When we last left Shire, is was busily preparing itself to fend off unwanted advances from Allergan in the latter's bid to fend off unwanted advances from Valeant. Today we hear that Abbvie has joined the chase for Valeant? No. Allergan? No. Shire? Yes!!!
Apparently Shire has also turned down not 1, not 2 but 3 separate bids from Abbvie -- the last being worth about $46.5 B in cash and exchanged AbbVie shares. In a now familiar refrain, Shire's board said that AbbVie's bids significantly undervalued the company -- even at a 23% premium over yesterday's close. Shire stock price has doubled this past year, and they are now predicting that their sales will double this year -- so they may be right. They says that Shire will offer its shareholders much better value as an independent company.
Analysts have chimed in that AbbVie while perhaps benefitting from additional Shire products to lessen its own dependence on Humira -- which accounts for 57% of the company's sales -- still has little in common with Shire as a whole. They see it as a deal largely benefitting from cost cutting and is another tax inversion strategy. In this case, AbbVie could locate itself to Ireland and its lower tax rates. So we have yet another US company chasing the tax rate gain.
AbbVie may come back with another bid directly to Shire shareholders, but its interest may also spawn other competition amongs other Big Pharma players. Other potential bidders mentioned include Pfizer (who else!), BMS, Merck and AZ plus yesterday's news -- Allergan. Shire is likely to stay busy fending off suitors and may itself be motivated to chase new assets of its own.
Posted by Bruce Lehr June 20th 2014.