Shire Stock Undervalued Despite Takeover Bid

Shire rejected three bids from the Japanese pharmaceutical firm. Allergan is also now evaluating a potential offer for Shire

Karen Andersen, CFA 20 April, 2018 | 6:24AM
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Shire (SHP) has released details of recent negotiations with Takeda, detailing three proposed, and rejected, bids from the Japanese pharmaceutical firm. Allergan is also now evaluating a potential offer for Shire. We’re maintaining our £48.90 per share valuation for Shire; shares remain undervalued in our view. The firm’s growing plasma business and steady rare-disease portfolio also contribute to its narrow moat rating.

We think the market’s focus on competition to Shire’s established haemophilia portfolio could give Takeda, or Allergan, the opportunity to acquire a diversified rare-disease business and a rapidly growing immunology business at a good price. However, both Takeda and Allergan will be pushing the limits of their debt capacity and testing shareholder patience, if bids move significantly higher than Takeda’s last rejected bid of £46.50 per share.

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Karen Andersen, CFA  Karen Andersen, CFA, is a senior stock analyst with Morningstar.