Shire takeover edges closer

<p>Shire has recommended a takeover by AbbVie.</p>

A takeover of British pharmaceutical company Shire edged closer after it recommended a purchase by US rival AbbVie.

The board of the London-listed drug firm pledged its support to the £31 billion acquisition following a long-running attempt by AbbVie to buy Shire. If pushed through, the US firm will pay £53.20 per share and it would provide Shire shareholders with 25 per cent of the combined company. It marks the fifth attempt AbbVie has made to buy the firm.

Shire said in a statement: "The board of Shire has indicated to AbbVie that it would be willing to recommend an offer at the level of the revised proposal to Shire shareholders subject to satisfactory resolution of the other terms of the offer."

However, it was keen to stress that it while it was in "detailed discussions" with the US company there was no certainty that a formal bid would be submitted. Shire has previously rejected four proposals from AbbVie stating that it felt it was being undervalued. Shareholders have now been pressuring Shire for a sale claiming that the £51 mark represents a good figure.

Shire is a speciality biopharmaceuticals which focuses on neuroscience, rare diseases, gastrointestinal and internal medicine. Its expertise lie in creating medication for extremely and life-threatening conditions like Hunter syndrome and Fabry disease. It has also worked on drugs to treat attention deficit hyperactivity disorder (ADHD) or ulcerative colitis which have the potential to affect both the patient and their family.

This latest follows Pfizer's failed attempts to purchase another British drugmaker – AstraZeneca. The US firm had a number of proposals knocked back before officially ending its interest in the takeover in late May. There had been a £69 billion approach in the works but it failed to turn this into a formal bid and thus withdrew its interest.

Shire's share price was up 2.48 per cent at 4,991.00 at 08:53 this morning (July 14th).

Find up to date information on spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.