Drugmaker Shire to buy Baxalta for $32 billion after six-month pursuit

Mon Jan 11, 2016 5:30pm EST
 
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By Ben Hirschler and Paul Sandle

LONDON (Reuters) - Drugmaker Shire Plc (SHP.L: Quote) clinched its six-month pursuit of Baxalta International Inc BXLT.N on Monday with an agreed $32 billion cash and stock offer, catapulting it to a leading position in treating rare diseases.

The London-listed group, which first approached the U.S. company with an all-stock offer in July, won over the maker of treatments for rare blood conditions, cancers and immune system disorders after adding a cash sweetener.

Shire's U.S.-traded shares (SHPG.O: Quote) fell 9 percent, however, as investors worry about a potential competitive threat from Roche ROG.VX to Baxalta's critically important haemophilia franchise, and on nerves over the price offered and a cost savings forecast that Jefferies analysts called "somewhat disappointing."

The deal marks a strong start to mergers and acquisitions in healthcare in 2016 after the sector had its biggest deal-making streak in history last year, with global transactions totaling $673 billion, according to Thomson Reuters data.

It also highlights the appeal of medicines for rare diseases targeting small groups of patients for which drugmakers can charge hundreds of thousands of dollars a year.

"Together we will have the number one platform in rare diseases with a strong foundation for future growth," Shire Chief Executive Officer Flemming Ornskov told reporters, after unveiling his company's most ambitious acquisition yet.

Shareholders will receive $18 in cash and 0.1482 Shire American depositary share per Baxalta share, implying a total value of $45.57 per share based on Jan. 8 prices. That is 37.5 percent above Baxalta's price on Aug. 3, before Shire went public with its interest.

Illinois-based Baxalta, which was spun off last year from Baxter International Inc (BAX.N: Quote), rejected Shire's previous $30 billion all-stock offer in August, arguing it significantly undervalued the company.   Continued...

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