Citing "usually well-informed sources," the Financial Times reports that Shire ($SHPG) is considering a $4 billion bid for rare disease specialist NPS Pharma ($NPSP), a deal that would bolster the company's last blockbuster acquisition and perhaps get it out of rivals' crosshairs.
Per FT's report, Shire has been kicking around the idea of a cash offer for NPS that would value the company at around $40 a share, a roughly 46% premium on its Thursday closing price. The story comes with the usual caveats: It's an early-stage prospect that could be shelved any moment, and some of the newspaper's other well-informed contacts had heard nothing of the deal. All the same, NPS' shares rose about 24% on Friday morning.
The idea fits in with both the character and strategy of Shire under sophomore CEO Flemming Ornskov, who has repeatedly looked to M&A to grow the drugmaker's pipeline. Shire's first major overture into rare diseases came with its $4.2 billion acquisition of ViroPharma last year, paying a heavy premium to complement its Firazyr franchise. NPS' banner product, the orphan drug Gattex, would fit right in, and, at $295,000 a year per patient, the treatment could have a promising revenue future in Shire's hands.
|Flemming Ornskov, CEO of Shire|
But any inclination toward major dealmaking on Shire's part could also be an effort to fend off would-be acquirers. Thanks to its growing pipeline and the tax benefits tied to its Irish homestead, Shire has become a rumored target for larger drugmakers, and the company reportedly rebuffed a takeover offer from Allergan ($AGN) earlier this year. For companies looking to get out of the crosshairs, the prescription is often M&A of their own, and Shire may be considering a large, accretive deal to make itself unattainable--the same thinking that drove Allergan, fighting some unwelcome attention from Valeant Pharmaceuticals ($VRX), to approach it in the first place.
Shire's most recent bolt-ons, while promising, aren't likely to push its market cap outside the bounds of a potential takeover. This month, the company signed a deal to trade $260 million in cash for Lumena Pharmaceuticals and its stable of treatments for rare liver diseases, and it's on the line to buy Australia's Fibrotech for $75 million upfront and a string of undisclosed milestones.
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