Shire, the London-listed pharmaceuticals group, has moved to bolster its rare disease treatment business with the $4.2bn acquisition of ViroPharma.
Ireland-domiciled Shire will pay $50 a share in cash for all ViroPharma’s outstanding equity, representing a 27 per cent premium to the Pennsylvania-based company’s closing price on Friday and a 64 per cent premium to the shares before talk of the transaction surfaced in September.
The move boosted Shire’s high-priced, low-volume “orphan drugs” business to estimated annual sales of $2bn next year, or 40 per cent of its business. It made two other smaller acquisitions of rare disease companies this year.
Flemming Ornskov, chief executive, said: “This provides an excellent fit for Shire. We have a clear strategy focusing on areas of significant unmet need.”
The latest purchase adds to Shire’s portfolio ViroPharm’s Cinryze, an injectable preventive treatment for hereditary angioedema (HAE), which causes sudden attacks of swelling and affects 18,000 people in the US and EU.
The company has an acute treatment for the condition, Firazyr, which can be injected as soon as sufferers feel an attack coming on.
Mr Ornskov said the deal would be immediately accretive, generate synergies of $150m a year by 2015, and give Shire the potential to expand the product into new geographical markets, extend its approval for new medical conditions and explore different formulations of the drug.
Graham Hetherington, chief financial officer, added that Shire’s tax rate of below 20 per cent made the deal more attractive, compared with nearly double that rate paid by ViroPharm.
Savvas Neophytou, analyst at Panmure Gordon, said the enterprise value of the transaction – including debt – as a multiple of ViroPharma’s revenues was 9 times, which was an “eye-watering” ratio albeit for a “strategically very sound” acquisition.
“This is the big deal the market had been waiting for,” he added, comparing the move to Shire’s $1.6bn purchase of rival TKT in 2005 and the deal to buy New River for $2.6bn in 2007.
The news followed details of the latest part of the company’s “One Shire” restructuring last week, which will include substantial cuts among its 170 research scientists at its historic headquarters in Basingstoke. It is also looking at moving its Swiss office from Nyon to Zug and refocusing US operations close to Boston.
Mr Ornskov said the Swiss move reflected the “increasing attractiveness” of Zug for finding suitably qualified staff.
The group said it would fund the ViroPharm transaction with a mixture of new debt and cash reserves.
ViroPharma reported full-year net product sales of $428m in 2012 and expects this to increase to $445m-$465m in 2013.
Shares in Shire rose almost 1 per cent to £28.22 in London.