It's not new news that speciality pharmaceuticals group Shire (SHP) is a desirable takeover target. It's conspicuous in a vacuum of mid-sized European pharmaceuticals companies pursuing treatments for rare diseases. For years, management has fought off advances from would-be suitors, but times could be changing.
Chief executive Flemming Ornskov - at the helm for just over a year - has now said he would consider selling the company if the price was right. But, for now, he is urging shareholders to back the board's rejection of the latest £46.26 a share offer from US group AbbVie (US: ABBV), which values the company at £27bn. Dr Ornskov said the offer "significantly undervalued" Shire and, arguably, he's right. The share price - although riding a deal-driven wave of momentum - is at an all-time high of 4,520p, valuing the company at £26.5bn. Inevitably, AbbVie will have to step up its offer if it wants to woo shareholders with a generous premium.
In the event of a takeover, AbbVie plans to move its tax domicile to the UK and join the ranks of US companies seeking to protect cash from US corporate tax rates via foreign deals. AbbVie's average tax rate could drop from 22 per cent to 13 per cent, but company headquarters will remain in Chicago and its listing in New York.
Last month, the British government defended AstraZeneca (AZN) from Pfizer's (US: PFE) advances, but there is no guarantee it will do the same for Shire. Shire moved its tax domicile to Ireland a number of years ago and has whittled its UK workforce down to fewer than 500. While it was founded in Britain, its main market is in the US with revenues driven from treating attention deficit hyperactivity disorder (ADHD) among American teenagers.
In the meantime, while AbbVie's chief executive Richard Gonzalez arrived in London to seek backing from Shire shareholders, Shire has been forced to put its own M&A agenda on hold to comply with market takeover rules. Last month, it allegedly arranged a $5bn credit facility to bid for NPS Pharmaceuticals, a US-based rare disease specialist.
