Shire AbbVie Deal Collapses – What Now?

US pharmaceutical company AbbVie have called time on its $54 billion offer for Ireland based Shire Pharmaceuticals, this comes after the passing of new laws in the US being passed on Inversion deals. With this is mind AbbVie board will no longer recommend the bid to shareholders.

Left just with a heft pile of overseas cash, AbbVie are now looking at the prospect of having nothing to replace its best selling Humira skin disease drug when its patent expires in 2016.

With a clear prospect of the deal collapsing back when negotiations were at their peak Shire made sure that there was a fall out clause in which they will receive $1.6 billion payout if as expected AbbVie shareholders vote against the deal.$1.6 billion is not really going to cover the costs of Shire though if this deal does collapse $13 billion has been wiped off the companies market value since Tuesday night when this news broke and the Shire share price is continuing to tumble.. 

Shire has been a market darling for years, with major shareholders including BlackRock and Fidelity as well as several big U.K. institutions, and hedge funds.

One major shareholder is Paulson & Co, the hedge fund founded by billionaire John Paulson, which issued a statement Wednesday urging AbbVie to go ahead with the deal.

Shire took the unusual step of waiving the three days’ notice required for the AbbVie board to meet after announcing it was re-examining the $54 billion offer, in an effort to avoid further huge share price plunges. The company said Thursday it is “considering the current situation and a further announcement will be made in due course.

The Shire shareholders who are clutching at straws, should take comfort form the fact the company could now be in a stronger position to buy up more “orphan drugs” treatments for rare conditions. This can be highly lucrative, with Shire already building up a $12 billion borrowing capacity to fund acquisitions, which has been pointed out by the analysts at Jeffries.

Shire’s fundamentals appear strong and the stock looks oversold,” Jeffries analysts argued in a note published Thursday morning. With the new laws in the US over tax inversion deals as well as Ireland putting more pressure on these types of deals as well, could this be the final nail in the coffin for this type of deal which has been named “inversion”.

Shire will always have its potential suitors and so it will be interesting to watch the movements of the Valeant and Allergan deal now that it seems that Shire is back on the market.

Alex Carson

PiR Resourcing leaders in senior life science resourcing. For more news and information, you can follow us on Twitter and LinkedIn  For all our latest opportunities in the Life Science sector please click here.

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