LONDON (The Deal) -- AbbVie (ABBV) on Wednesday backed down from a claim underpinning its sweetened, 30.1 billion pound ($51.5 billion) offer for Irish drugmaker Shire plc after Takeover Panel intervention.
AbbVie had at first appeared to hint on Tuesday that it had broad backing from its Dublin target's shareholders for its fourth indicative offer, before chairman and CEO Richard Gonzalez went on to claim investor support for the transaction in subsequent media interviews. Under the Takeover Code the only valid shareholder backing that bidders can cite are written agreements.
"AbbVie wishes to clarify certain press and newswire reports with respect to support for its transaction with Shire plc," the company said. "AbbVie confirms that it has not received any written commitments of support and accordingly retracts the statements. It acknowledges that in the absence of written statements of support from shareholders it is not in a position to make any statement of shareholder support which accords with the provisions of Rule 19.3."
One corporate lawyer and former Takeover Panel secondee noted, "The rule is in place so neither bidders nor targets can claim to have the support of shareholders unless they can truly demonstrate it. So things like 'We believe' and 'We've received some sort of indications that' are probably not going to get you there. The Panel can't allow a situation where a statement that is unverified sits there in the market."
The misstep by the North Chicago-based Abbott Laboratories spinoff comes after Pfizer Inc. in May tied its own hands by declaring a hostile £69.4 billion bid for AstraZeneca plc "final" but suggesting it could be raised in certain circumstances. AstraZeneca countered that the spurned offer was "not capable under the Takeover Panel rules of being increased or even suggested at being increased, privately or publicly, with or without the board's approval or recommendation," and Pfizer retreated.
A person familiar with the situation said the Takeover Panel had taken issue with Gonzalez's spoken comments only, not with AbbVie's earlier Tuesday statement that it had spoken with holders of a majority of Shire's stock. The person added that Gonzalez's comments were intended to refer to Shire shareholders' support for the notion of the transaction being explored further.
AbbVie on Tuesday valued its latest Shire offer at 5,115 pence and said the bid would hand 24% of the enlarged entity to Shire shareholders. AbbVie's previous Shire bid - its third - was worth 4,626 pence. Many analysts said they believe the company will have to offer close to 5,500 pence to win Shire.
Shire CEO Flemming Ornskov, unlike AstraZeneca CEO Pascal Soriot, has indicated he is willing to sell if the price is right. Shire shares were up 30 pence at 4,561 pence by early afternoon in London. The company has yet to deliver its verdict on AbbVie's latest offer and a spokesman wouldn't say when that might happen.
An AbbVie spokesman declined to comment. Its stock had closed down almost 3% on Tuesday, at $55.69, valuing the equity at $88.7 billion.
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.