Shire CEO's buyout plans thwarted when AbbVie came calling

Flemming Ornskov, CEO of Shire

Shire CEO Flemming Ornskov is none too happy about AbbVie's ($ABBV) repeated attempts to buy his company for $46 billion. Shire ($SHPG) has snubbed AbbVie's advances three times since April, and under U.K. takeover rules, the Chicago company has until July 18 to make another bid or leave the Irish company alone. Problem is, AbbVie's ongoing pursuit is preventing Shire from making acquisitions of its own--a goal the company had been pursuing aggressively.

"I have been significantly in the market for assets that would strengthen our growth and strengthen our pipeline," Ornskov told The Wall Street Journal. But now Shire has to wait until after July 18 to pursue any deal worth more than 10% of its market capitalization, or roughly $4.5 billion. AbbVie's advances "stopped us in our tracks," Ornskov said.

Ornskov didn't name any names, but rumors emerged earlier this month that Shire was preparing a 10-figure bid for NPS Pharma ($NPSP), a specialist in rare disease therapeutics. In fact, Shire secured a $5 billion credit facility to prepare for that deal last month, according to unnamed sources cited by the Financial Times. NPS continues to deny any such deal was proposed, even going so far as to say in an SEC filing in early June that it has had no communication with Shire regarding a deal.

Shire has been on a buyout tear since Ornskov took over the top spot a year ago, making 6 deals, all of which have been blessed by investors: The company's stock has risen 150% over the past year to $235 a share. Most recently, Shire picked up ViroPharma for $4.2 billion. Some analysts have suggested that if Shire wants to remain independent, it needs to keep doing deals to boost its presence in rare diseases. Ornskov has spent the past few days in the U.S. talking with potential acquirees--but not to would-be acquirers, according to the WSJ.

Meanwhile, AbbVie CEO Richard Gonzalez is crossing the pond in the other direction this week to make his case for a merger directly to shareholders of Shire. Gonzalez, who has vowed to move AbbVie's tax base to the U.K. should the deal go through, plans to meet with investors in London, according to the FT. AbbVie continues to talk up the merits of a Shire merger, including the fact that the two companies have complementary platforms in rare diseases and neuroscience, and global commercial and manufacturing opportunities. Some analysts predict AbbVie will up its offer for Shire, but sources close to the Chicago company told the FT yesterday it would remain "disciplined" on price.

- here's the WSJ story (sub. req.)
- read more at the FT (sub. req.)
- here's the Telegraph's take