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UPDATE - Shire flies flag of independence with US$5.2bn US acqusisition

Last updated: 21:15 12 Jan 2015 AEDT, First published: 22:15 12 Jan 2015 AEDT

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UK drug giant Shire (LON:SHP) has signalled its intention to remain independent with a US$5.2bn deal to buy US speciality drug firm NPS Pharma.

After its US$54bn takeover by America’s AbbVie fell through last October, Shire is turning predator to boost its own medicine cabinet.

It has agreed to pay US$46 a share for NPS, whose lead drug tackles a condition called short bowel syndrome. The New Jersey-based firm is also in the process of registering a treatment for hypoparathyroidism, a rare hormone disorder.

"We look forward to accelerating the growth of the NPS Pharma portfolio based on our proven track record of maximising value from acquired assets and commercial execution,” said Shire chief executive Flemming Ornskov.

"The NPS Pharma organisation will be a welcome addition to Shire as we continue to help transform the lives of patients with rare diseases."

Shire was rumoured to be looking at the acquisition last year according to City firm Cenkos, and the payment of a US$1.6bn break fee by AbbVie made it easier to pull the trigger on the deal.

“We believe that the deal makes strategic sense as it consolidates Shire’s position in rare-diseases with two biological products (one near approval) and complements Shires existing strategy” the broker said, as it reiterated its ‘buy’ recommendation and £53.47 price target.

The deal is expected to be earnings enhancing on a non-US GAAP (generally accepted accounted principles) measure in 2016.

NPS has a clutch of marketing deals with Amgen and Janssen Pharmaceuticals, Cenkos noted.

“There are a number of other pipeline products currently in clinical development including NPSP795 at Phase IIa stage for adults with autosomal dominant hypocalcaemia. We see further pipeline progression under Shire, especially as this acquisition complements some of its existing portfolio,” Cenkos analyst Navid Malik said.

Shire remains Cenkos’s top pick in the speciality pharmaceuticals sector and Malik suggested that this may not be the last acquisition the company makes in the near-term.

Shares in Shire were little changed at £47.26.

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