Shire ($SHPG) is a perennial entry on everybody's favorite M&A target list. Now, according to the Daily Mail, Shire is putting its ducks in a row for a potential "special dividend" to counter any takeover interest. Word is, an £11 billion hostile bid is coming.
New CEO Flemming Ornskov has been eyeing plans to share £2 billion in cash with Shire's shareholders. Feeling vulnerable, given the fact that Shire's stock hasn't risen significantly over the past 18 months, Ornskov figures more cash could keep them loyal, the Mail reports. Shire is already in the midst of a £500 million buyback program.
In recent months, Bristol-Myers Squibb ($BMY) has been a rumored shopper at Shire's door. The Wall Street Journal reported in March that Bristol hired financial advisors to analyze a possible deal.
Shire is a logical target for a pharma company looking to add cash flow, and, in Bristol's case, biologics manufacturing capacity, Leerink Swann analyst Jason Gerberry said in an investor note after the latest news appeared. Bristol could probably realize some sizeable cost cuts in the combination, too. "However, we view the size of the reported hostile bid as insufficient," Gerberry noted.
He figures a buyer would have to offer at least $110 per share to win Shire over. The reported £11 billion ($16.75 billion) wouldn't be enough. Shire's market capitalization topped $17.8 billion today, with shares up past $95.25.
- see the Daily Mail story
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