UPDATE 3-Shire to buy Belgian drugmaker Movetis for $560mln

Tue Aug 3, 2010 10:33am EDT

* Acquisition would give Shire rights to Resolor in EU

* Purchase to be financed from existing cash resources

* Gets unconditional OK from 39 pct of Movetis shareholders

* Shire up 1.58 pct, outperforming sector

* Movetis suspended at 11.90 euros

(Adds analyst comment, shares, banks, owners, background)

By Julie Crust

LONDON, Aug 3 (Reuters) - British drugmaker Shire Plc (SHP.L) plans to buy Belgium's Movetis NV MOVET.BR for 428 million euros ($559 million) in cash to boost its portfolio of gastrointestinal products and drive international growth.

The acquisition would give Shire the rights to Resolor, which treats chronic constipation in women, in 27 countries of the European Union and elsewhere. Shire estimates potential annual peak sales of Resolor of more than 300 million euros.

Buying Movetis fits Shire's long-standing strategy of building its business through acquisitions of firms selling specialist drugs. News of the latest bolt-on deal was cheered by investors, with Shire shares rising 1.58 percent by 1428 GMT. The DJ Stoxx European healthcare index .SXDP was up 0.41 percent.

Chief Executive Angus Russell said this year that Shire would continue to hunt out promising deals to drive the company's growth beyond 2015.

The venture-capital firms backing Movetis -- Sofinnova Partners, sister firm Sofinnova Ventures, and Life Sciences Partners -- support the bid, and in total institutional shareholders owning 38.9 percent have agreed to accept the offer, Movetis said.

Shire said it is offering 19 euros for each share in Movetis, which had 100 million euros in cash on its books at the end of March.

The offer price represents a 74 percent premium to Movetis's closing share price on Monday at 10.90 euros and is 55 percent above the price of 12.25 euros at which the company floated on Euronext Brussels last December.

Movetis and its main shareholders had earlier sought a buyer before opting for the flotation, a person familiar with the matter said.

Movetis shares were suspended just before the announcement, last trading at 11.90 euros.

Peter Welford, an analyst at Jefferies, said the deal was positive, although he was less confident in Resolor's sales potential.

"We agree the acquisition should be earnings accretive after 2012 but are more cautious on Resolor's EU commercial potential, with a $300 million preliminary peak sales estimate versus Shire's over $400 million peak," he said.

The enterprise valuation price of 328 million euros for Movetis will wipe out two-thirds of Shire's cash, as at March 31, but the company's strong cash inflows in the second and third quarters should largely replenish this, Welford added.

STICKING TO 2010 GUIDANCE

The British drugmaker, which will report second-quarter results on Wednesday, said its business continued to perform very well.

"Given this strong performance there is no impact to previously stated guidance for 2010 due to the modest short-term financial effect of the acquisition of Movetis," it said.

Shire has a fast-growing drug in Lialda for ulcerative colitis, which had sales of $236 million in 2009 and is expected to bring in around $500 million by 2014, according to consensus analyst forecasts.

Analysts said it should be able to accelerate the roll-out of Resolor by using its existing sales force currently promoting Lialda and another bowel drug, Pentasa.

Movetis is entitled to receive royalties on sales of Resolor outside of Europe from Johnson & Johnson (JNJ.N), the U.S. healthcare group from which Movetis is a spin-off.

Further off, Movetis also has two drug candidates in Phase II clinical trials for ascites, or fluid build-up in the abdomen, and heartburn.

Deutsche Bank advised Shire, while Evercore advised Movetis. (Additional reporting by Ben Hirschler, Quentin Webb and Philip Blenkinsop; Editing by Sharon Lindores) ($1=.7650 Euro)

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