Shire plc and ViroPharma Incorporated announced that their boards of directors have unanimously approved, and the companies have entered into, a merger agreement pursuant to which Shire will acquire all the outstanding shares of the rare disease company ViroPharma for $50 per share in cash, for a total consideration of approximately $4.2 billion. The $50 per share price in the transaction represents a 27 per cent premium to ViroPharma's closing share price on Friday, November 8, 2013, the last trading day prior to announcement, and a 64 per cent premium to ViroPharma's unaffected share price of $30.47 on September 12, 2013.
ViroPharma is a high growth, rare disease biopharmaceutical company, whose commercial product Cinryze (C1 esterase inhibitor [human]), is a leading brand for the prophylactic treatment of Hereditary Angioedema (HAE).
Shire transaction highlights include: Excellent strategic fit; Expands rare disease portfolio which Shire is strategically committed to strengthen; Adds Cinryze, with growing sales in the prophylactic treatment of HAE, which complements Shire’s Firazyr (icatibant injection); • Enhances Shire’s short and long term revenue growth profile; Expected annual cost synergies of approximately $150 million by 2015, over and above the improved operating leverage already being driven by the ongoing One Shire reorganization; Immediately accretive to Shire’s Non GAAP EPS following completion and enhances earnings growth profile; Shire expects transaction to deliver ROIC in excess of its weighted average cost of capital; Acquisition to be effected by a tender offer and funded from Shire’s cash resources and existing and new bank facilities.
Flemming Ornskov, chief executive officer, Shire said: “The acquisition of ViroPharma will immediately benefit Shire and is entirely consistent with our clear strategic objective of strengthening our rare disease portfolio. It brings us a new growth driving product which augments our already strong growth prospects. Shire is uniquely positioned to drive the continued success of Cinryze for the benefit of patients through our knowledge of the rare disease space, our international infrastructure and our biologics manufacturing expertise. Shire is also excited by the prospect of being able to offer two complementary treatments, Firazyr for the treatment of acute HAE attacks and Cinryze for prophylactic treatment of patients suffering from HAE. Shire’s priority will be to ensure Cinryze patients continue to enjoy high standards of service. Shire has conducted a thorough and collaborative due diligence process over the last few months and, following completion of the transaction, the integration process will be focused on delivering value to all stakeholders. This acquisition is expected to create a $2 billion rare disease revenue base and delivers further strong growth prospects.”
Vincent J Milano, ViroPharma’s chief executive officer stated: “We are pleased to announce our merger with Shire, which like ViroPharma, is focused on developing products for patients suffering from rare diseases. After thoroughly evaluating our strategic options we determined that this transaction is in the best interests of ViroPharma, our shareholders and our patients. By joining with Shire, ViroPharma will become part of a larger, more diverse biopharmaceutical company and will benefit from Shire’s innovation, scale and global reach. We will have access to resources to expand product distribution, giving us a platform to provide our crucial therapies, such as CINRYZE, to more patients than ever before. We look forward to working with Shire’s team and to being part of an even stronger, more geographically diverse organization.”
ViroPharma is a leading rare disease company with Cinryze, a high growth product for prophylactic treatment of HAE, as well as a number of other marketed products and a pipeline of product candidates in the rare disease space. ViroPharma generated total worldwide net revenues of $428 million in 2012. Total worldwide net revenues are forecast by ViroPharma to be in the range of $445 million to $465 million in 2013.
Cinryze was approved with orphan drug designation in October 2008 and has grown rapidly since launch in 2009 to generate revenues of $321 million in the US in 2012. On October 31, 2013, ViroPharma forecasted Cinryze net revenues in North America in 2013 to be between $395 million and $405 million.
Shire believes there is a significant opportunity for future revenue growth, in both the US and ex-US markets, as new HAE patients are identified and treated and additional physicians gain experience with this important therapy. Current consensus estimates for global Cinryze sales forecast strong revenue growth in the coming years. Cinryze has US orphan drug exclusivity which expires in 2015 and US biologics data exclusivity until 2020.
With Cinryze in its portfolio, Shire will be able to offer broader outreach to HAE patients and a continuum of care alongside Firazyr.
Lazard and Morgan Stanley are acting as joint financial advisors to Shire. Goldman, Sachs & Co. is acting as financial advisor to ViroPharma. Davis Polk & Wardwell LLP is acting as legal advisor to Shire and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to ViroPharma.