Shire offers $30B for Baxalta

August 05 01:08 2015

Ireland-based pharmaceutical giant Shire PLC (SHPG) Tuesday announced an unsolicited $30 billion all-stock offer for U.S. biotech rival Baxalta (BXLT). The transaction, the latest in a continuing wave of pharma mergers and acquisitions, would create the leading global biotech company focused on rare diseases, Shire said.XXX 20140708_UK-SHIRE-PLC_APS_155.JPG I FIN GBR

The proposed deal represents a strong strategic fit that would generate an estimated $20 billion in product sales by 2020, Shire said. The companies have the industry’s largest rare diseases portfolio, with more than 50 projects. The announcement sent Baxalta shares up 11.68% to $37.02 in trading shortly after U.S. financial markets opened. Shire shares were down 4.41% at $256.27 in morning trading.

Baxalta investors would receive 0.1687 of Shire’s American Depositary Receipts for each share they hold in the Bannockburn, Ill.-based biotech company whose spin off from Baxter International (BAX) was completed last month.The proposal implies a value of $45.23 for each Baxalta share and represents a 36% premium over the company’s stock price as of Aug. 3, Shire said. Baxalta shareholders would own approximately 37% of the combined Shire group if the transaction were approved.

However, Baxalta has declined to engage in substantive discussions regarding the proposal. Shire released copies of a letter sent Tuesday to Baxalta President and CEO Ludwig Hantson that characterized the “lack of engagement” as “surprising.” Hantson notified Shire on July 31 that the takeover proposal “was not a basis for discussions,” the letter said. The proposed deal comes nearly 10 months after U.S. biopharmaceutical firm AbbVie scrapped its planned $55 billion merger with Shire. The decision came after the U.S. Department of the Treasury adopted new rules to make so-called corporate tax inversions — deals in which a U.S. company shifts its headquarters overseas to help cut its future tax bills — less profitable and harder to complete.