Shire makes hostile all-stock US$30bn bid for Baxalta

Shire is proposing to make a hostile US$30bn all-stock takeover bid for Baxalta, the US drugmaker recently spun out from Baxter International.

Shire said Baxalta, based in Illinois and a developer of treatments for rare blood conditions, cancer and immune system illnesses, has declined to engage in substantive discussions regarding the proposal.

Dublin-based Shire said the proposed combination would generate immediate shareholder value and accelerate the growth plans of both Shire and Baxalta. The combined entity would be the global leader in rare diseases with multiple billion-dollar franchises in high-value therapeutic areas with substantial barriers to entry. Together, the companies are projected to deliver product sales of $20bn in 2020.

Under its proposed offer Shire would own 63% of the combined group and Baxalta shareholders 37%.

The $45.23 per share unsolicited offer would represent a 36% premium over Baxalta’s stock price on 3 August.

We believe the proposed combination of Shire and Baxalta would be strategically and financially attractive for both of our companies

Flemming Ornskov, Chief Executive of Shire said: 'We believe the proposed combination of Shire and Baxalta would be strategically and financially attractive for both of our companies, accelerating our respective growth ambitions and creating the leading global biotech company in rare diseases.'

In an open letter to Ludwig Hantson, President and Chief Executive of Baxalta, Ornskov said he was surprised by the company's refusal to engage with Shire other than a brief meeting on 10 July.

'On 31 July, weeks after receiving our written proposal and without any meaningful interaction, you stated that you had concluded it was not a basis for discussions. As a result, you have left us with no choice but to make our proposal known to your shareholders. We believe they deserve an opportunity to consider it,' he wrote.

In reponse, Baxalta said today (5 August) that the proposal is not in the best interests of Baxalta or its shareholders.

Wayne Hockmeyer, Chairman of Baxalta, said: 'The Board today reaffirmed its conclusion that Shire’s proposal significantly undervalues Baxalta and its attractive prospects for growth and value creation, and that a merger at this time would be severely disruptive at this very early stage of Baxalta’s existence as a public company and presents a significant and real risk to value creation for our shareholders.'