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Shire Progresses with ViroPharma Acquisition

Zacks Equity Research

Shire plc (SHPG) recently announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (:HSR) related to its previously announced acquisition of ViroPharma Incorporated (VPHM) has expired.

The expiration of the HSR waiting period brings a step closer to the acquisition of ViroPharma as it has satisfied one of the conditions of the tender offer.

However, the tender offer remains subject to certain conditions as set forth in the purchase offer.

As per the HSR, an investor who is seeking to acquire a 15% stake or a stake valued at more than $15 million in a security is required to file a form with the government. The form is called a premerger notification report (PNR) and the acquiring firm is required to pay a filing fee.

We remind investors that Shire recently announced that it will acquire ViroPharma for approximately $50 per share or $4.2 billion, in a bid to strengthen its portfolio of rare disease drugs. ViroPharma's lead drug Cinryze is approved in the U.S. for routine prophylaxis against angioedema attacks in adolescent and adults with hereditary HAE. Cinryze complements Shire's Firazyr, indicated for the on-demand treatment of acute HAE attacks.

Shire expects the addition of Cinryze to its rare disease business unit to propel revenues to grow over $2 billion in 2014, accounting for approximately 40% of Shire's total product sales. Moreover, Shire expects to realize approximately $150 million of annual cost synergies across the business by 2015 from the acquisition. The acquisition is expected to be immediately accretive to Shire’s bottom line.

Shire’s efforts to realign its business structure to drive growth and innovation are noteworthy. The recently announced acquisition of ViroPharma will be a significant boost for the company’s rare disease portfolio and we expect accretion once the acquisition goes through.

Shire currently carries a Zacks Rank #2 (Buy). Right now, stocks like Jazz Pharmaceuticals (JAZZ) and Forest Laboratories Inc. (FRX) also look attractive. Both carry a Zacks Rank #1 (Strong Buy).

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