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January 11, 2016

Shire agrees to acquire Baxalta for $32bn

Irish drugmaker Shire has entered into an agreement to acquire US-based biopharmaceutical firm Baxalta in a deal worth approximately $32bn.

Shire

Irish drugmaker Shire has entered into an agreement to acquire US-based biopharmaceutical firm Baxalta in a deal worth approximately $32bn.

The transaction, which is expected to be completed in mid-2016, will create a global biotechnology company focused on rare diseases as well as provide a foundation for haematology and oncology business.

The combined company will focus on immunology; neuroscience; lysosomal storage diseases; gastrointestinal / endocrine; and hereditary angioedema (HAE).

As part of the deal, Baxalta shareholders will receive $18 in cash for each share and 0.1482 Shire American depositary shares.

Baxalta CEO Ludwig Hantson said: "This transaction presents a unique opportunity for Baxalta shareholders, who will receive substantial immediate value as well as an ongoing stake in a combined global leader in rare diseases with strong growth prospects.

"We bring to Shire a strong portfolio and pipeline of market-leading products, high-quality manufacturing capabilities and a talented global workforce that places patients at the centre of everything we do.

"The combined organisation will be well positioned to accelerate innovation and deliver enhanced value for all stakeholders."

Following completion of the transaction, Baxalta holders will have a 34% interest in the combined company.

Shire CEO Flemming Ornskov said: "Together, we will have leadership positions in multiple, high-value franchises and become the clear partner of choice in rare diseases.

"Our expanded portfolio and presence in more than 100 countries will drive our growth to more than $20bn in anticipated annual revenues by 2020."

The combined company will have an extended range of therapeutic areas with more than 60 programmes in development, including more than 50 that will address rare diseases and several newly-approved products of Baxalta, including Adynovate, Vonvendi and Obizur.

Shire anticipates over 30% and planned product launches from the combined pipeline, contributing about $5bn in annual revenues by 2020.

"Our expanded portfolio and presence in more than 100 countries will drive our growth to more than $20bn in anticipated annual revenues by 2020."

The merger is expected to generate annual cost savings of more than $500m within the first three years.

Warwick Business School professor of Practice in the Entrepreneurship and Innovation Group John Lyon said: "It is always good to see deals that make good strategic sense and this is one of them.

"Shire has set out its future as a global leader in rare diseases and this deal augments that strategy with Baxalta, another specialist in rare diseases, having expertise in bleeding disorders, immunology and oncology.

"The deal is hardly a surprise. Last year Shire sought a deal as a stock purchase and were rebuffed. In the courting process, they put forward an improved offer with a 40% cash component, increasing the value from $45 per share to $48 per share."


Image: Shire location in Lexington Massachusetts, US. Photo: courtesy of John Phelan.

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