AbbVie lays out case for Shire takeover
Shire Pharmaceuticals aims to show it was right to reject AbbVie's approach
AbbVie said it wanted to “move quickly and cooperatively” to strike a deal with Shire as it set out plans for a £27bn takeover of its UK-listed rival.
The US drugmaker said a deal would create more value for shareholders than Shire would if it remained independent. AbbVie also questioned some of the aggressive growth targets announced by the UK company this week. AbbVie confirmed it would move its tax domicile to the UK in the event of a takeover, joining a series of US companies that have sought to use foreign acquisitions to shelter offshore cash from high US corporate tax rates.
However, the company’s headquarters would remain in Chicago and its listing in New York.
While AbbVie fleshed out details of its proposal for the first time, there was no increase on the cash-and-share offer made public last week.
AbbVie said the offer was worth £46.26 per share – 44 per cent of it in cash – although Shire has valued it at £46.11 using a different method of calculating the stock component.
In what could be seen as a signal of flexibility on price, AbbVie said it was “willing to move quickly and cooperatively to engage with Shire with a view to achieving a transaction for the benefit of all shareholders”.
Shire said on Friday that AbbVie’s proposal “fundamentally undervalued” the company, which has emerged as one of Europe’s fastest-growing drugmakers with a strong portfolio of treatments for rare diseases and neurological disorders.
The company made no immediate response to AbbVie’s statement on Wednesday.
Richard González, AbbVie chief executive, said his company’s greater global scale and capabilities would allow it to widen the reach of Shire’s products and accelerate development of its experimental drugs.
The US company said it had “thoroughly assessed” the tax aspects of its proposal and was confident in its ability to execute the deal.
Shire had identified risks surrounding the so-called “tax inversion” as one of its reasons for dismissing the offer.
Some Democrats on Capitol Hill are pushing for legislation to make it harder for companies to escape US taxes by moving overseas.
However, Shire’s main objection to the deal is on the grounds of price, with Flemming Ornskov, the chief executive, stressing on Monday that he would not stand in the way of an offer if it was in shareholders’ interests.
Mr Ornskov forecast a doubling in annual revenues to $10bn by 2020 as he laid out the case for independence.
AbbVie said it had been analysing Shire’s business since last autumn and that its models “do not reflect the same magnitude” of growth predicted by Mr Ornskov for the company’s research pipeline or gastrointestinal products.
The US company’s offer represented a 23 per cent premium over Shire’s share price the day before news of its interest became public. However, AbbVie highlighted the 58 per cent premium over the price on April 17, before news of Pfizer’s interest in AstraZeneca caused an intensification of takeover speculation around Shire.