Irish-based drugmaker Shire braces for takeover bids

London-listed drugmaker Shire has hired investment bank Citi as an adviser, expecting to receive takeover approaches following a wave of deals in the healthcare sector, sources familiar said.

Much of the dealmaking has been fuelled by US companies seeking lower tax rates abroad. With its tax base in Ireland - where effective corporate tax rates are among the lowest in the world - and a mid-sized market value of around $35 billion, Shire could be a prime target, analysts and bankers believe.

“Something could happen this year,” said one of the sources on condition of anonymity because the matter is private.

Shire, which specialises in treatments for attention deficit hyperactivity disorder (ADHD) and a range of rare diseases, was not immediately available to comment. Citi declined to comment.

Shire, which was founded in 1986 in Britain but conducts most of its business in the United States, has been domiciled in Ireland for tax purposes since 2008.

It has already been approached by Botox-maker Allergan months before the US group itself became a takeover target for Valeant.

That approach did not lead to serious discussions between the two parties and there are currently no talks with Allergan, one source said.

Shire is a relative rarity in being a mid-sized drugmaker with no controlling shareholder, making it a perennial subject of takeover speculation.

Sector bankers think it could appeal to US pharmaceutical and biotech firms such as Bristol-Myers Squibb, Amgen , Abbvie, Gilead and Biogen.

But Shire’s reliance on ADHD drugs has put off potential bidders in the past, as using stimulants to treat ADHD in children is controversial in some doctors’ eyes, they added.

ADHD medicines account for around 40 percent of Shire’s sales. The firm also sells pricey drugs to treat rare genetic disorders and is building up a portfolio of treatments in ophthalmology and other speciality disease areas.

The current imperative for major drugmakers to keep up with rivals in terms of a low tax rate and to use offshore cash that would otherwise be taxed punitively if brought back home, could now be changing the calculation, some industry watchers believe.

Reuters