Shire (SHPG), in an investor presentation and conference call on Monday morning, made the case that AbbVie’s (ABBV) $46 billion takeover bid substantially undervalues the Irish company. The bid was made public last Friday, and Shire says it was the third offer since May from AbbVie, which teeters on an important patent cliff with Humira.
Shire unveiled a “10 x 20” plan, outlining guidance for $10 billion in revenue by 2020 from the company’s current pipeline and product franchise, a doubling of revenue in six years with no additional M&A or licensing. The company also expects $6.5 billion in revenue in 2016.
This outlined defense comes directly on the heels of Valeant’s (VRX) thus far failed takeout of Allergan (AGN), which has summarily rejected revised offers as undervaluing the company and as negative for current shareholders. As Allergan sees it, Valeant’s serial acquisition strategy is more facade than execution, and Valeant in the weeks since has been forced to defend its own business in addition to the bid for AGN.
These takeover attempts are creating a new dynamic for pharmaceutical companies: issuing longterm guidance. It’s a practice we’d like to see more of, and investors have reason to celebrate as the veil falls from this long-standing taboo.
