News Column

UK MIDDAY BRIEFING: AbbVie Sets Out Case For Shire Acquisition

June 25, 2014



LONDON (Alliance News) - US-based drugmaker AbbVie Wednesday set out its case for a takeover of FTSE 100-listed Shire, saying it believes it is offering "Shire shareholders compelling immediate value" by creating a larger, more diversified company with several leading treatment franchises.



AbbVie, which has made three takeover offers for Shire, the last of which was worth GBP27.2 billion, said it was confident that its resources and management team would create "superior value" from Shire's assets than the British company would be able to produce independently.



AbbVie said it had been conducting an analysis of Shire's business since the Autumn of 2013, and that its model does not show the same magnitude of pipeline or gastrointestinal franchise potential that Shire's management has expressed.



Shire has rejected all AbbVie's approaches, and broken off talks with the US company. On Monday, Shire had set out its defence against a takeover offer, reiterating plans to more than double its annual product sales to USD10 billion by 2020.



Shire was given a boost early Wednesday, when a US District Court ruled that patents protecting Shire's Vyvanse treatment for Attention Deficit Hyperactivity Disorder had been infringed by five pharmaceutical manufacturers looking to bring out generic competitors. The ruling means Shire's exclusivity over the treatment is protected until the patents end in 2023, or unless the generics companies successfully appeal the ruling.

JUST OUT: The US economy's output of goods and services decreased at an annual rate of 2.9% in the first quarter, nearly triple the hit that had originally been estimated

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FTSE 100: down 0.8% at 6,730.12

FTSE 250: down 0.9% at 15,408.25

AIM ALL-SHARE: down 0.7% at 777.45

GBP-USD: up at 1.7000

EUR-USD: up at 1.3648

GOLD: up at USD1,318.60 an ounce

OIL (Brent): down at USD113.47 a barrel

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Other Top UK Corporate News

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Shire said that the US District Court for the District of New Jersey has ruled that patents protecting the British company's Vyvanase drug to treat Attention Defecit Hyperactivity Disorder had been infringed by five pharmaceutical manufacturers who want to bring out generic versions of the drug. The court ruled that the patents remain valid. Actavis, Amneal Pharmaceuticals, Mylan Pharmaceuticals Inc., Roxane Laboratories Inc, and Sandoz Inc have filed so-called Abbreviated New Drug Applications for generic versions of Vyvanase, which is patent protected until 2023.

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Land Securities Group has acquired a 30% stake in the Bluewater shopping centre in Kent from Australian property business Lend Lease Group in a deal worth GBP656 million in cash. FTSE 100-listed Land Securities also acquired the full asset-management rights for the centre and 110 acres of surrounding land for GBP40 million. The overall net initial yield after expiry of rent free periods is 4.1%. The deal comes after UK press reports suggested that rivals British Land and Hammerson were also looking to buy the stake in the shopping destination which attracts around 27 million visitors a year. The centre totals 1.8 million square feet and is home to over 330 retailers, including House of Fraser and John Lewis. It also includes 13,000 parking spaces.

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Babcock International Group and Balfour Beatty said their nuclear joint venture has been given the green light for the third phase of a contract to construct a new maintenance facility at the Sellafield nuclear plant in a deal worth a total of GBP160.0 million. The facility will be used to retrieve radioactive waste from silos. The joint venture, 55% owned by Babcock International and 45% by Balfour Beatty, will begin work on the third phase immediately.

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The US units of HSBC Holdings and Royal Bank of Scotland Group have been blocked from increasing any capital distribution they make to the parent companies until at least 2015, after the banks asked for extensions to the deadlines by which they have to submit revised capital plans to the US Federal Reserve. The Fed had previously said they were unhappy with the plans for governance and internal controls at the units, and had demanded improvements. Wednesday's ruling also impacts Citigroup Inc and Spain'sBanco Santander SA.

