Actelion Hits Record on $18.9 Billion Shire Approach Report

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Actelion Ltd., the Swiss maker of treatments for a rare lung disease, rose to a record after the Sunday Times reported it received an informal approach from Shire Plc in recent weeks.

Actelion’s stock rose as much as 9.6 percent to 144.50 Swiss francs in Zurich trading, the highest since the Allschwil, Switzerland-based company first sold shares in April 2000. Both companies declined to comment.

Shire’s approach, which Actelion rebuffed, valued the maker of the lung drug Tracleer at about 160 francs a share, or 12.4 billion pounds ($18.9 billion), the Sunday Times reported, citing unidentified sources. Shire expanded its portfolio of rare-disease treatments in February with the purchase of NPS Pharmaceuticals Inc. The Dublin-based drugmaker is seeking to boost growth after a proposed $52 billion sale to AbbVie Inc. collapsed last year.

“We find the concept of an Actelion bid plausible, in light of Shire’s stated aspiration to pursue further significant M&A, with a preference for deals in the rare disease space,” James Gordon and colleagues at JPMorgan Chase & Co. wrote in a note to clients.

Not Hostile

Shire Chief Executive Officer Flemming Ornskov has said he will continue buying companies to become a leader in the biotech industry. A takeover price of 160 francs per share represents a 21 percent premium to Actelion’s closing price on Friday. By contrast, Shire paid $46 a share for NPS, 50 percent more than the company’s price on Dec. 16, before news broke of Shire’s interest.

“Actelion board’s alleged unwillingness to open the books at 160 francs may suggest their expectations are far higher,” UBS AG analyst Guillaume van Renterghem said in a note. “We believe Shire would be unlikely to come back with a higher offer. Over the last 10 years we are not aware of a situation where Shire would go hostile.”

Actelion’s Tracleer, the lung drug that was the source of three-quarters of its 2014 product sales, loses patent protection this year. Actelion has developed a replacement product, Opsumit, which went on sale at the end of 2013 and generated 95 million Swiss francs in first-quarter revenue.

The company is also awaiting approval of another lung drug, Uptravi, filed to U.S. regulators in December. Opsumit sales could reach $1.6 billion by 2020, while Uptravi could add another $1 billion to revenue that year, according to the average of five analyst estimates compiled by Bloomberg.

Shire may need to fund the acquisition with some equity if it decides to go ahead, Barclays Plc analyst Michael Leuchten said in a note to investors. The company can only raise its debt, which stood at $2.6 billion at the end of the first quarter, to $12 billion without seeking shareholders’ approval, he wrote.

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