AbbVie urges shareholders to push Shire toward deal talks

Susan Kilsby
Shire Chairman Susan Kilsby

There's just one week left for AbbVie ($ABBV) to strike a deal with Shire ($SHPG) before it will have to walk away for as long as 6 months under U.K. takeover law. And with time running out, the Illinois-based company is encouraging top Shire shareholders to push the Irish drugmaker toward the bargaining table.

AbbVie is pressing Shire investors to write letters, make telephone calls and hold meetings with company chairman Susan Kilsby to spur negotiations over its most recent $51.5 billion offer, Bloomberg's sources say. One source received a direct call from AbbVie CFO William Chase, who ultimately wrote to Shire after a 30-minute conversation.

The campaign follows AbbVie's Tuesday announcement that it had sweetened its bid for the third time, putting down a proposal CEO Richard Gonzalez called "compelling."

"We think its shareholders should strongly encourage the Shire board to engage in constructive dialogue with AbbVie," he said at the time.

While some analysts don't think the new bid is high enough to get an agreement inked--Shire's foreign tax domicile, which would sink AbbVie's tax rate from 22% to 13% and save the company an estimated $1.3 billion by 2020, is "a critical component that gives them a little more power," Credit Suisse analyst Vamil Divan told Bloomberg earlier this week--Shire may be able to snag the price it wants through talks.

"As a substantial shareholder, I think it's now appropriate for the Shire board to engage with AbbVie management and provide due diligence to see if AbbVie can be encouraged to put a larger premium on the table," Pentwater Capital Management CEO Matthew Halbower, who has also written a letter to Shire's board, told the news service.

Shire CEO Flemming Ornskov

So far, Shire seems amenable to the possibility of a deal; though CEO Flemming Ornskov has touted more-than-doubled sales by 2020 from an independent company, he's also said there's a price Shire won't walk away from--a position some shareholders appreciate. Now, the ball's in the company's court as it weighs its response to AbbVie's latest.

"We are pleased to see that the board is taking the bid seriously," Chris Watt, a Jupiter Fund Management investment manager, told Bloomberg. "They are not wedded to the idea of remaining independent at all costs, and see the benefit of becoming part of a wider organization if the price and time are right. In my view that is a good approach to take."

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