The proposal comprised $34.81 in cash and 0.7988 AbbVie shares per Shire share. The proposal involved a new U.S. listed holding company with a U.K. tax domicile.
Based on AbbVie’s 30-day volume weighted average share price of $54.10, the proposal represents a value of $78.5 per Shire share (comprising 44% cash and 56% AbbVie shares). The proposal represents a premium of 23% to Shire’s share price of $63.66 on June 19 (the business day prior to this announcement) and a premium of 30% to Shire’s 30-day volume-weighted average share price of $60.34.
The proposal follows two earlier proposals, which also were rejected. At AbbVie’s request, Shire met with AbbVie to enable AbbVie to explain key aspects of the proposal. Following this meeting, Shire’s board unanimously rejected the proposal on the basis that it fundamentally undervalued the company and its prospects.
The board also had concerns regarding the execution risks associated with the proposed inversion structure, as AbbVie would redomicile in the U.K. for tax purposes.
In particular, Shire’s board believed the proposal fundamentally undervalued Shire and its prospects as a leader in rare diseases and specialty markets, because new management has achieved a step-change in Shire’s performance, resulting in significantly accelerated growth and increased shareholder returns over the last 12 months. Shire will more than double its 2013 annual product sales to $10 billion by 2020, and the proposal would deny Shire shareholders the full benefits of Shire’s growth strategy.
Susan Kilsby, chairman of Shire, said, “With an expanded portfolio focused on high-growth opportunities, an efficient cost base and an enhanced innovative pipeline, we have put in place a platform for long-term value creation. We believe that Shire has a strong independent future.”
Shareholders are strongly advised to take no action in relation to the proposal. There can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made.
This statement was made by Shire without the prior agreement or approval of AbbVie.