Shire seen having to sweeten $30 billion offer to win Baxalta

Wed Aug 5, 2015 9:01am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Nishant Kumar and Ben Hirschler

LONDON (Reuters) - Shire Chief Executive Flemming Ornskov will need to dig deeper in his pocket if he wants to win U.S. biotech company Baxalta.

The Danish doctor running the London-listed drugmaker from offices in Massachusetts is not taking the easy option with his $30 billion run at Baxalta.

Rather than selling out at a premium to a bigger drugmaker, as many investors thought Shire might do, Ornskov is embarking on a risky battle to create the world's leading rare diseases specialist.

The transaction could vault Shire into the top 20 global drugmakers by sales, but hazards include Baxalta's formidable anti-takeover defenses, as well as the risk that new science could upend the haemophilia market, which accounts for over half its revenue.

With a "poison pill" defense against unwanted suitors, a hard-to-replace board featuring staggered directors' terms and a block on shareholders calling special meetings, investors see a negotiated deal as the only realistic way forward.

And that will likely mean sweetening the current unsolicited all-share offer, worth $45.23 a share at Aug. 3 market prices, which Baxalta argued "significantly undervalues" its newly listed business.

"You know that they (Shire) will have to increase and you know that any increase has to be substantial,” said one fund manager with a stake in Baxalta. "You've also got the potential of somebody else coming in."

He believes Shire's next move would have to involve an offer above $50 a share.   Continued...

Ludwig Hantson (C), Chief Executive Officer of Baxalta, celebrates the company's IPO after ringing the opening bell above the floor of the New York Stock Exchange, July 1, 2015.   REUTERS/Lucas Jackson