The Deal: Shire to Spend $4.2 Billion on ViroPharma

Tickers in this article: VPHM

LONDON (The Deal) -- Dublin's Shire on Monday, Nov. 11, unveiled an agreed $4.2 billion takeover offer for ViroPharma to expand its portfolio of rare disease treatments.
 
Shire said it would pay $50 per share for Exton, Penn.-based ViroPharma, 27% more than the target's Friday closing price and a 64% premium to its close Sept. 12, when speculation surfaced that it was reconsidering its future.
 
While many pharmaceutical companies are using their wallets to add innovative treatments for widespread maladies, Shire is hoping a focus on uncommon diseases will prove profitable. The biotech in August agreed to extend a discovery and development deal with Horsholm, Denmark-based Santaris Pharma, in which the two are looking for treatments for rare genetic disorders.
 
"The acquisition of ViroPharma will immediately benefit Shire and is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio," said Shire CEO Flemming Omskov in a statement.
 
ViroPharma will allow Shire to broaden its portfolio of drugs focused on treating and preventing hereditary angiodema, which causes spontaneous swelling of the skin and mucous membranes. ViroPharma's Cinryze is used to prevent the attacks, while Shire's own Firazyr is used during attacks.
 
ViroPharma, whose sales jumped 24% in the third quarter to $113 million, also produces treatments for adults with adrenal insufficiency and to treat seizures in infants and adolescents. The company credited Cinryze for the sales jump and said it swung to net income of $4 million in the third quarter from a $5 million loss a year earlier.
 
Still, ViroPharma isn't immune to the generic competition that has many major pharmaceutical companies worried -- it had a loss of $59 million in the first nine months of the year, up from a loss of $10 million in the same period a year earlier, as generic competition hit its Vancocin treatment for gastrointestinal bugs.
 
The target in September reportedly tapped Goldman Sachs to review its options after it received an unsolicited approach, either from Shire or French giant Sanofi.
 
Shire said it would be able to save $150 million each year by combining the companies. It said the deal will be considered unconditional as soon as shareholders representing a simple majority commit their ViroPharma shares. The purchase will boost its own earnings immediately following completion, Shire added.
 
Lazard and Morgan Stanley are providing financial advice to Shire, with Davis Polk & Wardwell LLP its legal adviser. Skadden, Arps, Slate, Meagher & Flom LLP is legal adviser to ViroPharma.
 
Shire shares gained 3.7%, or 102 pence, to 2,898 pence ($46.40) in late morning London trading.

Written by Andrew Bulkeley