Shire reaches deal to buy NPS Pharmaceuticals

UK drug firm Shire has signed a deal to acquire NPS Pharmaceuticals for $5.2 billion.

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By :  ,  Financial Analyst

UK pharmaceutical company Shire has announced a deal to acquire US biotech firm NPS Pharmaceuticals.

The acquisition will see Shire pay $5.2 billion (£3.4 billion) in cash amounting to $46 per share price and is a 51 per cent premium to the US company's share price of $30.47 on December 16th. Shire stated that it would be using its cash resources as well as new bank facilities to ensure that the transaction can be completed.

Shire has been looking to make an acquisition in recent months. In October the company failed in a bid to purchase US drug firm AbbVie. Members of the AbbVie board recommended that shareholders voted against a £32 billion takeover bid from Shire stating that the introduction of tax changes had introduced an "unacceptable level of uncertainty".

Plans had been put in place to situate the newly merged company in Jersey but these had to be abandoned after AbbVie called time on the deal. As a result, Shire's share price dipped by 11 per cent, on top of a 22 per cent drop seen following the announcement.

Following that disappointment, Shire has been on the lookout for other opportunities and the purchase of NPS Pharmaceuticals has been heralded as a major coup for the company. The boards of both firms has approved the deal and is expected to include Shire's earnings from 2016.

Flemming Ornskov, Shire's chief executive, said: "The acquisition of NPS Pharma is a significant step in advancing Shire's strategy to become a leading biotechnology company. This is about growth and rare diseases, and it fits hand in glove with our strategy and our franchise."

Shire's ability to secure a deal for NPS Pharmaceuticals provided a slight boost to its share price which was up 0.06 per cent at 4,744 at 09:33 GMT on Monday (January 12th).

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