SHPG is up more than 25% in 3 months. And is trading well above consensus option pricing for 6 month hence. Only four ways to make that happen: New product about to sweep Wall Street off its feet; Remarkable turnaround; Buy-out or; A significant share buy-back. Only one that makes sense given this run-up is that the news of a buy-out is now a badly-kept secret in the financial community. Or maybe it is the impact of FO? That would be a first for him.
Market price is almost 25% over the rumored BMS offer. That kind of premium would be a deal sealer if it were offered a month ago. Will Shire lock in this market cap and say yes? Or risk having the speculators move off and later be stuck in the doldrums by shunning an offer? Timing is everything. BMS may wait for the speculators to cover their positions before chatting with Shire. But 22 billion seems a price that is too good to refuse. If you were the upper management, would you prefer to immediately sit on piles of millions and have no worries or would you prefer to slog it out, try keep the investors modestly happy knowing that it may be years before the stock price that may get back to these levels? That sounds like real work.
I hope we get bought out. BMS would be a great company to work for. Worst case scenario is some of us get laid off and have a reason for leaving Shire
Can you really be that ignorant? Try Yahoo finance genius and you'll clearly see the recent run up is a combo of share buyback and rumors on a Shire buyout of another company. Its in the press but you probably never see anything beyond NASCAR.
Not sure how you do the math. All things equal, this run up reflects a buy back of 20% of outstanding shares. Even if one takes the starting point at 15 billion market cap, that would be 3 billion in buy back. Way way over the amount being bought back. And acquiring a company possessing one drug for a price of 2.8 billion market cap by borrowing money does not seem to be a recipe for a run up. Usually the acquiring company's share price drops with this sort of acquisition, especially if there is a bidding war possible. This is speculative buying and it is reflecting something - but what.
Speculators are buying because they believe Shire will soon be bought. The recent press release about Shire hiring Lazard to avoid a buyout intentionally fueled this run up. All part of FOs plan to make the investors happy. http://www.marketwatch.com/story/shire-hires-lazard-to-advise-on-possible-us-bid-2013-08-19
And if that buy back fails to occur, Fleming is entangled in a long cold war with those same investors. The problem with an uncontrolled stock price maximum is the inability to sustain it. Some companies like MRK tease it along with dividends. If avoiding a buyout is the true strategy, they may be adding some smoke and mirrors with a relatively enormous acquisition. That smoke could provide cover to a stock price that would probably never recover to these levels even in 2-3 years once the buyout-fueld speculators drop away. The danger of a drop in stock price is that it only emboldens the acquirers. These speculators only have a time frame guided by the option timelines. They will only leave their bets on the table for 3 months before they need to re-jigger their accounts at year end. Employees want jobs, security, and steady planned growth. investors want a better return and fast. Something has to give.
