Shire PLC (ADR) Eyes BioMarin Pharmaceutical Inc.

  • BioMarin,Shire,SHPG

BioMarin stock has rallied up 5% in extended trading on news that Shire is interested in acquiring the company

Word on the Street is that Shire plc (NASDAQ:SHPG) is about to make a "transformational" acquisition by acquiring US-based BioMarin Pharmaceutical Inc (NASDAQ:BMRN). The news has sent BioMarin stock up 5.3%, to now be valued at $121 apiece.

The speculation that Shire may end up acquiring BioMarin is not ill-founded, especially in light of the fact that the company only recently went on to expand its rare disease drug portfolio through acquiring NPS Pharmaceuticals, Inc. (NASDAQ:NPSP). BioMarin itself specializes in making drugs for rare genetic diseases.

The company reported revenues of $230.9 million in the most recently concluded quarter, marking a growth of 57% on a year-over-year basis. Furthermore, the company’s share price has rallied over 67% in the last 12 months, as investors reward the company for having an expansive pipeline that focuses on rare disorders, which is expected to add to the company’s revenue stream.

Shire, as per sources well informed with the matter, has approached BioMarin with a proposed deal. What remains unclear is, however, how things have progressed after the company expressed interest in acquiring BioMarin.

The BioMarin acquisition will be transformational for Shire given that the company is worth $18 billion, and hence a sizable chunk for Shire to bite off. The company’s current CEO Flemming Ornskov has gone on to sign many major acquisition related deals, however, the BioMarin acquisition will seriously move the needle into the tens of billions category.

Shire will likely have to pay a sizable premium for the acquisition given the upsurge in mergers and acquisitions-related activity in the pharmaceutical sector.

Shire may not be the only company vying to lay its hands on BioMarin, since Switzerland-based Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) only last year evaluated BioMarin as an acquisition target. Roche Holding eventually ended up buying Intermune Inc (NASDAQ:ITMN) for $7.4 billion. Roche, as per sources close to the matter, may revisit its interest in buying BioMarin now that Shire has taken an active interest in acquiring the business.

BioMarin and Shire both declined to comment on the market rumors.

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