UK business Shire’s acquisition of NPS Pharmaceuticals is a sound investment but could make Shire itself a more attractive takeover target, according to Warwick Business School professor of practice John Lyon.
Shire has agreed to buy up all outstanding NPS shares at £46 each – leading to a deal worth around $5.2 billion.
Lyon, who himself has extensive experience within the pharmaceutical company – including a stint as global VP of Covance – predicts that Shire “will continue to mop up further niche acquisitions” in the drug and pharmaceutical areas.
“But that will make Shire a more attractive vehicle as a takeover target. AbbVie has already failed in one bid, but this acquisition could spark renewed interest from US companies and other major pharma firms,” he warned.
“The key for Shire is not to acquire too swiftly so acquisitions can be embedded appropriately, ensuring sales forces are dovetailed and streamlined, and at the same time maintain a momentum.”
NPS CEO Francois Nader said the deal was possible because “Shire shares NPS Pharma’s commitment to patients with rare diseases”.
“We believe that joining our two companies will drive value for shareholders and ensure we continue to transform the lives of patients,” he added.
Despite his praise for the deal, Lyons expressed surprise that Shire didn’t wait for the US Food and Drug Administration’s pronouncement on a second drug – Natpara – that targets conditions affecting the body’s production of calcium.
“No doubt, Shire will have conducted extensive due diligence and concluded that any risks of delayed final approval will be manageable, if indeed this drug did not pass its final hurdle on this attempt,” he concluded.
Further reading on M&A: Top 15 M&A deals of 2014