|Shire CEO Flemming Ornskov|
So, Shire's ($SHPG) $55 billion union with AbbVie ($ABBV) probably isn't happening, as changing regulations have gutted the incentives that brought the bottom-line-minded suitor to the table in the first place. But, on the bright side, the U.K. drugmaker is in line for a $1.6 billion breakup fee, cash that could fund a major M&A push, and with renowned dealmakers in its executive ranks, Shire may not be lonely for long.
Now that AbbVie is effectively out of the picture, Shire can get back to the serial acquisitions for which it has been known under CEO Flemming Ornskov, who has presided over 6 buyouts in less than two years on the job. And, if unnamed-source news stories are to be believed, the company isn't wasting any time: Reports have linked Shire to multibillion-dollar offers for NPS Pharma ($NPSP), whose rare disease focus would augment the company's existing expertise, and Cubist Pharmaceuticals ($CBST), a global leader in antibiotic R&D.
In the past, analysts have speculated that Shire may have an eye one of Sarepta Therapeutics ($SRPT) and Prosensa ($RNA), makers of promising treatments for Duchenne muscular dystrophy, or perhaps ThromboGenics, developer of the eye drug Jetrea, a company that announced earlier this year that it was looking into strategic alternatives.
In the run up to AbbVie's final offer, Shire was reportedly scouting for deals that could increase its market value and make itself effectively unacquirable, a process that was severely hamstrung by the U.K.'s opaque and far-reaching takeover code. Under the rules, AbbVie's interest made it so that Shire could not strike any deal worth 10% or more of its market cap, which was about $45 billion at the time.
Now, free of such constraints, Shire and its wallet--soon to be $1.6 billion heavier--can get back in the M&A market. And Ornskov is likely well-prepared, telling The Wall Street Journal in June that, "given leeway, there are a few phone numbers I can execute on immediately."
He has that leeway, and he may want to use it in a hurry, as AbbVie's change of heart has torpedoed Shire's market value, sending shares down more than 25%. Such weakness could galvanize another suitor to step in and start the process all over again, something Shire, already wounded from one canceled merger, would probably prefer to avoid.
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