Even after being rejected three times, AbbVie (NYSE: ABBV.US) is not ready to let Shire (LSE: SHP) (NASDAQ: SHPG.US) escape its grasp just yet.
Indeed, it is now widely believed that the US pharmaceutical giant will return to make another bid for Shire. City analysts believe the AbbVie could offer as much as £62.00 per share for Shire, a 34% premium to the previous offer of £46.26 per share.
Shareholder support
AbbVie’s first three offers to acquire Shire were quickly rejected by Shire’s management. It was claimed that the offers, “fundamentally undervalued” Shire and the company’s rapidly growing portfolio of treatments for rare diseases, and neurological disorders.
However, all three deals were made, and rejected behind closed doors.
So, to drum up support, AbbVie is urging Shire’s shareholders to press the company’s management to return to the negotiation table. AbbVie hopes that this will sway shareholders in favour of the US company, if/when it comes back with a better offer.
Fighting over the target
AbbVie has stated that it would like to come back with a bigger offer for Shire but until the US giant is allowed to see Shire’s books, it remains cautious.
Nevertheless, Shire is reluctant to open books, as under UK takeover rules, the company would then have to do the same for other potential suitors. It’s not in the interest of either Shire or AbbVie to get caught up in a bidding war with other pharmaceutical giants — things could get ugly.
Still, AbbVie is eager to get a deal done, this much is clear and the company has not ruled out a hostile bid if Shire’s management does not cooperate. The looming prospect of a hostile bid is why AbbVie is now courting shareholders.
Hostile takeover
A hostile bid would see AbbVie bypassing Shire’s management and going straight to shareholders with an offer.
It is likely that shareholders would quickly accept a higher offer from AbbVie if the company took this approach. Moreover, there is a chance that AbbVie would have to pay less for its prey.
Additionally, there is a belief that a deal between AbbVie and Shire will attract the same political storm as the proposed merger between AstraZeneca and Pfizer.
Indeed, most of Shire’s research, development and sales are done within the US. Further, the company is incorporated in Jersey and domiciled in Dublin, while only 9% of the company’s workforce is located within the UK.
Foolish summary
So, it is likely that AbbVie will return to make another offer for Shire in the near future. Although, it remains to be seen how much AbbVie will offer and if Shire’s management will cooperate.
