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Business Combinations
 9 Months Ended
Sep. 30, 2012
Business Combinations [Abstract]  
Business Combination Disclosure

2.       Business combinations

 

Acquisition of FerroKin BioSciences, Inc. (“FerroKin”)

On April 2, 2012 Shire completed the acquisition of 100% of the outstanding share capital of FerroKin. The acquisition-date fair value of consideration totalled $159.3 million, comprising cash consideration paid on closing of $94.5 million and the fair value of contingent consideration payable of $64.8 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is $225.0 million. The amount of contingent cash consideration ultimately payable by Shire is dependent upon the achievement of certain clinical development, regulatory and net sales milestones.

 

The acquisition of FerroKin adds global rights to a Phase 2 product, SPD 602 (formerly referred to as FBS0701), to Shire's SP pipeline. SPD 602 is intended to serve a chronic patient need for treatment of iron overload following numerous blood transfusions. Together with our collaboration with Sangamo Biosciences Inc. (“Sangamo”), this acquisition is a strategic step in building Shire's hematology business, which already includes XAGRID and a growing development pipeline.

 

The acquisition of FerroKin has been accounted for as a purchase business combination. The assets acquired and the liabilities assumed from FerroKin have been recorded at their preliminary fair values at the date of acquisition, being April 2, 2012. The Company's consolidated financial statements and results of operations include the results of FerroKin from April 2, 2012. In the three and nine months to September 30, 2012 the Company included pre-tax losses of $0.4 million (2011: $nil) and $2.8 million (2011: $nil), respectively for FerroKin within its consolidated income statement.

The purchase price allocation is preliminary pending final determination of the fair values of certain assets acquired and liabilities assumed. The purchase price has been allocated to acquired in-process research and development (“IPR&D”) in respect of SPD602 ($166.0 million), net current liabilities assumed ($6.6 million), net non-current liabilities assumed (including deferred tax liabilities) ($46.2 million) and goodwill ($46.1 million). The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. Goodwill arising of $46.1 million, which is not deductible for tax purposes, has been assigned to the SP operating segment.

 

In the three and nine months to September 30, 2012 the Company expensed costs of $0.4 million (2011: $nil) and $2.8 million (2011: $nil) respectively relating to the FerroKin acquisition, which have been recorded within Integration and acquisition costs in the Company's consolidated income statement.

Acquisition of certain assets & liabilities of Pervasis Therapeutics, Inc. (“Pervasis”)

On April 19, 2012 Shire acquired substantially all the assets and certain liabilities of Pervasis. The acquisition date fair value of the consideration totaled $26.1 million, comprising cash consideration paid on closing of $2.5 million and the fair value of contingent consideration payable of $23.6 million. The maximum amount of contingent cash consideration which may be payable by Shire in future periods is up to $169.5 million. The amount of contingent cash consideration ultimately payable by Shire is dependent upon achievement of certain clinical development, regulatory and net sales milestones. The acquisition adds VASCUGEL to Shire's Regenerative Medicine business. VASCUGEL is currently in Phase 2 development for acute vascular repair, focused on improving hemodialysis access for patients with end-stage renal disease.

The acquisition has been accounted for as a purchase business combination. The assets acquired and the liabilities assumed from Pervasis have been recorded at their preliminary fair values at the date of acquisition, being April 19, 2012. The Company's consolidated financial statements and results of operations include the results of the assets acquired and the liabilities assumed from Pervasis from April 19, 2012. The purchase price has been allocated on a preliminary basis to acquired IPR&D (principally for VASCUGEL) ($24.3 million), current liabilities assumed ($0.2 million) and goodwill ($2.0 million). Goodwill, which is not deductible for tax purposes, has been assigned to the RM operating segment.

 

Acquisition of Advanced BioHealing, Inc. (“ABH”)

 

On June 28, 2011 Shire completed its acquisition of 100% of the outstanding shares and other equity instruments of ABH. The fair value of cash consideration paid by the Company during 2011 was $739.6 million.

 

The acquisition of ABH was accounted for as a purchase business combination. The assets acquired and the liabilities assumed from ABH have been recorded at their fair values at the date of acquisition, being June 28, 2011. The determination of final fair values was completed on June 28, 2012. The determination of final fair values did not result in any adjustments to the preliminary purchase price allocation which was included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

The Company's consolidated financial statements and results of operations include the results of ABH from June 28, 2011. In the three months and nine months to September 30, 2012 the Company included revenues for ABH of $33.7 million and $134.9 million (2011: $50.0 million and $52.0 million) and pre-tax losses of $27.6 million and $53.2 million (2011: $5.4 million and $12.0 million) (after intangible asset amortization of $10.5 million and $30.3 million (2011: $9.8 million and $10.0 million)) respectively within its consolidated income statements.

 

In the three and nine months to September 30, 2012 the Company incurred costs of $1.1 million and $9.0 million (2011: $3.6 million and $10.5 million) respectively in respect of the acquisition and post-acquisition integration of ABH, which have been charged to Integration and acquisition costs in the Company's consolidated income statement.