News Column


June 23, 2014

By Rob Davies, Daily Mail, London

June 23--DRUGS firm Shire will today step up its defence against the pounds sterling 27bn takeover bid by US rival AbbVie in a charm offensive aimed at shareholders anticipating an improved offer.

In an online presentation put together over the weekend, boss Flemming Ornskov and finance chief James Bowling will tell investors why they believe that Shire can double sales to nearly pounds sterling 6bn by 2020.

The manoeuvre mirrors the tactic used by AstraZeneca, which laid out ambitious growth targets as part of its successful plan to stave off a pounds sterling 69bn Pfizer bid.

But with Shire employing only a few hundred people in the UK, its defence is unlikely to be aided by the sort of political opposition that helped Astra avoid Pfizer's attentions. That leaves Shire, which is listed in London but based and tax-domiciled in Ireland, with only its investors to convince of the merits of independence.

Ornskov and Bowling are expected to highlight their belief that Shire can boost sales massively from products it already has on the market or that are in the late stages of clinical trials.

They will also point to the company's long-range plan, which envisages rising sales and profits without needing to resort to expensive acquisitions.

Shire's top sellers include treatments for rare and life-threatening diseases such as Hunter syndrome and Fabry disease, as well as medicines for specialist conditions such as ADHD and ulcerative colitis. AbbVie would be keen to get its hands on these lucrative drugs to add to its runaway success Humira, used to treat rheumatoid arthritis.

But like Pfizer, AbbVie has also been attracted by the benefits of 'tax inversion', where a US predator's takeover of a foreign firm allows it to move its HQ to take advantage of lower taxes.

Tax inversion has become an increasingly popular tactic among US firms, with Pfizer the most high-profile recent example.

Hotel chain Wyndham has explored an offer for InterContinental Hotels, the London-listed owner of the Holiday Inn brand, for the same reasons, although its interest was rebuffed.

FTSE100 firm Shire moved to Ireland in 2008 to take advantage of Dublin's low tax regime. It has long been rumoured to be considering a move back to London, but is thought to be waiting until after next year's general election to assess the likely tax burden it would face.

Shire's board rejected a cash-plus-shares offer worth pounds sterling 46.11 per share last Friday on the grounds that the proposal which is the third it has received from AbbVie 'fundamentally undervalued the company and its prospects'.

'We believe that Shire has a strong independent future,' the board of the company said.

It advised shareholders to take no action.

The firm's share price rose nearly 17pc in a day, but it still closed significantly below AbbVie's offer price at pounds sterling 43.71.


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Source: Daily Mail (London, England)

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