SHPG's presentation on the merger sums up the debt situation (I tried posting part of it but YHOO blocks it). Anyway, although leverage will go up, it is expected to be between 2-3X in fairly short order. Sure that's high relative to several large pharma companies I took a look at, but it seems quite manageable.. ABBV for example is running at ~1.5X.
With annual FCF forecast to be 6B (versus ~2B in recent years), the 18B debt related to the acquisition could potentially be paid off in as little as three years. The company plans to maintain an investment grade debt rating which will keep a cap on interest costs of debt going forward. So overall, I see no major concerns on the debt front.
The report I quoted suggests that PFE could gain from an acquisition of SHPG even if new tax codes means there are no inversion benefits gained. Government can discourage companies from doing inversions by negating any tax benefits, but the only way to stop mergers if there is no tax benefit involved is through anti-trust provisions. Do you think PFE-SHPG would fail on anti-competition concerns?
Another step forward by SHPG to maintain its dominance in the ADHD market space.
@ Lexington, Mass. - April 4, 2016- Shire plc today announces positive topline results from a four-week Phase 3, randomized, double-blind, multi-center, placebo-controlled, dose-optimization, safety and efficacy study, SHP465-305, in children and adolescents aged 6-17 years with Attention-Deficit/Hyperactivity Disorder (ADHD). SHP465 (triple-bead mixed amphetamine salts - MAS) is an investigational oral stimulant medication being evaluated in the U.S. as a potential treatment for ADHD, a therapeutic area with significant need for additional treatment options. The primary efficacy analysis of study 305 demonstrated that SHP465, administered as a daily morning dose, was superior to placebo on the change from baseline in ADHD-RS-IV (ADHD rating scale) total score, with a Least Squares (LS) mean difference from placebo at Week 4 of -9.9 (95% CI: -13.0 to -6.8, p
@ Overall Robust SHP465 Clinical Development Program to Support Class 2 Resubmission Including study 305 and previous studies, Shire now has a robust database of 15 clinical studies evaluating SHP465 in more than 1,100 subjects. Once the pharmacokinetic study and an additional safety and efficacy Phase 3 trial in adults currently under way are complete later this year, Shire plans to add these study results to its existing SHP465 data set to submit a Class 2 resubmission for FDA approval of the medicine for treatment of ADHD. SHP465 remains on track for potential U.S. launch in the second half of 2017. Protection for Shire's ADHD
@Franchise Extends to 2029 There are patents supporting Shire's overall ADHD franchise in the U.S. that extend to 2029. With a launch planned for the second half of 2017, Shire expects that SHP465, following potential FDA approval, will have three years of Hatch-Waxman exclusivity and at least three patents listed in the FDA Orange Book expiring as late as May 2029.
I've owned shpg for close to 20 years. It is one of my best investments with cb of $10.76/SH. If it pulls back more I'll pick up a few hundred more, although I have a pretty full position. Hang in there and you'll be happy.
Cannot believe the selloff today,well i guess down the road we will see how good buying baxalta was,in the meantime i will twiddle my thumbs.
Analysts have been pointing to a buyout of SHPG by the likes of PFE, AGN, etc for several years. Now that are talking about how a takeover of SHPG makes sense, even if a buyout does not gain the benefit of tax inversion.
@Another stock to bounce this week was Shire, on 13.7 times prospective earnings, below a 10-year median of 16.7 times and as much as 25 in 2014. The stock has fallen more than 20 percent over the last year, as some investors worried over its costly deal to buy U.S. peer Baxalta. DEAL OR NO DEAL Exane BNP Paribas analyst David Finch added Shire to its M&A Target list, noting: "Big Pharma in general has other reasons than tax efficiency to make big acquisitions." He cites Shire's cheap valuation, as well as favourable forex conditions and the unsustainability of share buybacks, as contributing to the case for Pfizer to bid for Shire. And even if Shire resists an approach, the stock's valuation meant that: "Deal or no deal, we think we will make money."
