Another year, another round of mega-mergers for the pharmaceuticals and biotechnology sector. This time it’s specialty pharma group Shire (SHP) which, just over a year ago, was on the brink of being taken over itself by US group AbbVie (US:ABBV). Having successfully turned the tables, it now plans to bag US biotech Baxalta (US:BXLT) in a deal worth $32bn (£22bn).
This deal hasn’t come out of the blue. Shire first made its interest in Baxalta known last year. An offer was rejected by Baxalta bosses in July, forcing Shire to turn hostile in August with a renewed all-stock offer worth $45.23 (£30.86) a share, equating to a total deal value of $30bn. However, this offer didn’t pass mustard with Baxalta shareholders who have since demanded a cash portion to sweeten the deal.
It seems Shire’s management has acquiesced. The agreed terms will see Baxalta shareholders receive $18.00 in cash and 0.1482 Shire American Depository Shares (ADS) per Baxalta share, a total value of $45.57 per Baxalta share. The offer represents a total deal value of $32bn and represents a 37.5 per cent premium over Baxalta’s share price on 3 August 2015, prior to Shire’s initial announcement.
Together the two companies will create the world’s largest pharma company focused on developing drugs for rare diseases. Shire reckons it could launch up to 30 new products from the combined development pipeline, which would add $5bn to the top line by 2020.
