Will Shire investors get a Christmas present in the form of a buyout? As Republicans put the final touches on their new tax plan, so too are large pharma companies circling Shire for a potential acquisition, media reports say.
According to The Telegraph, which cites market rumors, rare disease-focused Shire could get an offer of £50 per share or more.
But it's not just big pharmas in the U.S.—which could soon have plenty of cash for buyouts, thanks to an impending tax cut on repatriated profits—that are taking a look. Drugmakers in Europe are also interested in the specialty drugmaker, according to the publication, and its shares have climbed in recent days as the rumors have made the rounds. The share uptick comes despite a late-stage trial failure in Hunter syndrome; results from that study were released Tuesday.
From a high point in July 2015, however, the drugmaker's shares are down more than 40%. That could make Shire a less expensive prospect these days, at least hypothetically. Biotech asking prices have deterred some deal-making of late, pharma executives say.
AbbVie previously took a $55 billion run at Shire in 2014 but had to call the deal off due to new inversion rules from the Treasury Department.
Despite the excitement about a potential Shire takeout, analysts with Jefferies wrote Wednesday that they believe the "potential group of buyers for Shire may be very limited, particularly at this time" due to the company's Baxalta integration efforts, an emerging hemophilia threat from Roche and Shire's plan to review options for its neuroscience business.
When it announced its second-quarter 2017 results back in August, Shire said it would review options for its ADHD franchise; that review should be done by the end of 2017. Meanwhile, Swiss drug giant Roche recently won FDA approval for Hemlibra, a hemophilia A treatment that could threaten Shire's position in the market. Shire is seeking an injunction to stop that launch.
The potential Shire deal news comes as Republicans in Congress are nearing the finish line for a tax plan that will give top U.S. drugmakers some serious buying power. U.S. pharmas have billions in overseas cash that they'll be able to access on more favorable terms under the plan, and analysts believe the new tax bill could trigger a wave of M&A and buybacks in 2018.
Market watchers have been clamoring for an increase in M&A for two years as pharma's deal-makers largely sat on the sidelines in 2016 to await results from the U.S. election, and then this year to parse what the new administration's agenda might mean for their businesses.
The year's banner deal so far came back in January, when Johnson & Johnson bought Actelion for $30 billion. Gilead made its long-awaited M&A move in August with its $12 billion Kite Pharma buyout, moving into the hot CAR-T field. Aside from those two deals, the industry has been quiet on the deal-making front.