Sector News

Deal-minded Shire offers $30B for new spinoff Baxalta in public bid

August 4, 2015
Life sciences
It didn’t take long for Baxalta, the biopharma company spun off from parent Baxter Laboratories early last month, to draw takeover interest. As Shire announced on Tuesday, it put forth a bid of about $30 billion for the Illinois pharma on July 10–just 9 days after Baxalta went solo–and now it’s taking the offer to shareholders to spur the company to the bargaining table.
 
The Irish pharma last month offered up $45.23 per Baxalta share–a 36% premium over its target’s Monday stock price, it said.
 
To Shire, the logic of its proposal is clear. A tie-up between the two companies would generate $20 billion in sales by 2020, it figures, with projected double-digit top-line growth. Adding Baxalta’s hemophilia drugs to Shire’s growing rare disease portfolio would also create an industry leader in rare diseases, a quickly expanding field with high barriers to entry, Shire said.
 
“The combined entity would have the opportunity to create significant shareholder value in one of the most attractive and fastest growing segments in healthcare,” CEO Flemming Ornskov said in a statement.
 
Joining hands with Dublin-based Shire would lower Baxalta’s tax rate, too–and on top of that, Shire will structure the pickup as an all-stock transaction so that the Baxalta shareholders can hang onto the spinoff’s tax-free status.
 
Baxalta’s execs, though, haven’t shown the same enthusiasm for a deal, and as Ornskov wrote in a letter to company CEO Ludwig Hantson, their “lack of engagement has been surprising.” Following a July 10 meeting–at which Shire’s leaders outlined their vision–Baxalta said it saw no “basis for discussions,” leaving Shire with “no choice” but to take its offer public.
 
Shire itself may understand what Baxalta is going through after a pursuit from AbbVie ($ABBV) last year. The Dublin drugmaker turned down multiple offers from the Abbott spinoff before finally settling on a $55 billion agreement, only to see that deal fall through months later on new, stricter U.S. rules on tax inversions.
 
Since then, though, it’s been all buys for Ornskov’s company. In January, it inked a pact to buy GI specialist NPS Pharma, and earlier this week it agreed to nab pinkeye drug developer Foresight Biotherapeutics for $300 million.
 
By Carly Helfand
 

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