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There’s no doubt about it. Persistence can pay off. AbbVie (NYSE:ABBV) has been courting Shire plc (LSE:SHP) for some time now with takeover proposals, all of which Shire has shunned. The board of Shire has now reported that it is willing to recommend ABBV’s latest offer of £53.2 per share in cash and stock. Shire’s share price opened at 5,025.00 this morning, an increase of 155.00 over Friday’s close. Shire’s current price is 4,903.00. Meanwhile, ABBV shares have fallen 1.06% on the day to 54.38.
Despite several rebuffed earlier proposals, AbbVie has persisted in its attempts to woo Shire into the fold (see “Shire Shares Soar Sixteen Percent” and AbbVie Agressive to Acquire Shire“), ABBV upped the stakes by $3 billion dollars over the weekend to $54 billion. It also spent time prior to and over the weekend reaching out to Shire’s major investors. In my last article, I concluded that, “Given the activity of the Shire share price over the past 52 weeks, it would be difficult to understand why investors would decided to sell out.” Shire has done an excellent job under the leadership of Susan Kilsby, positioning the company over the past year. Just a year ago, 15 July 2013, SHP was trading at 2,247.00. With the share price increasing as it has over the past 12 months, any offer would have to be beyond the expectations of the company’s continued growth plan.
It appears that the offered amount is finally acceptable, pending detailed negotiations and shareholder approval. The board of Shire has indicated to AbbVie that it “would be willing to recommend an offer at the level of the revised proposal to Shire shareholders, subject to satisfactory resolution of the other terms of the offer. Accordingly, the board is in detailed discussions with AbbVie in relation to these terms.” So, it would appear that Shire is officially betrothed, pending approval of the prenuptial agreement.
In their corporate brochure, Shire says “We believe that there’s a better future for the people we help. And for us that means being brave enough to do things differently.” Heretofore, the corporate response either directly or indirectly alluded to the concern that a takeover would change the courageous culture the company has worked so hard to develop. Clearly, the move by ABBV is primarily about moving its corporate offices to Dublin in order to avoid continuing to pay much higher U.S. corporate taxes. It is part of a massive wave of U.S.-based pharmaceuticals attempting to do the same. One must assume that the common financial benefits have fanned the flames of romance, but that certain pledges must be made to assure that the bride does not have to change so radically as to lose her identity.
AbbVie itself is a Chicago-based, research-oriented spin-off of Abbott Laboratories and was initially listed on the NYSE on 01 January 2013. Shire was founded in 1986 and first listed on the LSE in 1996. It’s specialize pharmaceutical products include Adderall and Vyvanse. The now-favored fifth offer is 35% higher than the first, and is at a 90% premium to the Shire share price as of 01 January 2014.
