Baxalta rejects drugmaker Shire’s approach
05 Aug 2015
Drugmaker Shire said yesterday that it was seeking to acquire Baxalta a company spun-off by Baxter International last month, for $30 billion to emerge as the leading global specialist in rare diseases.
The London-listed group publicly announced its approach after it was turned down by the US firm during private talks last month.
The offer was rejected by Baxalta yesterday which said in a statement that Shire's unsolicited offer significantly undervalued the company.
Shire's all-share offer valued Baxalta shares at $45.23 apiece at 3 August market prices.
Baxalta's shares at close were down 12 per cent at $37.10. Shire's stock fell around 6 per cent.
The Illinois-based firm, which has a workforce of around 16,000, develops biotech treatments for rare blood conditions, cancers and immune system disorders.
Baxalta reported a proforma revenue of $ 6 billion in 2014.
Baxalta offered Shire a promising range of new products to complement its expanding portfolio of high-priced treatments for rare or "orphan" diseases, according to analysts.
However, it was not certain that Shire, which itself was the target of a failed takeover by Illinois-based AbbVie in 2014, would succeed in its attempt (See: AbbVie calls off $55-bn acquisition of Shire over US tax rules).
"Shire may need to go hostile and success rates of pharma hostile bids are low," Reuters quoted Leerink analyst Jason Gerberry.
The all-stock offer valued each Baxalta share at a premium of 36 per cent over Baxalta's stock price on Tuesday, 3 August.
On receipt of the offer, Baxalta's board consulted its financial and legal advisors to review the proposal and, in a unanimous decision, rejected it.
"The board today reaffirmed its conclusion that Shire's proposal significantly undervalues Baxalta and its attractive prospects for growth and value creation, and that a merger at this time would be severely disruptive at this very early stage of Baxalta's existence as a public company and presents a significant and real risk to value creation for our shareholders," board chairman Wayne Hockmeyer said in a statement.
Baxalata CEO Ludwid Hantson, sent a letter to his counterpart Flemming Ornskov, saying that as a new, publicly-traded entity only since 1 July, Baxalta was in the initial stages of implementing its growth strategy as a standalone company and its stock had not yet achieved a price level that appropriately reflected its value and prospects.
According to Hantson, the combination was not strategically complementary and would not provide substantial operational or revenue synergies.
"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," he noted.
