Shire has won over Baxalta by adding cash to sweeten a takeover bid worth about $32bn in a deal that will create the world’s biggest maker of drugs for rare diseases.
The price includes 0.1482 of Shire’s American depositary receipts and $18 in cash for each Baxalta share held, the companies said in a joint statement.
Baxalta had rebuffed an unsolicited $30bn all-stock bid that valued it at $45.23 a share in July. Shire shares fell to the lowest in 15 months in London trading.
The planned acquisition boosts Dublin-based Shire’s position in the market for rare-disease treatments, which will grow by more than 60pc over the next five years to $176bn, according to market researcher EvaluatePharma. The combined company would generate more than $20bn in sales by 2020.
Like Pfizer’s planned acquisition of Allergan – also based in Dublin – the deal highlights the role played by Ireland has a residence and tax base for a range of major global businesses.
More than half of the 20 biggest “Irish” companies are multinationals with roots outside Ireland.
Buying Baxalta will give Shire a dominant position in providing treatments for haemophilia, a disorder that affects only about 20,000 people in the US.
Baxalta’s drug Advate, for haemophilia A, can cost $200,000 to $500,000 a year and is covered by American insurers. That would add to Shire’s collection of rare-disease drugs, which includes Cinryze for an inflammatory disease. Cinryze is among Shire’s best-sellers and one of the most expensive medicines in the world, costing as much as $630,000 a year.
Baxalta will benefit from a lower tax rate by being taken over by Shire, which has a Dublin legal address despite keeping many operations elsewhere. US-based Baxalta had projected a tax rate of 23pc in 2016. A combination would yield an effective tax rate of 16pc to 17pc by 2017, Shire said.
Shares of Baxalta rose 1.3pc to $40.54 yesterday in New York trading. The stock has climbed 21pc since it was spun off from Baxter only last June. Shire declined 5.2pc to 4,056 pence, the lowest since October 2014.
The value of the offer represents a premium of about 38pc to Baxalta’s share price on August 3, the day before the announcement of Shire’s initial offer. The transaction is expected to close mid-2016, and will leave Baxalta holders owning about 34pc of the enlarged company. Shire expects to save more than $500m in annual costs following the transaction, which is likely to add to non-GAAP earnings starting in 2017, the companies said.
Shire chief executive Flemming Ornskov said the company is confident the deal would preserve the tax-free status of the spin-off from Baxter for shareholders. The company consulted with both Baxalta and Baxter in addition to legal counsel to ensure it, Mark Enyedy, head of corporate development, said in a call with analysts yesterday. Shire has been bulking up following AbbVie’s abandoned $52bn buyout of the company last year.
The deals also lessen the company’s dependence on treatments for attention-deficit and hyperactivity disorder, such as Vyvanse, its best-selling drug.
Shire is registered in Jersey and based for tax purposes in Ireland. Its primary stock listing is in the UK, while Flemming Ornskov and most other top executives are based in Lexington, Massachusetts.
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