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Bunzl said it expects to report 6% revenue growth at constant exchange rates for the first half of 2014, due to underlying revenue growth of about 2% and an uplift from acquisitions. However, it reiterated that its reported results will be hit by foreign exchange fluctuations. Bunzl said it expects all of its business areas to show positive underlying revenue growth and improved operating margins. Two new acquisitions will give a boost to its safety business in the Netherlands and expand its cleaning and hygiene supplies business in Brazil.

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Stagecoach said that profit rose in its last financial year, as revenue grew in each of its businesses and margin increased in its London bus and North American operations. Operating profit rose 80% in North America as it expanded its Megabus network there. It increased its full-year dividend by 10.5%, and said trading in the current financial year is in line with its expectations. Pretax profit in the year to end-April came in at GBP158.0 million, up from a restated GBP154.3 million last year.

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Premier Oil has appointed Tony Durrant as chief executive officer with immediate effect. Durrant has been with the company since 2005, serving as finance director. Before this he worked at Lehman Brothers, latterly as managing director and head of the european natural resources group.

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easyHotel, one of the portfolio of companies owned by billionaire entrepreneur Stelios Haji-Ioannou, has set its initial public offering price at 80 pence a share, meaning it will have a market capitalisation of GBP50 million when it starts trading on AIM on Monday, lower than its previous estimates. easyHotel's pricing came as Fundsmith Emerging Equities Trust's shares rose in early dealings after its IPO on the main market in London, and private hospitals company Spire Healthcare Group said it intends to list on the main market, raising new funds for the business as well as allowing its private equity owner to realise some of its investment.t.

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AIM MOVERS

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Akers Biosciences is doing well after it inked a distribution agreement for its PIFA Heparin/PF4 and PIFA PLUSS PF4 test kits with Medline Industries Inc. Under the agreement Medline will begin marketing the tests over its network of hospitals and surgery centres across the US. Stellar Resources is up after its two tonne per hour gold processing plant finally arrived at the Clogau St David's gold mine in North Wales. Synectics has lost a quarter of its value after it said results for the first half of its current financial year, and for the year as a whole, will be "significantly below market expectations" largely due to contract delays, mainly due to the current fighting in Iraq. Acta SPA is down after it cautioned that its revenue for the year may be below current market expectations after the company under-estimated the length of sales cycles in the telecoms market. Byotrol is also down after it raised GBP1.25 million before expenses in a share subscription and placing priced at 3 pence per share. It said it would use the funds raised to invest in sales and marketing resources, expansion, intellectual property development, and working capital.Petrel Resources is another faller after its pretax loss widened slightly in 2013, and it warned that its assets in Ireland, Ghana and Iraq all face difficulties.

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Top Economics And General

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Iraqi government forces have taken full control of the country's largest oil refinery after clashes with Islamist-led insurgents, state-run broadcaster Iraqiya TV reported online. Elite troops battled fighters from the militant Islamic State in Iraq and the Levant in the vicinity of the refinery in Biji and fully secured all access roads to the facility, the broadcaster said, citing an unnamed security official. The refinery, about 200 kilometres north of Baghdad, accounts for almost a third of Iraq's refining capacity. "The refinery is now secured by large security forces, who are able to protect it and repulse any potential aggression from ISIL gunmen," the official said. The claim could not be independently verified.

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US Secretary of State John Kerry met with Kurdish leader Massoud Barzani in northern Iraq on Tuesday during his second unannounced visit to the country in two days to urge regional leaders to participate in Baghdad's next government. Kurdistan's Rudaw television reported that Kerry also met with Nechirvan Barzani, prime minister of Kurdistan and a number of Kurdish leaders. Kerry told the US-based ABC News that the Iraqi parliament would convene on July 1 to begin work to form a government. He said that Prime Minister Nouri al-Maliki "says he is committed to the constitutional process, wants to see the parliament convene on the 1st of July, and will work to try to create a government of unity and a government that can bring Iraq together."