Some info and hang in there on Shire and buy more if it pulls back to $160-165.
Shire PLC (ADR) (NASDAQ:SHPG) shares are off by 2% after the company acquired the global rights for all indications to Pfizer Inc. (NYSE:PFE)’s PF-00547659. The acquisition of the investigational biologic for the treatment of moderate-to-severe inflammatory bowel disease improves Shire’s leading gastrointestinal unit. Financial terms of the deal were not disclosed. 49 funds in our system were bullish on Shire PLC (ADR) (NASDAQ:SHPG) at the end of the first quarter, up by nine funds from the end of 2015.
Under the merger agreement, Baxalta’s shareholders will receive $18.00 in cash per share and either 0.15 of Shire’s ADSs (American depositary shares) or 0.45 of Shire’s common shares per Baxalta share. Baxalta’s shareholders have yet to approve. Shire expects the merger transaction to be completed by June 3, 2016.
If you have Baxalta its $18 plus 15 percent of tomorrow's Shire price of about $190 or when said and done $46. Hope that helps.
Sentiment: Strong Buy
I think you can use the RAI buyout of LO last yeas as a reference. Here's the relevant part. I hope it helps.
2) As a LO shareholder, what will I receive as a result of the acquisition?
For every LO share, holders will receive $50.50 in cash plus 0.2909 shares of RAI common stock.
Pursuant to the merger agreement, any resulting fractional shares of RAI common stock will also be
redeemed for cash at the rate of $72.2977.
6) What is the cost basis of my new shares of RAI?
The cost basis for RAI shares paid to LO shareholders receiving those shares as a result of the
transaction is $72.15 per share. This was the closing price of RAI shares on June 11, 2015, the last
trading day prior to the date the transaction was completed.
7) What is the tax treatment for the cash and shares I receive?
The transaction is considered a taxable event for LO shareholders. The following information is
provided only as an example and for reference. By providing this example, Reynolds American Inc. is
not providing legal and/or tax advice. As everyone’s situation is different, you should consult your
tax advisor to determine specifically how this transaction affects you.
This example assumes a LO shareholder held 100 shares of LO at the time of the merger on June 12,
2015. The total consideration received by the LO shareholder would be $7,148.86.
1) 100 shares of LO multiplied by$50.50 = $5,050.00 cash received
2) 100 shares of LO multiplied by 0.2909 shares of RAI = 29.09 shares of RAI received
a. 29 shares of RAI multiplied by $72.15 (closing price of RAI on 6/11/2015) = $2,092.35
b. 0.09 fractional shares of RAI multiplied by $72.2977 = $6.51 cash received
Total consideration received: $5,050.00 + $2092.35 + $6.51 = $7,148.86
Don't be such a nervous nellie. This is just big volume monkey games by all the big boys to maximize their trading profits pre-merger. What matters is that the merger closes. Then the stock will settle down and start to reflect the true value again.
Etrade messed up the cost basis for my holdings, but I'm not sure what they should be instead. Any help?
Bought 400 shares on 1/4/16 for total cost of $16,289.99 w/ commission
Received a cash dividend of $28 on 4/1/16
Received $7,200 cash, 59 SHPG shares on 6/3/16 and was charged a $20 fee. Theoretically I should also have received cash in lieu of the 0.28 fractional share, but I'm not seeing it anywhere.
SHPG was at $190.04 at conversion. I'm assuming I can't just use that price, right?
Thanks for your help
Buy great companies when they are slammed for non company related news. I'm looking to pick more up under $160 if it gets there. This is a long term investment that will pay. (20 year shpg shareholder)
Added today as i believe the coast is clear and the stock price will work its way the remaining part of the year to go higher,will stay long and enjoy the ride!
20 year Shire sh - they are qualified.
Also, remember that they are listed in London so a big European decline will mean lower stock price. On the positive, they just got 2 drugs deemed high priority (don't remember actual "term").
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