Allergan says not interested in buying Shire

Allergan has said it is not interested in buying Shire after all, after announcing yesterday that it was considering a bid for the UK-listed firm also targeted by Takeda.

Shire has rejected a bid of around £42 billion ($60 billion) from Takeda, and Allergan was pushed into making the announcement following press reports under the UK’s takeover code.

In brief statement last night, Allergan said it was not interested in making a bid for Shire after all, although there are rumours that other firms are also interested.

Dublin, Ireland-domiciled Shire says it had already received three proposals from Takeda since 29 March, the day after the Japanese firm announced it was considering a merger.

The firm has emerged as a takeover target after a string of acquisitions, including a $32 billion merger with rare disease firm Baxalta in 2016, have proved unpopular with investors.

Shire’s CEO Flemming Ornskov is also unpopular with shareholders, and only this week came under fire from pay advisory group Pirc for his “excessive” pay deal.

Nevertheless, Shire looks like it is trying to deter Takeda’s bid outright: earlier this week it announced an agreement to sell its cancer drug business to France’s Servier for $2.4 billion.

All three proposals would see Shire and Takeda merge to form a company with stock market listings in Japan and the US.

The first bid valued Shire at £41 billion, and would see Shire shareholders owning around 50% of the enlarged Takeda.

After a review with its advisers and a board meeting on 8 April, Shire’s board unanimously rejected the bid, saying it undervalued Shire, its growth prospects and drug pipeline.

The second bid on 11 April valued Shire at £43 billion, with shareholders in the UK-based firm owning 51% of the enlarged Takeda.

After seeing the second bid rejected, Takeda came back on 13 April, with the £44 billion bid, which values Shire at around £42 billion excluding debt, at $46.5 per share.

Shire also rejected the third proposal, made up of £17.75 in cash, to be paid in US dollars, and £28.75 of new Takeda shares.

In a response statement, Takeda confirmed that it had made the £44 billion bid and that discussions between the companies are ongoing.

The  Japanese firm said it will “remain disciplined” with any offer and intends to maintain its dividend policy and investment grade credit rating. However many analysts have cast doubt on whether the company can finance a buy-out, and have speculated that a merger of equals might be necessary.

Takeda’s Christophe Weber

The firm’s French CEO Christophe Weber is trying to turn Takeda into a global pharma company, and believes the Shire merger would accelerate this process.

This story has been updated twice to summarise various statements from Allergan.

 

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