) soared 16.3% after the company rejected an acquisition offer from
Shire announced that AbbVie offered to acquire the former for
£20.44 in cash and 0.7988 AbbVie shares per Shire share held. The
proposal was made on May 30, 2014. AbbVie's proposal represented a
value of £46.11 per Shire share (comprising 44% cash and 56% AbbVie
The acquisition proposal also included a new listed holding
company in the U.S. post acquisition with a UK tax domicile.
We remind investors that this was the third offer by AbbVie
which was rejected by Shire.
Shire stated that the offer undervalues the company and its
prospects as a leading company in rare diseases and specialty
markets. The company also had reservations about the proposed
inversion structure, as AbbVie would redomicile in the UK for tax
Shire believes that it can double its 2013 annual product sales
to $10 billion by 2020 on a standalone basis and the acquisition
proposal will deny the shareholders the full benefits of the
company's growth strategy .
We note that Shire repositioned its business in 2013 undertaking
a realignment program with strategic focus on rare diseases and
greater operational discipline. Shire is well placed in the
attention deficit and hyperactivity disorder (ADHD) market driven
by key drug Vyvanse. Shire's recent acquisition of ViroPharma is
expected to boost the bottom line by 7% in 2014.
On the other hand, AbbVie came into existence on Jan 1, 2013,
) divested its pharmaceutical division. AbbVie, a biopharmaceutical
company, focuses on the development and marketing of treatments for
complex and serious ailments.
We expect investor focus to remain on further updates on the
Both Shire and AbbVie currently carry a Zacks Rank #3 (Hold). A
better-ranked stock in the broader healthcare sector is
), with a Zacks Rank #1 (Strong Buy).
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