Swiss biotech Actelion hits record high on potential Shire bid

A sign sits in front of Shire's manufacturing facility in Lexington, Massachusetts July 18, 2014. REUTERS/Brian Snyder

By Ben Hirschler and William James

LONDON (Reuters) - Shares in Actelion <ATLN.VX>, Europe's biggest biotech company, jumped 10 percent to a record high on Monday after a report Shire <SHP.L> was considering a $19 billion takeover of the Swiss group to boost its rare diseases business.

Shire, which is based in Ireland but has most operations in the United States, is a serial acquirer in a consolidating healthcare sector, which has seen a record $253 billion of deals so far this year.

An informal approach by Shire was rebuffed several weeks ago by Actelion, according to Britain's Sunday Times newspaper, citing unidentified financial industry sources.

Shire was willing to pay 160 Swiss francs a share for Actelion, the sources said, a 21 percent premium to Friday's closing price. Shares in Actelion hit an all-time high of 144.5 francs on Monday.

Berenberg Bank analysts said Shire might have to offer 180-200 francs to get a deal done, adding its reported move would likely encourage others to come forward with offers.

A spokeswoman for Shire, whose shares fell 2 percent, told Reuters the company did not comment on speculation. An Actelion spokesman said it did not comment on market rumours.

Earlier this year, Actelion raised its full-year guidance after strong sales of its new heart and lung drug helped its first-quarter earnings exceed analysts' estimates.

At the time, the company's founder and chief executive Jean-Paul Clozel told Reuters it had not received any outside interest to buy the company.

Clozel has resisted past pressure from shareholders to consider a sale but Actelion's position as a niche player in a high-margin segment of the drugs market has made it a persistent target of bid talk.

Deutsche Bank analyst Richard Parkes said Actelion would give Shire a further rare diseases growth engine, with extra upside from the Swiss firm's late-stage pipeline in infectious diseases and multiple sclerosis.

Shire could also extract significant corporate overhead savings and use its existing sales force to market Actelion's drugs for Gaucher and Fabry disease, two genetic disorders where Shire is strong.

But Parkes said Shire might have to offer a 30 percent plus premium to secure a deal, adding that any deal would require a mix of cash and equity.

Shire, which agreed to buy U.S. group NPS Pharmaceuticals for $5.2 billion in January, had net debt of $2.6 billion at the end of March and CEO Flemming Ornskov has shareholder approval to increase this to $12 billion if required.

(Additional reporting by Joshua Franklin in Zurich; editing by Jason Neely and Susan Thomas)