Based on Shire’s closing American depositary share price Friday, the deal implies a total current value of $45.57 per Baxalta share.
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Flemming Ornskov, chief executive of Shire, said the deal “allows us to realize our vision of building the leading biotechnology company focused on rare diseases”.
While news last week suggested that Shire was seeking assurances that the tax-free status of Baxalta’s spin-off from United States medical group Baxter previous year would not be jeopardised by a cash payment, the sources noted that the UK group’s tax concerns had now been resolved to the satisfaction of both parties.
Baxalta shareholders will wind up owning about 34 percent of the combined company under the latest proposal.
Baxalta develops treatments for rare blood conditions, cancers and immune system disorders.
The agreed deal, increased with a large cash element, is the latest takeover in the pharmaceuticals industry as companies with older drugs seek to acquire the next generation of profitable medicines.
The offer price compares with Baxalta’s price of US$32.58 on August 3, before Shire went public with its interest in the company.
The combined portfolio will house more than 60 programs in development, including over 50 that will address rare diseases, and Shire anticipates more than 30 recent and planned product launches from the combined pipeline, contributing around $5 billion in annual revenues by 2020.
Baxalta brings Shire a strong position in haemophilia treatments, although this business also faces challenges, since Roche Holding AG is developing a promising haemophilia antibody.
With annual operating cost synergies of over US$500 million, additional revenue synergies and tax benefits from Shire’s Irish domicile, Shire said it expected the transaction to boost non-GAAP diluted earnings from 2017. That would add to Shire’s collection of rare-disease drugs, which includes Cinryze for an inflammatory disease.
“Together, Shire and Baxalta create a platform for sustainable innovation, growth and value creation”, said Shire’s chair Susan Kilsby. He bought NPS Pharmaceuticals for $5.2 billion in February and Dyax for $5.9 billion in November.
Says Shire has secured an $18 billion fully underwritten bank facility to finance combination. Ropes & Gray, Cravath, Swaine, & Moore? and Slaughter and May were the legal advisers to Shire, while Kirkland & Ellis acted as transaction counsel and Jones Day was regulatory counsel to Baxalta.?Morgan Stanley and Barclays are also providing financing for the transaction.
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Goldman Sachs and Citi are acting as financial advisors to Baxalta.
