Rare disease specialist Shire (SHP) rises 10.7% to £41.41 as it rebuffs the latest of three takeover offers from AbbVie (ABBV:NDQ). Confirming rumours it is the latest UK target in the sights of a US drugs company, Shire has snubbed a £46.26 cash and shares offer which values the business at £27 billion.
Shire's board has rejected the bid, arguing it undervalues the business and its prospects. Talks have now ended, although AbbVie has until July 18 to make a fresh bid or officially end its interest. Rumours of a takeover approach for the Ireland-domiciled drugmaker have been swirling around this week on news Shire had hired investment bank Citi to defend it from an approach.
Panmure Gordon analyst Savvas Neophytou believes the deal could still happen if AbbVie comes back to the table with a higher bid. 'The offer of £46.26 implying some 25x PER for a 25% growth stock is barely adequate and, depending on circumstances regarding the possible benefits of tax inversion (of which we are no experts), Abbvie may be able to increase its offer to £50, which we believe will be required to make this deal happen', he explains.
UK pharmaceutical groups are in the sights of several rich US giants looking to replace revenue streams lost to generic competition. Last month, the UK’s second largest drugmaker AstraZeneca (AZN) rejected a third and final £70 million bid from Viagra-maker Pfizer (PFE:NYSE).