Shire acquires US rival NPS Pharmaceuticals for $5.2bn

Biopharmaceutical group Shire has announced it will acquire NPS Pharmaceuticals for $5.2bn in cash, a long-rumoured target.

The $46.00 per share price in the transaction represents a 51% premium to NPS Pharmaceuticals's share price of $30.47 on 16 December and Shire said the deal will be entirely funded by the firm's cash resources, as well as existing and new bank facilities.

The deal comes around two months after a £32bn takeover of Shire by US outfit AbbVie collapsed.

US-based NPS focuses on rare diseases and its first product for injection, Gattex/Revestive, is approved in the States and Europe to treat adults with short bowel syndrome (SBS) who are dependent on parenteral support.

Shire said that the deal represents an "excellent strategic fit" as it strengthens its current focus on rare diseases and will expand the group's portfolio.

"The acquisition of NPS Pharma is a significant step in advancing Shire's strategy to become a leading biotechnology company," said Shire's chief executive, Flemming Ornskov.

"We look forward to accelerating the growth of the NPS Pharma portfolio based on our proven track record of maximizing value from acquired assets and commercial execution. The NPS Pharma organization will be a welcome addition to Shire as we continue to help transform the lives of patients with rare diseases."

NPS said the deal would boost both firms' revenue and value for their respective shareholders.

Analysts at UBS said the acquisition was a “natural fit” and the price tag paid was “undemanding” if guidance is correct.

The bank said that Gattex alone accounts for around half of the price paid if consensus forecasts are to be believed.

However, Natpara pricing is key to justify the price paid for NPS, it said, as Natpara has a drug approval date in the US on 24 January.

Alex Moore at Brewin Dolphin said the fairly generous deal price of 6.2 times NPS consensus 2018 revenue of $838M reflects the expectation of revenue synergies.

"Shire is in a much stronger position to negotiate coverage, educate clinicians, provide patients with individualized disease support, etc. It also reflects the Shire business model; that orphan drugs, with material benefit, will command high prices into the 2020s. Even with this acquisition, Shire has significant capacity for further deals and we suspect, management will keep looking for suitable targets."