Bottom Line: Pharma deal must be a two-way tonic
9 July 2014 2:29am
FOURTH time lucky? The latest bid for pharma firm Shire from AbbVie is an improvement of 11 per cent on its third attempt, up to £51.15 per share.
With a looming deadline of 18 July due to Takeover Panel rules, AbbVie must pray the offer sticks: otherwise it will need to move fast, or be forced to walk away until 2015. Having talked with shareholders, it clearly feels the improvement is enough to gain support from Shire’s board.
But does the deal really now add up for Shire? That’s harder to judge. Shire’s unfashionable ADHD specialism made it an unlikely target for acquisition in the past, but that hasn’t stopped it doing very well ploughing this furrow on its own. Its patent win in the US over its Vyvanse anti-hyperactivity drug added to a sense of strength and its ambition, announced in June, to more than double 2013 annual product sales to $10bn (£5.85bn) by 2020 is a strong consideration for sticking with what shareholders have.
AbbVie’s intense interest centres on the tax benefits of moving its HQ from the US to Europe. Either Dublin, where Shire is now, or London, which Shire left for tax reasons of its own but which now looks rather more tempting, to the credit of George Osborne, who appreciated the magnetic pull of lower corporate tax rates.
Shire’s owners must weigh whether its commercial potential will get the long-term attention it deserves in new hands. AbbVie is smart to seek favourable tax rates, but that’s no tonic for Shire’s jitters.
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