Irish pharmaceuticals company Shire plc (SHPG) on Sunday, Jan. 11, said it had agreed to pay about $5.2 billion for loss-making rare disease specialist NPS Pharmaceuticals Inc. (NPSP) , striking its largest ever acquisition three months after erstwhile suitor AbbVie Inc. (ABBV - Get Report) pulled a £32 billion ($48.5 billion) takeover agreement because of a U.S. clampdown on tax inversions.
Shire agreed to pay $46 per share for NPS, of Bedminster, N.J. The price is 9.8% more than NPS's $41.91 Friday closing price and, Shire noted, 51% more than NPS's price on Dec. 16, before rumors of a potential sale and talk of possible bid interest from Shire and Pfizer Inc. (PFE) began circulating.
The transaction eclipses by size Shire's $4.2 billion takeover a year ago of ViroPharma Inc., of Exton, Pa., which gave it drugs focused on treating and preventing hereditary angioedema. Shire CEO Flemming Ornskov told a conference call that the NPS deal "represents yet another significant step in expanding our leadership of rare diseases."
"We will deliver NPS's pharmaceuticals to even more patients globally and enhance their growth," he said. "We see a huge opportunity in the rare disease space and we are thoughtfully focusing our organization in this manner."
NPS has approval for one product: the Gattex, or Revestive, injectable treatment of adults with short bowel syndrome, whose sufferers struggle to absorb sufficient nutrients and fluids to survive.
NPS is hoping for FDA approval as early as this month for its Natpara treatment of a rare endocrine disorder known as hypoparathyroidism. The disease is associated with low calcium levels which right now can only be tackled with often counterproductive oral doses of calcium. The NPS treatment, by contrast, helps the body retain appropriate calcium levels in the blood serum.
One of the major risks of the Shire/NPS deal is that the FDA withholds approval for Natpara. Shire is obliged to close the deal whatever happens.
"There are no guarantees in life but we feel as confident as we can,"" said Ornskov. "It is better that we get in early on to prepare with the NPS team" during the approval process.
Shire's specialist areas include rare diseases, neuroscience and gastrointestinal complaints. It is best known for its Vyvanse drug for attention deficit hyperactivity disorder. The Dublin company has posted six consecutive quarters of double-digit product growth and had nine-month revenue of about $4.45 billion, up from $3.6 billion a year earlier.
NPS is led by president and CEO Francois Nader. The N.J. company said in November it expects full-year net sales at the lower end of a $100 million to $110 million range. Its nine-month net loss was $6.2 million, down from a loss of just under $21.3 million a year earlier.
Shire said the takeover will boost its non GAAP earnings per share from 2016. The buyer, which received a $1.64 billion breakup fee when its purchase by AbbVie collapsed, said it will pay for NPS with cash and existing and new bank debt, including a $2.1 billion five-year revolving credit facility it arranged in December. It plans to refinance a new, $850 million short-term loan it has arranged for the purchase through bond sales "in due course."
Shire shares were little changed by mid-morning in London. The company, which had reportedly held talks with NPS before AbbVie's approach last year, has a market value of about £28 billion.
Panmure Gordon & Co. plc analyst Savvas Neophytou reiterated his buy recommendation on Shire following the announcement.
"We expect Shire's growth prospects to be boosted following the acquisition over the weekend of NPS Pharma. There is a strong therapeutic and strategic fit, and we expect NPS nascent product portfolio to benefit from Shire's broader channel to market, particularly with its first two products due to launch in Europe in coming months," he noted.
Shire's advisers are a Citigroup Global Markets Ltd. team including Christopher Hite and Ben Carpenter and Lazard's Stephen Sands and Andrew Dickinson. Shire's lawyers are a Davis Polk & Wardwell LLP team including George Bason and William Chudd, and Slaughter and May.
A Goldman, Sachs & Co. team including Marshall Smith Jason Silvers, and Leerink Partners LLC's Tony Gibney are advisers to NPS Pharma, which is taking legal counsel from Skadden, Arps, Slate, Meagher & Flom LLP's Eileen Nugent, Graham Robinson and Andrew Kopans.
The deal is expected to close by the end of March, NPS said.
-- David Marcus contributed to this report.
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