AbbVie forced to retract claims of Shire shareholder support for takeover

AbbVie has been forced to retract claims recently made by CEO Richard Gonzalez that Shire shareholders are "generally supportive" of an acquisition by the US drugmaker for 51.15 pounds ($87.54) per share, or around 30.1 billion pounds ($51.5 billion).

Under UK takeover rules, a company cannot claim to have support for its bid unless it has this in writing from shareholders. AbbVie said Wednesday that "it has not received any written commitments of support and accordingly retracts the statements," adding "it acknowledges that in the absence of written statements of support from shareholders it is not in a position to make any statement of shareholder support."

Shire said its board would review AbbVie's latest offer, which represents an increase of 11 percent over a previously rejected bid, with analysts suggesting that it may be enough for the Irish drugmaker to enter negotiations. The proposal "should help get both parties closer to negotiating a final offer," remarked RBC Capital Markets analyst Douglas Miehm, adding "we believe that if both companies were to sit down, a clearing price for the deal could be in the 55-58-pound range."

Commenting on the current offer, Credit Suisse analyst Vamil Divan said "I definitely don’t think it's enough to get the deal done," adding that a final price may even reach 60 pounds ($102.63) per share. Divan noted that Shire's foreign tax domicile is "a critical component that gives them a little more power." According to Barclays analyst Mark Purcell, AbbVie would save about $1.3 billion by 2020 through an acquisition of Shire as its tax rate falls to 13 percent from 22 percent. Jeffrey Holford of Jefferies suggested that the tax incentive of the deal could encourage AbbVie to pursue a hostile bid, something that Gonzalez hasn't ruled out.

"We see the possibility that AbbVie could go hostile, given that seeing the books is less important to establish the benefits of the deal than would usually be the case," Holford said. UBS analyst Guillaume Van Renterghem noted that the possibility of a hostile bid may force Shire to the negotiating table. "From a Shire board point of view, you know that if you don't sit down to try to get toward 55 pounds per share, they're going to go hostile at this level, and given the share price, probably they’re going to get it," Van Renterghem remarked.

Although other companies such as Allergan, Amgen and Bristol-Myers Squibb may be interested in making bids for Shire, Van Renterghem said "the likelihood of anybody coming with a higher offer to me seems remote." The analyst suggested that Allergan, which is looking to fend off takeover interest from Valeant Pharmaceuticals, "simply can’t afford it, it's out of their league," adding "for Amgen it doesn't make sense anymore at this level. AbbVie's almost the best fit."

For related analysis, read ViewPoints: AbbVie boosts offer for Shire in bid to jumpstart negotiations.

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