By Ben Hirschler
LONDON (Reuters) - U.S. drugmaker AbbVie (N:ABBV) set out the strategic rationale for acquiring Shire (L:SHP) on Wednesday as a battle for control of the London-listed company, which has spurned AbbVie's $46 billion (27.07 billion pounds)offer, entered a new phase.
AbbVie called for talks and said it was willing to move quickly to clinch a deal, arguing it would create more value from Shire's assets than the hyperactivity and rare diseases specialist could do on its own.
One person familiar with the matter said AbbVie, which stands to cut its tax bill through the deal, could consider bidding more but first wanted to explain its case to Shire shareholders and hear their views on valuation.
The U.S. group said its proposal represented "compelling" immediate value for Shire investors, with significant future upside potential for shares in the combined company.
However, many analysts and investors believe AbbVie will have to pay more than 50 pounds a share to get a deal done, rather than the 46.26 pounds implied in its last cash-and-shares offer.
Buying Shire would allow AbbVie to join a growing number of companies to move their tax base out of the United States and would give it an effective tax rate of around 13 percent by 2016. The enlarged company would be managed from Chicago, listed in New York and incorporated in the British island of Jersey.
Despite criticism from Shire that the nature of the deal would create risks for shareholders, AbbVie said it had thoroughly assessed the tax and structuring aspects and believed the transaction was "highly executable".
The proposed deal would boost adjusted earnings per share materially in the first year following completion, growing to above $1 per share by 2020, it added.
AbbVie's case for a deal, which it will outline in detail in an investor call at 1300 GMT, comes as Shire won new ammunition for arguing it is worth more than AbbVie has offered, after a U.S. court backed patent claims on its top-selling drug Vyvanse.
AbbVie is eager to buy Shire, both to reduce taxation by redomiciling in Britain - a tactic known as inversion - and diversify its drug portfolio. The U.S. company currently gets nearly 60 percent of its revenue from rheumatoid arthritis drug Humira, the world's top-selling medicine, which loses U.S. patent protection in late 2016.
Chief Executive Richard Gonzalez is keen to explain AbbVie's own strengths to Shire shareholders, since they would end up owning shares in AbbVie if a takeover goes through. AbbVie has already raised its profit forecast for 2014, citing a strong business performance.
AbbVie was created as a spin-off from Abbott Laboratories (N:ABT) and listed in January last year, since when Gonzalez said it had delivered a 64 percent total return to shareholders.
SHIRE SHARES JUMP
Shares in Shire, which surged on Friday after news of AbbVie's takeover offer emerged, hit a new all-time high of 46.63 pounds before slipping back to stand 1.5 percent higher at 44.68 pounds by 1235 GMT (01.35 p.m. BST), while the Stoxx Europe 600 drugs sector index <.SXDP> slipped 0.9 percent.
Shire's chief executive Flemming Ornskov said on Monday he was happy for the company to be sold at the right price, if the board recommended it, as he set out a detailed case as to why AbbVie's offer fell short.
Shire expects its sales to more than double to at least $10 billion a year by 2020, fuelled by existing and new drugs - including an important contribution from Vyvanse, which is also being studied as a treatment for binge eating in addition to attention deficit hyperactivity disorder. Investors believe AbbVie will have to raise its offer to win over Shire, with analysts at both Jefferies and Barclays arguing the U.S. company could make a Shire deal pay at a price of up to 55 pounds a share, or $55 billion. Some shareholders have also made clear they are looking for a price above 50 pounds.
Under British takeover rules AbbVie has until July 18 to announce a firm offer for Shire or walk away. The U.S. company said it reserved the right to introduce other forms of consideration and vary the cash-and-share mix of the bid.
(Editing by Tom Pfeiffer and Greg Mahlich)