US drugmaker AbbVie says Shire rejected bid approach

Irish-domiciled Shire viewed as prime takeover target for US pharmaceutical giants

Founded in 1986 in Britain, Shire conducts most of its business in the United States and has been domiciled in Ireland for tax purposes since 2008. Photograph: JB Reed/Bloomberg News

Founded in 1986 in Britain, Shire conducts most of its business in the United States and has been domiciled in Ireland for tax purposes since 2008. Photograph: JB Reed/Bloomberg News

 

US drugmaker AbbVie Inc has confirmed today that it had made a bid approach to Shire , which was rejected by the British group’s board. It said talks were no longer ongoing.

AbbVie was responding to a Reuters story yesterdat which revealed the talks.

AbbVie’s initial cash and share proposal in early May 2014 represented an indicative offer of £39.50 (€28.99) per share for Shire, and the third and latest cash and share proposal represented an indicative offer of £46.26, it said.

AbbVie, which makes rheumatoid arthritis drug Humira, has a market capitalization of around $86 billion (€63.1 billion), while Shire has a market capitalisation of roughly $38 billion.

The companies held talks in recent weeks following AbbVie’s takeover approach.

It is possible that other suitors will emerge for Shire, people involved in the talks said.

Founded in 1986 in Britain, Shire conducts most of its business in the United States and has been domiciled in Ireland for tax purposes since 2008. With its tax base in Ireland, where effective corporate tax rates are among the lowest in the world, Shire, with a mid-sized market value, has been seen as a prime takeover target for US drugmakers.

Shire specialises in medicines for attention deficit hyperactivity disorder (ADHD), which account for around 40 per cent of its sales. The firm also sells pricey drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other specialty disease areas.

AbbVie, based in North Chicago, Illinois, was founded last year as a spin-off from Abbott Laboratories. The company has been criticized for its overreliance on its top drug, Humira, which comprised over half of its revenue in the most recent quarter.

To lessen its reliance on Humira, the company is attempting to develop treatments for hepatitis C, cancer and other diseases.

Shire had also been approached by Allergan Inc in the months before the Botox maker itself became a takeover target for Valeant.

That approach did not lead to serious discussions between the two parties and there are currently no talks with Allergan.

US pharmaceutical companies are in a race to keep up with rivals and are looking at lowering their tax rates in order to do so, in what is called as an inversion. Recent inversion deals have included medical device company Medtronic Inc’s $42.9 billion deal for Covidien this week, as well as Pfizer Inc‘s abortive $118 billion bid for AstraZeneca PLC .

Some US lawmakers are concerned that the deals erode government revenue by giving corporations another tax-avoiding loophole. Two bills in the US Congress and a White House proposal would make inversions harder to do, but neither has gained much traction.

Reuters

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.