iNVEZZ.com, Saturday, May 31: Biopharma group Shire Plc (LON:SHP) is considering a bid for US rare drug specialist NPS Pharmaceuticals (NASDAQ:NPSP), FT Alphaville has reported.
The report marks the latest takeover speculation involving a FTSE 100 company after earlier this week news emerged that Michigan-based orthopaedic implant maker Stryker Corp (NYSE:SYK) had been evaluating a potential bid for its UK rival Smith & Nephew (LON:SN).
Shire’s share price closed in the red in London yesterday, dropping 1.19 percent to 3,414p. Shares in NPS soared on the NASDAQ, closing more than 13 percent higher at $31.13.
**Shire eyes NPS Pharmaceuticals**
The Financial Times blog FT Alphaville yesterday quoted unnamed yet “usually well informed sources” as reporting that Dublin-based Shire had been working quietly with advisers and held internal discussions about a potential cash offer for NPS Pharmaceuticals, a New Jersey-based rare disease specialist. The potential offer is thought to be at around $40 a share, valuing the US group at some $4 billion (£2.4 billion).
The sources, however, cautioned that any deal was at an early stage and might be shelved, given events elsewhere in the sector.
The FT blog quoted a Shire spokesman as saying that the company “did not comment on rumour or speculation”.
**M&A buzz continues**
The news of Shire’s interest comes amid increased deal activity across the health care and pharma sectors. Earlier this week, Stryker’s chief executive admitted that his company had been considering a bid for FTSE 100 artificial hips maker Smith & Nephew, while AstraZeneca (LON:AZN) recently rebuffed several tie-up offers from US pharma giant Pfizer Inc (NYSE:PFE).
Shire itself is a frequent subject of takeover speculation on account of its growing presence in neuroscience and rare diseases, and its Irish tax domicile. Last month, news emerged that Botox maker Allergan Inc (NYSE:AGN) was preparing a bid for the UK group in an effort to fend off an unsolicited approach from Canada-based Valeant Pharmaceuticals International Inc (TSE:VRX). (Shire share price jumps on speculation over Allergan approach)
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The largest UK pharma company, GlaxoSmithKline Plc (LON:GSK), has also recently been involved in M&A activity, announcing a three-way multibillion dollar deal with Switzerland’s Novartis (VTX:NOVN). (GSK share price jumps on multibillion dollar deal with Novartis)
Shire’s chief executive Flemming Ornskov, however, earlier this month refused to comment on the deal frenzy which has gripped the pharma sector.
“We are looking for innovation, for products we can bring to market,” the Dane told Reuters, adding that his own acquisition strategy remained unchanged.
**Analysts on Shire**
As of May 28, the consensus forecast amongst 36 polled investment analysts covering Shire for the FT advises that the company will outperform the market.
Analyst Ratings Network reports that the FTSE 100 biopharma group currently has a consensus ‘buy’ rating and an average price target of 2,841.61p.
**On May 30, buy Shire shares at 3,416.00p.**
**On May 30, sell Shire shares at 3,413.00p.**