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The ceasefire in Ukraine was shaken Tuesday by the downing of a military transport helicopter by eastern Ukraine separatists. Nine soldiers died in the attack. The army said another two soldiers were killed in 35 attacks on government troops. After the latest violence President Petro Poroshenko met with Ukrainian military officers and warned separatists that he could not rule out ending the ceasefire. Just hours before, Russian President Vladimir Putin sent a clear signal of de-escalation. He asked the Russian parliament to revoke its authorization for the use of force in Ukraine in order to back the peace process between government troops and separatists in that country.

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NATO is not yet ready to resume cooperation with Russia, Secretary General Anders Fogh Rasmussen says, calling on Moscow to do more to restore peace in Ukraine. "We have no option but to maintain the suspension of practical civilian and military cooperation," he said after talks by NATO foreign ministers. "There will be no business as usual with Russia until (it) comes back into line with its international obligations."

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German consumer confidence is set to improve in July, survey data from market research group GfK showed. The forward-looking consumer sentiment index rose to 8.9 in July from a revised 8.6 points in June, as economic expectations rose to a three-year high. Economists had forecast the indicator to rise to 8.6 points from June's original estimate of 8.5. The economic expectations index rose 7.7 points to 46.2 in June. Willingness to buy gained 3.7 points to reach 53.2. Meanwhile, income expectations fell by 0.6 point to 47.2 in June. The survey suggests that private consumption will rise 1.5% in 2014.

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Chancellor Angela Merkel rejected any easing in eurozone austerity rules. She was speaking to the German parliament in Berlin, a week after a political rival, Economics Minister Sigmar Gabriel, had called for looser government borrowing rules for states that commit to reforms. Merkel, who was to represent Germany at the European summit on Thursday and Friday in Brussels, defended the Stability and Growth Pact, which regulates EU governments' borrowing, saying it "provides a multiplicity of instruments of flexibility."

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The French economy is likely to log a meagre growth this year and remain below the government's target, a quarterly report published by the statistical office Insee revealed Tuesday. Gross domestic product is forecast to grow 0.7% in 2014, after rising 0.4% in 2012 and 2013. The government estimate 1% growth this year. The acceleration in activity should be driven in particular by manufacturing, while construction is forecast to shrink for the third consecutive year. Insee predicts 1.2% growth in manufacturing, while a contraction of 2.6% is estimated for construction. It forecast 0.3% GDP growth in each quarter of the second half of 2014.

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Libyans go to the polls Wednesday to elect a new parliament for the oil-rich North African country, which remains prey to turmoil three years after a revolution drove long-term leader Moamer Gadafi from power. Citizens will vote for 200 members of a successor assembly to the General National Congress, the interim parliament elected in 2012. Thirty-two seats are reserved for women. Candidates are required to run as individuals rather than as nominees of political parties.

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EU leaders will dust off their ceremonial pens Friday to sign off on closer ties with Ukraine, Georgia and Moldova - closing ranks in defiance of Russian misgivings. But that is where unity is likely to end at their summer Brussels summit. The EU is struggling to agree on who should manage the bloc in the future as EU Commission president and the political showdown is expected to come to a head this week.

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Afternoon Watchlist (all times British Summer Time)

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14:45 US Markit Services PMI Preliminary

14:45 US Markit PMI Composite Preliminary

15:30 US EIA Crude Oil Stocks change



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Thursday's Key UK Corporate Events

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Punch Taverns Interim Management Statement

Dixons Retail Full Year Results

John Wood Group Trading Update

DS Smith Full Year Results

Carphonewarehouse Group Full Year Results

Mountview Estates Full Year Results

Safestore Holdings Half Year Results

Stobart Group Interim Management Statement

Photo-Me International Full Year Results

Standard Chartered Trading Statement



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Thursday's Key Economic Events (all times British Summer Time)

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All Day EU European Council meeting

07:45 France Consumer Confidence

10:30 UK BOE's Governor Carney speech

10:30 UK Financial Stability Report

13:30 US Fed's Lacker speech

13:30 US Initial Jobless Claims

15:30 US EIA Natural Gas Storage change

16:00 US Kansas Fed manufacturing activity

18:05 US Fed's Bullard speech



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Contact: +44 203 668 7440; newsroom@alliancenews.com; @AllNewsTeam






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