November 24, 2015 / 8:24 PM / in 2 years

Exclusive: Shire prepares to make new bid for Baxalta - source

A sign sits in front of Shire's manufacturing facility in Lexington, Massachusetts July 18, 2014. REUTERS/Brian Snyder

ZURICH/LONDON (Reuters) - Drugmaker Shire (SHP.L) is preparing to make a new takeover offer for U.S. biotech firm Baxalta BXLT.N that if successful will create one of the world’s leading specialists in rare diseases, a source with direct knowledge of the situation said on Tuesday. The London-listed group has asked its advisers to renew its bid effort, the source said, almost four months after Baxalta rejected an unsolicited $30 billion offer that it said significantly undervalued the company.

Shire’s bid preparations come three weeks after it announced its $5.9 billion purchase of U.S. rare disease specialist Dyax Corp DYAX.O.

Shire is working with Morgan Stanley (MS.N), Evercore (EVR.N) and Deutsche Bank (DBKGn.DE) on the offer which could be structured in cash and shares, the source said, cautioning that no deal was certain and negotiations could still fall through. A spokesman at Shire declined to comment while Baxalta had no immediate comment. Morgan Stanley, Evercore and Deutsche Bank declined to comment.

Baxalta, which has a market capitalisation of $22.7 billion, would help complement Shire’s growing portfolio of high-priced treatments for rare or “orphan” diseases.

Baxalta’s shares rose to an intra-day high of $37.50, up more than 10 percent, after the Reuters report, before trimming gains to $35.67 at 2105 GMT(1605 ET). On Aug. 3 Shire valued each Baxalta share at $45.23.

If it goes ahead, the deal will create a rare diseases company with product sales of around $20 billion by 2020 and double-digit percent annual sales growth.

Shire Chief Executive Flemming Ornskov has relentlessly pursued a merger with Baxalta for the past six months, the source said. 

“He’s never given up,” the source said, adding that Shire is keen to buy Baxalta to deliver on its goal of doubling its revenue in the next few years.On Nov. 2 Ornskov said the acquisition of Dyax had not compromised Shire’s ability to pursue a bid for Baxalta.

“Even with this transaction, we will continue to have the financial firepower to pursue other value-added strategic acquisitions, including Baxalta,” he said at the time.

Baxalta, advised by Goldman Sachs, said Shire’s bid did not reflect its potential as a newly listed company which expects its shares to rise as it becomes better known. The biotech firm was spun off by Baxter International (BAX.N) in July.

Baxalta develops biotech treatments for rare blood conditions, cancers and immune system disorders. It employs 16,000 people and had proforma revenue of $6 billion in 2014.

The transaction, however, faces several hurdles mainly due to Baxalta’s state-of-the-art takeover defences, with a “poison pill” that effectively stops unwanted suitors buying more than 10 percent of the company and a hard-to-replace board.

Additional reporting by Carl O'Donnell in New York and Paul Sandle in London; editing by Susan Thomas

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