Daily Management Review

Following a Six Month Pursuit Drugmaker Shire wins Baxalta for $32 billion


After an agreed $32 billion cash and stock offer, catapulting it to a leading position in treating rare diseases, drug maker Shire Plc clinched its six-month pursuit of Baxalta International Inc on Monday.
After adding a cash sweetener, the U.S. firm that makes medicines and treatments for rare blood conditions, cancers and immune system disorders was won over by the London-listed group after having first approached the US firm with an all-stock offer in July.
In 2015, the global healthcare industry had its biggest deal-making streak in history and the deal marks a strong start to mergers and acquisitions in the sector in 2016. In 2015 the global mergers and acquisitions in the sector totaled $673 billion, according to Thomson Reuters data.
The merger also exemplifies how drug companies try to use the medicines for rare diseases and targeting small groups of patients for which drug companies can charge prices running into 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.
With an implied total value of $45.57 per share based on Jan. 8 prices, shareholders will receive $18 in cash and 0.1482 Shire American depositary shares per Baxalta share.
The price is 37.5 percent above Baxalta's price on Aug. 3, beforeShire went public with its interest.
The previous bid of $30 billion all-stock offer in August by Shire was rejected by Bannockburn Illinois-based Baxalta which was spun off last year from Baxter International. The argument for the rejection was that the offer had significantly undervalued the company.
However by meeting with Baxalta's major shareholders over a period of months, Ornskov relentlessly pursued Baxalta and sought to pressure it into agreeing to a deal.
These measures helped it to avoid the complexities of a hostile deal that would have included a "poison pill" that stopped unwanted suitors from buying more than 10 percent of the company and created a hard-to-replace board.
Due to the nervousness over the price offered Shire prices fell by 4 % while the shares in Baxalta rose just under 2 percent to $40.70 in early New York trade on confirmation of the deal.
Due to concerns a cash element might jeopardize the tax-free status of Baxalta's spin-off from Baxter, Shire had initially offered only stock for the deal. The tax free status would be able to be maintained said a confident Ornskov.
The companies together expected to deliver double-digit sales growth with more than $20 billion in annual revenues by 2020, the companies said.
Shire said it expected the transaction to boost non-GAAP diluted earnings from 2017 with annual operating cost synergies of over $500 million, additional revenue synergies and tax benefits from Shire's Irish domicile.
Even as the merger brings a strong position in haemophilia treatments to Shire from Baxalta, the business also faces challenges due to Roche Holding AG is developing a promising haemophilia antibody.
Baxalta could actually dilute Shire earnings from 2019 to 2023 before being accretive again from 2024 due to the threat from Roche's product ACE910, said UBS analysts.


Science & Technology

NASA’s Mars Mission To Make Use Of Cold War-Era Atomic Rockets

Israel Completes Mars Habitat Simulation Experiment

Just $24 Earned By Hackers From The Huge Cryptojacking Campaign Conducted Last Week

New Molecule That Quickly Fights Cancer Cells Identified By Swedish Scientists

The U.K.’s Health Sector To Integrate Israeli ‘Digital Health’ Technology

Cryptocurrency Mining Malware Infects Government Websites In Multiple Countries All Across The World

New Research Into Space Settlement And Space Habitation Will Be Supported By Seed Grants Launched By UAE

NASA Confirms Mystery Satellite To Be Its IMAGE Satellite

Facebook To Put A Ban On Cryptocurrencies Ads

Study Show An Early Sign For Alzheimer's Is Sleep Disruption

World Politics

World & Politics

Australia To Welcome Britain On The Latter’s Interest In Joining TPP

South African President Zuma Finally Resigns, New President To Be Elected Soon

13 countries with the best healthcare system

France is coming closer to Iran

India-Russia Develops Supersonic Missile Which Could Raise Concerns In China

Yet another serious political risk for Europe: Italian elections coming soon

Seven Weeks Time Period , Says Theresa May, For Agreement On Brexit Transition Deal

Germany on the brink of political chaos