LONDON (Reuters) - Shares in British drugmaker Shire Plc L:SHP jumped 4 percent on Tuesday after Reuters reported that Botox-maker Allergan Inc N:AGN was preparing a new takeover approach.
Allergan itself is facing an unsolicited bid from Valeant Pharmaceuticals International Inc TO:VRX, and a bid for Shire, whose market value is more than $33 billion (19.5 billion pounds), would underscore how keen the U.S. dermatology drugmaker is to stay independent.
Representatives at Allergan and Shire declined to comment.
Citi analyst Peter Verdult said Shire could be attractive to Shire given the London-listed company's strong sales of high-margin drugs for treating rare diseases. The transaction would also offer significant cost and tax savings.
Getting a deal done, however, will depend on the premium Allergan is willing to pay for Shire and the readiness of Shire shareholders to receive a large part of the payment in equity, he said. Valeant teamed up with activist investor Bill Ackman this month to make a $47 billion offer for Allergan. But Allergan has been reluctant, partly because of Valeant’s reputation for cutting costs and spending little on research and development. Allergan had held talks in recent months with Shire about a potential takeover, but those did not pan out, Reuters reported last week.
One person said Allergan could make its bid within the next few days.
Shire holds in annual meeting in Dublin on Tuesday and will report first-quarter results on May 1.
A transaction would add to a frenzy of deal-making in the healthcare sector. Deals totalling more than $153 billion have been struck so far this year, the highest year-to-date level since Thomson Reuters began tracking data.
Buying Shire, which is based in Dublin, would also play to an increasingly popular trend that is driving M&A in healthcare and other sectors - it could help lower Allergan’s tax rate. In a process known as inversion, U.S. drugmakers seek to relocate their headquarters to countries with lower tax rates, as Pfizer N:PFE hopes to do with AstraZeneca
(Reporting by Ben Hirschler and Anjuli Davies; Editing by Louise Ireland)