Shire (SHPG) announced that it held a meeting with representatives of AbbVie (ABBV) in connection with the latter’s acquisition proposal.
Shire will provide an update on the meeting as and when appropriate. The company once again urged its shareholders not to take any action in relation to the proposal.
We note that last week AbbVie increased its bid to acquire Shire for approximately £51.15 per Shire share (£22.44 in cash and 0.8568 ordinary shares of the merged company for each Shire share). This was the fourth proposal made by AbbVie.
Shire did not reject the offer outright and indicated that its board will meet to consider the revised proposal.
Earlier, Shire’s board unanimously rejected the offer three times as it believed that the proposal fundamentally undervalues the company and its prospects.
The acquisition proposal also included a new listed holding company in the U.S. post acquisition with a UK tax domicile. Shire also had reservations about the proposed inversion structure as AbbVie would redomicile in the UK for tax purposes.
We expect investor focus to remain on further updates from the acquisition proposal.
Shire holds a strong position in the attention deficit and hyperactivity disorder (ADHD) market driven by key drugs like Vyvanse, Intuniv and Adderall XR. In a bid to strengthen its portfolio of rare disease drugs, the company acquired erstwhile ViroPharma for approximately $50 per share or $4.2 billion earlier in 2014.
Shire currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare sector include Allergan (AGN) and Johnson & Johnson (JNJ). Both the stocks carry a Zacks Rank #2 (Buy).
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