Shire Pharmaceuticals (SHP) Gains US Approval for Alzheimers Drug

Uncle

Established member
671 2
Latest on the Merger

The following announcement has been made by the company today 13/03:

"Shire has become aware of an increasing number of enquiries as to the current status of the timetable to completion of the proposed merger with BioChem. In order to try to clarify the situation, the Board of Shire announces that the proposed merger with BioChem is proceeding satisfactorily with the integration planning well under way.

The merger is conditional, inter alia, on the Minister of Industry Canada's approval as well as the approval of both Shire and BioChem shareholdersa at meetings to be held on the 29 March 2001. Shire announces it has received notification from the Director of Investments under the Investment Canada Act that the period of his review of the proposed merger has been extended.

Discussions are continuing with the Director of Investments and the Board of Shire remains confident that the approval will be forthcoming, although the timing of such approval cannot be forecast with certainty. As a consequence completion of the merger, which is expected to occur on the 30 March2001 could be delayed. The Board currently believes that the period of any delay is unlikely to be significant."

......................


Has anyone else been on the roller coaster with this stock this week????????

John
 

shelman

1
439 1
SHP now almost back to where i first bought it and i can only think it's a normal market cycle ( as with CAT )
I think both are worth following and wait for the first solid sign of reversal.
Steve
 

ChartMan

Legendary member
5,580 46
Broken long term up trend line support @ 1040 today ( dating back to Aug 99)- but only 6p down.
Next support may be found at 930......
 

Uncle

Established member
671 2
Agree with you Steve. It droped below my support at 1020 today to 1003, but recovered to close at 1034.

However, dont rush in yet, it might just go down to the next support at 950, where it was in December before it took off to rise to 1357 intraday.

Like you keeping a eye on it

John
 

Riz

Experienced member
1,266 5
Down -140 (-13.9%) to 865...it is still something to do with the share-swap deal to acquire Canada's BioChem Pharma Inc... we can't possibly know where it will stop falling until the calculation period for averaging Shire's share price is announced...as they are still wating for the final completion date for the deal which depends on clearance from Canadian anti-trust regulators...and that has been delayed...

So just watching for the time being I'd say...

Riz
 

Uncle

Established member
671 2
Although the bulls tried hard today, the price fell back from 1010 to close at 935 up 70 over Thurs close. The indicators now looking positive, so keep your eye on this for any short term possible gains.

John
 

shelman

1
439 1
Anyone thinking of longer term investing could do worse than selecting this one but i must agree with John. Short term is the better option in this market.
Steve
 

Riz

Experienced member
1,266 5
Hi Uncle and Steve, and other members watching or holding SHP...

We're going to have eye-strain watching SHP, not that it didn't pay in the past...but as we want to make more out of this baby, we'd better put the reasons behind the current fall clearly, so we know what we're watching about...because it has come to a point that a short term view is even more risky now unless it's an intra hour trade...it may go up or down by 100 any day from now on..

I threfore decided to take a close look at this arbitrage issue...here is some details that I've come up with:

1) Heavy short selling by merger and acquisition arbitrage funds is the reason behind the depressed price of late...

2) They aim to profit by converting BioChem stock into SHP's at the lower end of the deal's tiered conversion structure, which is based on a 15-day price average...

3) These arbitrageurs have been short-selling on assumption that the deal will close - and the 15-day average be settled - around the March 31 deadline...

4) Ministry of Industry Canada, the regulatory body is reviewing the deal. The initial review ended March 1, triggering an additional 30-day period through March 31...

5) There's no guarantee that regulators will approve the deal by March 31. If they don't, the review rolls over into an open-ended period which has no set expiration date for arbitrageurs to rely on...in other words the deal can be approved any day...

6) These arbitrage funds have opened short positions SHP and long on BioChem to keep SHP share price depressed enough to reap the better conversion rate under terms of the stock-swap...

7) This is why volume has been massive for the last 4 trade days; 18 million Tuesday, 11.7 million Wednesday, 15.5 million Thursday and 9 million Friday...compare these figures with 800,000-a-day average volume and you'll see how aggressive the game is played and how big the money is used...

8) What are they trying to achieve?

Under the merger terms, if SHP ADSs trade between $47.20 and $70.80 at the date of completion, BioChem shareholders get $37 worth of SHP ADSs per Biochem share. Trading above $70.80 gives BioChem holders 0.5226 Shire ADSs, but anything below $47.20 gives BioChem holders a much better conversion rate of 0.7839. SHP ADSs closed friday at $40.50...

So they've been successful so far in spite of the rise on Friday...

But they have one serious problem...

The stock swap is based on SHP's share price on a 15-day average, ending on the third trading day prior to the deal's close. Mindful of this, arbitrageurs started shorting Shire shares around March 6...

What if the deal doesn't close by March 31?
There's probably going to be a lot of shorts moving to cover their positions...

Over all next week is decisive, if they get a signal that the deal will be closed by 31st march, they will keep depressing the price for a few more days...If not they'll rush to cover their short positions and we'll be watching SHP flying...

That's the trick...we either watch SHP close enough to make use of the trick or wait till the deal is closed to get in, or watch and trade it intra hour if we're equipped enough for that...

Good luck...Whatever it is for you...

Riz

(Info from DOW JONES NEWSWIRES)
 

Uncle

Established member
671 2
Riz, very many thanks for throwing more light on this and to the reasons how the manipulators, manipulate the price. This must have been a day traders dream stock if they had the bottle to trade it, however I have learned patience is the name of the game and will only venture when all the indicators are showing positive and the shennanigans have abated.

Keep watching this space folks.............

John
 

Uncle

Established member
671 2
Have taken the plunge on this one too earlier in the day.

Anyone else ventured yet?

John
 

Uncle

Established member
671 2
Update on Merger

"Shire announces the Minister of Industry will not be in a position to approve Shire's proposed merger with BioChem within the current review period ending on 31 March. Instead, the Minister has advised Shire that he is not at this time, based on representations made by Shire, satisfied that the proposed merger is of net benefit to Canada.

Shire is engaged in ongoing and active discussions with the Minister with a view to reaching a satisfactory resolution. Shire is entitled to make representations and submit undertakings within the next 30 days or such further period as may be agreed on by Shire and the Minister. Although the Minister is carefully reviewing the effect of this transaction from a Canadian perspective, Shire remains stongly of the view that the transaction benefits both BioChem and Canada as a whole and remains firmly committed to obtaining the Ministers's approval in due course.

Further announcements will be made when appropriate."

Meanwhile I trust some of your have taken advantage of the recent rise in price.

Best wishes

John
 

Riz

Experienced member
1,266 5
Down -62.0 (-5.5%) to 1075..

Found this piece of news on AFX:

"....But on the downside, Shire Pharma dropped 39 pence to 1,098 after HSBC Securities initiated coverage on the the stock with a 'reduce' recommendation and a 1,010 pence price target. Shire shares had seen a good boost over the past few sessions on arbitrage-linked short selling following news that the group's completion of its agreed takeover of Nasdaq-listed Biochem has been delayed by the Canadian government..."

Riz
 

Uncle

Established member
671 2
Bears driven off!!

After a fascinating week watching from the side line, the Bears were finally driven off - at least for the weekend. It will be interesting to see if they return next week. The stock has traded all week between 980 and 1050 - Monday's high/low - having opened at 1030 and finally closing at 1049 today Friday.

The stock is in a long term sideways trend, but plenty to go for in the short term as and when the opportunity presents itself.

Best wishes

John
 
 
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