AbbVie raises Shire offer by 11% to £30.1bn

US pharma group AbbVie made a fourth offer to buy Irish-headquartered rare drug company Shire, raising the price to about £30.1 billion (€38 billion) in an effort to force negotiations. Shire said its board would meet to discuss the bid.

AbbVie increased its offer by about 11 per cent to £51.15 a share in cash and stock after meeting with Shire’s top shareholders, the drugmaker said today. Shire said in a statement that it wasn’t given AbbVie’s latest proposal ahead of time, and the company advised investors to take no action.

AbbVie chief executive Richard Gonzalez talked with Shire's top 20 shareholders before the new bid, and said, in his opinion, they back the deal.

“I met the majority of Shire shareholders and they understand the strategic rationale,” he said. “I believe they are generally supportive of the transaction and this offer is responsive of their feedback.”

Mr Gonzalez wouldn’t say if the offer is AbbVie’s last, and said AbbVie isn’t in talks with Shire’s board. “We have asked for, on multiple occasions, engagement,” he said. “We are not engaged with Shire currently.”

AbbVie has made three previous bids of as much as £27.3 billion, a price Shire’s board unanimously rejected, saying it undervalued the comany’s prospects for increasing sales of its rare-disease medicines.

AbbVie can sweeten the deal by increasing the cash-to-stock ratio, which currently gives Shire shareholders £22 per share in cash, said Navid Malik, a London-based analyst at Cenkos Securities. Buying Shire would allow AbbVie to move its legal address to the UK, and take advantage of lower corporate tax rate there.

Shire’s array of rare disease treatments and drugs for attention deficit hyperactivity disorder would also give AbbVie a wider array of products beyond the rheumatoid arthritis injection Humira, which accounts for more than half of sales.

– (Bloomberg)