Shire To Buy America's ViroPharma

Shire To Buy America's ViroPharma

Shire has shot to the top of the FTSE 100 after unveiling a $4.2bn deal to buy a US rare diseases specialist.

The UK pharmaceuticals group, best known for its drugs for attention deficit hyperactivity disorder (ADHD), is buying Pennsylvania-based ViroPharma, a company which specialises n treating genetic immune disorders. A number of rivals were reportedly interested in ViroPharma, including France's Sanofi.

ViroPharma is expected to have sales of around $455m to $465m this year, and will join Shire's existing rare disease business to create a $2bn revenue business. Shire chief executive Flemming Omskov said:

The acquisition...is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio. It brings us a new growth driving produce which augments our already strong growth prospects.

Shire, which was boosted last week by news its ADHD treatment Vyvanse had been successful in trials to reduce binge eating, saw its shares climb 96p to £28.92.

Panmure Gordon analyst Savvas Neophytou said:

This is the big deal the market had been waiting for and chief executive Fleming Ornkov telegraphed 18 months ago. The acquisition will be funded through new debt (which is plans to refinance by May 2014) and cash reserves.

We view the acquisition in the same league as the BioChem Pharma, TKT and New River Pharmaceuticals transactions that transformed the group. Clearly at an eye watering multiple (7.6 time enterprise value/revenues) but strategically very sound.

Further on, the company announced that it has terminated its share buy-back. Today's acquisition offers excellent strategic fit though with rare diseases. Suggests (as I suspected) there is no interest in Reckitt Benckiser's suboxone business.

Overall the FTSE 100 has edged up 4.58 points to 6713.00 despite a couple of major fallers.

RSA Insurance is down 13.4p or 11% to 107.4p after problems at its Irish business led to the suspension of three executives.

Meanwhile BSkyB has dropped 90p to 840p in the wake of BT's victory in winning the rights to the Champions League. ITV also fell back on the BT news, down 2p at 188.5p.

Mining shares were weaker after JP Morgan turned negative on the sector, with the notable exception of Lonmin, up 20.9p at 349p after the platinum specialist reported better than expected full year profits of $140m, recovering from last year's financial problems and labour unrest and violence in South Africa.

Source: The Guardian