For many of us, the best way to move on from a failed relationship is to find a new one. That also seems to be Shire’s reasoning, as it tries to gets over the heartbreak of the breakup of its $51.5bn (£33.9bn) takeover by American giant AbbVie by splashing $5.2bn on US biotech NPS Pharmaceuticals.
Shire, which is based in Dublin, said today it will pay $46 a share in cash for the New Jersey-based rare diseases specialist, a 51% premium to the price on December 16th, when news of the potential deal first crept out.
The FTSE 100 pharma giant reportedly first started thinking about wooing NPS in May, but put those plans on hold after AbbVie made its intentions known. It was a fickle pursuit, though. After gushing about how well-matched the two companies were, AbbVie pulled the plug on the deal in October when the American government clamped down on tax ‘inversions’ (US companies buying British ones in order to pay the UK’s lower rate of corporate tax).
Shire got $1.64bn from the deal’s breakdown, which it is putting towards buying NPS. Nothing like using a divorce payout to spoil a new lover.
That break fee was fair enough really, though – Shire’s shares plunged almost 32% from a record high of 5,455p in the days after AbbVie called off their union. They’ve recovered reasonably well since, although investors weren’t sending the congratulations cards today – shares were actually down 0.3% to 4,726p in mid-morning trading.
Credit: Yahoo Finance
That might be because NPS has consistently made a loss and only has one drug approved, which treats Short Bowel Syndrome. Its hormone replacement treatement for rare endocrine disorder hypoparathyroidism is currently being reviewed by the US Foods and Drugs Administration and Shire chief executive Fleming Ornkov said, ‘we feel confident that [the deal] is a risk worth taking’. He’ll no doubt be hoping NPS doesn’t have any diseased skeletons in the closet.