Shire goes public with rejected $30bn Baxalta bid
pharmafile | August 5, 2015 | News story | Research and Development, Sales and Marketing | Baxalta, Shire, acquisitions, baxter, mergers, rare disease
Shire has confirmed that it made an all-share $30 billion offer to buy Baxalta last month, citing ’a strong strategic fit’ and the potential of a merger to ‘deliver immediate value creation’.
The initial approach was rejected by Illinois-based Baxalta, a recent spin-off from Baxter, which has so far declined to engage in discussions. Baxalta employs some 16,000 people and seeks to advance innovative therapies in haematology, immunology, and oncology.
The proposal is the latest in a surge of merger and acquisition activity in the pharma industry throughout 2015, including Shire’s attempted £12 billion move for Swiss firm Actelion, a $70 million purchase of Meritage Pharma, and $5.2 billion transaction for rare disease firm NPS Pharma.
Dublin-based Shire – which itself fended off a $52 billion takeover by AbbVie in 2014 – said the proposed combination would create the global biotech leader in rare diseases, while generating immediate shareholder value and accelerating the growth plans of both companies.
But Baxalta’s board claimed the offer ’seriously undervalued’ the company and that a merger at such an early stage of its existence would be ‘severely disruptive’.
The $45.23 per share offer would however represent a 36% premium over Baxalta’s stock price on 3 August. Shire said the offer would value Baxalta at $33.9bn, including debt, and that Baxalta shareholders would own approximately 37% of the combined Shire group.
Together, Baxalta and Shire are projected to deliver product sales of $20 billion in 2020, and the latter believes the combined entity would have the financial muscle to “bringing innovative new therapies to market for patients with rare, often life-threatening, diseases and conditions.”
Shire chief executive Flemming Ornskov says it is his ‘strong preference’ to press on and try and find an agreement with the Baxalta board. While Susan Kilsby, chair of the Shire board, adds: “We urge Baxalta to engage with us to create a stronger combined company that will benefit all of our stakeholders.”
Baxalta began trading 1 July 2015 and in responding to Ornskov’s letter, Baxalta chief executive and president Ludwig Hantson said it is far too soon for the company to entertain takeover offers.
“As a new, publicly-traded entity only since July 1, we are just in the initial stages of implementing our growth strategy as a standalone company and our stock has not yet achieved a price level that appropriately reflects the company’s value and prospects. A transaction at the exchange ratio you proposed significantly understates Baxalta’s true value.
“Moreover, we do not believe that a combination of our two companies would be strategically complementary, or that our respective product portfolios would benefit from such a combination. And we do not think the combination would generate substantial operational or revenue synergies, which would be critical to any potential value creation for our shareholders.
“Perhaps even more importantly, a transaction at this time would be severely disruptive to our young organisation and the implementation of a wide variety of critical commercial, R&D, and operational initiatives and thus carries with it significant risks for our shareholders.”
The letter concludes: “We are confident in our standalone plan and our ability to generate significant shareholder value based on that plan. Our board has evaluated your proposal and concluded that it is not a basis for further discussion.”
Joel Levy
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