Report) on Monday said it had entered detailed discussions with suitor AbbVie (ABBV - Get Report) about a fifth takeover proposal after eliciting a sweetened bid that values its stock at 31.4 billion POUNDS ($53.7 billion).

The Dublin maker of attention deficit hyperactivity disorder drug Vyanese said the new proposal values its stock at 5,320 pence per share, breaking down into 2,444 pence in cash and 0.8960 of a new AbbVie share. The takeover would give Shire shareholders about 25% of the combined company.

"The board of Shire has indicated to AbbVie that it would be willing to recommend an offer at the level of the revised proposal to Shire shareholders subject to satisfactory resolution of the other terms of the offer. Accordingly, the board is in detailed discussions with AbbVie in relation to these terms," it said.

Shire shares were up 123 pence, or 2.5%, at 4,993 pence by late morning in London.

The rapprochement counters initial expectations that the two sides would never see eye to eye on price, even though Shire CEO Flemming Ornskov said early on he was open to a deal in principle. It follows abortive bids by U.S. companies for two other major London-listed healthcare targets: Pfizer (PFE - Get Report) 69.4 billion pound bid for AstraZeneca (AZN - Get Report), which the New York company pulled in late May after the London target rejected a string of proposals; and Stryker Corp.'s exploratory work on an offer for devices maker Smith & Nephew plc, which ended before it had taken shape after an early media leak forced the U.S. company to retreat.

AbbVie's latest bid is 9.2% more than Shire's Friday closing price. AbbVie's bid interest first came to light on June 20, with the disclosure that it had made an offer worth 4,626 pence share on May 30. Analysts at the time said AbbVie, of North Chicago, may have to offer as much as 5,500 pence per share.

The Shire takeover would be the second big-ticket deal in the pharma sector in recent weeks motivated at least in part by so-called tax inversion after Minneapolis-based Medtronic (MDT - Get Report) in June agreed to buy Irish rival Covidien (COV - Get Report) for $42.9 billion to lower its tax bill by switching its domicile.

The latest AbbVie proposal remains subject to various conditions, including clearance from the U.S. company's own shareholders, Shire board backing and due diligence.

Shire, which had confirmed on Friday it had held a meeting with AbbVie executives, issued the standard disclaimer than an offer may not result from the talks. AbbVie has until 5 p.m. Friday to formalize its offer or retreat, unless Shire asks the Takeover Panel to give the two companies more time.

AbbVie, which was spun off from Abbott Laboratories in January 2013, has struck a string of licensing deals since gaining independence but the Shire takeover would be by far its largest transaction, and create the world's ninth-largest drugs company.

AbbVie's advisers are a trans-Atlantic JPMorgan & Co. team of Jeffrey Hoffman, Henry Gosebruch, Benjamin Wallace, Laurence Hollingworth, Dwayne Lysaght and James Robinson.

Shire's advisers are Citigroup Inc.'s Christopher Hite and Jan Skarbek; Evercore Group LLC's Francois Maisonrouge and Edward Banks; and Morgan Stanley's Michele Colocci, Colm Donlon and Peter Moorhouse. Davis Polk & Wardwell LLP's George R. Bason Jr., William J. Chudd and colleagues are providing legal advice to Shire.

The Takeover Panel told AbbVie on Wednesday to retract comments made by chairman and CEO Richard Gonzalez in media interviews the day before about the level of support he believed he had from Shire shareholders for a 5,115 pence-per-share bid announced on Tuesday. Under the Takeover Code, such statements can only be made when shareholders have issued written confirmation of their intentions.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs