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Shire Finalizes Deal To Acquire Baxalta For $32 Billion

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Merger

The merger will allow Shire CEO Dr. Flemming Ornskov to make good on his promise to investors to orchestrate a big merger.

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January 12, 2016 | by Sarah Massey, M.Sc.

After six months of negotiations, Shire has finally announced they’ve reached an agreement to acquire Baxalta for $32 billion. The merger will allow Shire CEO Dr. Flemming Ornskov to make good on his promise to investors to orchestrate a big merger.

Shire is set to pay $18 per share – with additional stock – in a deal that values Baxalta stock at $45.57 a share. Shire originally approached Baxalta about a potential merger in July of 2015.

“This proposed combination allows us to realize our vision of building the leading biotechnology company focused on rare diseases,” said Ornskov. “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 over $20 billion in anticipated annual revenues by 2020. Our due diligence has reinforced our belief in the combination, and we look forward to welcoming Baxalta colleagues to a shared entrepreneurial, patient-driven culture.”

With the deal comes a number of new disease areas – including neuroscience, immunology, hematology and lysosomal storage disease – for Shire to add to their pipeline. The merged companies will focus on rare diseases – an area that will bring in 65 percent of the company’s revenue. Once the acquisition has gone through, Shire anticipates it will be able to free-up over $500 million over the next three years.



Ornskov’s original offer to Baxalta was made in early August of last year, kicking off a six month courtship to acquire the biopharmaceutical company. His patience paid off when Baxalta accepted his $32 billion proposal – only $2 billion more of Shire’s original $30 billion offer.

Baxalta separated from Baxter last summer and since then, has been making deals with a number of other organizations. Baxalta signed a $1.6 billion collaboration with Symphogen to develop a cancer drug targeting immune checkpoints.

“Today's announcement marks a new path forward for our organization and is a testament to the significant progress we have made in achieving our strategic business priorities,” said CEO of Baxalta, Dr. Ludwig N. Hantson. “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 center of everything we do. The combined organization will be well positioned to accelerate innovation and deliver enhanced value for all stakeholders.”

The acquisition kicks off 2016’s mergers and acquisitions (M&A) in the biopharma industry. With the Pfizer/Allergan merger still pending, the year is set to be a big one for M&A.

Sources:

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Keywords: Biotechnology, Shire, Baxalta


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