AbbVie Returns With New $52B Shire Bid

LONDON (The Deal) -- AbbVie (ABBV) on Tuesday lifted an indicative offer for Irish drugs maker Shire (SHPG) by 11% to about 30.1 billion pounds ($51.5 billion) and hinted that it had broad backing from its target's shareholders for the latest in a string of proposals.

The North Chicago-based bidder said the new proposal is worth 5,115 pence per Shire share and includes 2,244 pence in cash and 0.8568 of an AbbVie share. Its most recent proposal, which it submitted on May 30 and which first came to light on June 20, was worth about 4,626 pence per share.

"AbbVie and its financial adviser have spoken to Shire's shareholders representing a majority of Shire's outstanding shares," the bidder said. "AbbVie believes that the revised proposal reflects a substantial sharing of potential synergies between the shareholders of each company."

The proposal is the fourth in a string of overtures to Dublin-based Shire and reflects AbbVie's aim to redomicile for tax purposes to the U.K. It said the revised proposal would leave Shire shareholders with 24% of the enlarged entity and called on those investors to lobby the target's board ahead of a July 18 Takeover Panel deadline for AbbVie to either formalize its offer or retreat.

"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," added AbbVie Chairman and CEO Richard Gonzalez in a statement. "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."

Shire shares had scarcely budged at 4,647 pence by mid-afternoon on Tuesday in London after the target told shareholders to take no action while it considers the offer.

Shire had previously rejected AbbVie's overtures as too low and too risky and when AbbVie's interest in Shire first came to light on June 20, analysts predicted the suitor would have to offer well over 5,000 per share.

The latest AbbVie proposal is subject to various conditions, including clearance from the U.S. company's own shareholders, Shire board backing and due diligence. Shire noted on Tuesday that AbbVie had trumpeted the improved offer in a regulatory announcement before submitting it to the company itself.

Shire is probably best known for its Vyanese drug for attention deficit hyperactivity disorder, which contributed $351.2 million to its first-quarter product sales of $1.31 billion. In January, it closed a $4.2 billion takeover offer for ViroPharma Inc., of Exton, Pa., to gain drugs focused on treating and preventing hereditary angioedema, which causes spontaneous swelling of the skin and mucous membranes.

In May, it arranged to pay $260 million up front to buy San Diego-based Lumena Pharmaceuticals Inc., which has two compounds in development to treat liver diseases in adults and children. Shire plans to more than double products sales between 2013 and 2020 to $10 billion.

AbbVie, which was spun off from Abbott Laboratories in January 2013, has struck a string of licensing deals since gaining independence.

In Europe, these have included September agreements to develop cystic fibrosis treatments with Mechelen, Netherlands-based pharmaceutical company Galapagos NV in exchange for as much as $405 million in up-front and milestone payments, and to purchase an option to license rheumatoid arthritis and systemic lupus treatments from Belgium-based Ablynx NV for as much as $840 million.

AbbVie's market value as of early morning in New York on Tuesday was just under $90 billion, after the shares declined 2%.

AbbVie's advisers are a JPMorgan Chase & Co. team including Jeffrey Hoffman, Henry Gosebruch, 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.

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