AbbVie Raises Offer for Pharmaceutical Shire to $51 Billion

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AbbVie Raises Offer for Pharmaceutical Shire to $51 Billion

Drugmaker AbbVie hiked its overture for Shire to 30.1 billion pounds today, with a view to convincing its unwilling target after three of its previous bids were declined.

The latest offer of 51.15 pounds per share that involves cash and stock is 11% above the previous AbbVie’s bid of 46.26 pounds, which had been dismissed as primarily undervaluing by the London-listed maker of medication for hyperactivity and rare diseases.

“This transaction is a combination of two leading companies with leadership positions in specialty pharmaceuticals that would create a global market leader with unique characteristics and a compelling investment thesis,” Forbes quotes AbbVie chairman and CEO Richard Gonzalezas saying in a statement.

But industry analysts were of the opinion that the offer might not be good enough to get a deal sealed. Shire said its board would convene to assess the raised offer, which it said it not receive an official announcement to the market was made by AbbVie.

According to Reuters, Shire’s shares declined on disappointment AbbVie had not proposed a higher valuation or hiked the proportion of cash, in the middle of concerns that the two companies may not reach a consensus on the price. AbbVie also slumped, cutting the stock portion of its overture.

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AbbVie is keen to acquire Shire with a view to cutting its tax bill by shifting its tax base to Britain via a strategy called tax inversion and to diversify its drug products. The US drugmaker generates almost 60% of its revenue from Humira, a drug that treats rheumatoid arthritis. Humira is the number one selling drug in the world and will lose its US patent protection in 2016.

AbbVie’s financial advisor J.P. Morgan has engaged shire investors about the deal, the company said. Gonzales told Reuters that the firm’s shareholders supported the deal and the offer was in line with the feedback received so far.

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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com