Shire share price slumps after unsolicited $30bn bid for Baxalta

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Aug 4, 2015
Updated: Oct 21, 2019

Shares in Shire Plc (LON:SHP) have lost more than four percent in afternoon trade in London today as the rare disease specialist proposed a $30-billion (£19 billion) tie-up with US biopharma group Baxalta Inc (NYSE:BXLT), spun out of Baxter International last month. The move, which highlights the ongoing consolidation in the pharmaceuticals industry, comes less than a year after the collapse of Shire’s merger with US pharma giant AbbVie (NYSE:ABBV).

Investors have reacted negatively to the news, with Shire’s share price having shed 4.45 percent to 5,475.00p as of 12:59 BST. The shares fell nearly eight percent immediately after the announcement.
Shire confirmed in a statement to the London Stock Exchange that it had approached Baxalta with an all-stock merger proposal on July 10, with the offer valuing the US company at $45.23 per share. The London-listed pharma group, however, noted that Baxalta had “declined to engage in substantive discussions” regarding the tie-up. Shire said today that the proposed $30-billion transaction was expected to generate double-digit top-line growth and result in $20 billion in product sales by 2020.

“We believe the proposed combination of Shire and Baxalta would be strategically and financially attractive for both of our companies, accelerating our respective growth ambitions and creating the leading global biotech company in rare diseases,” Shire’s chief executive Flemming Ornskov commented in the statement.
“Your lack of engagement has been surprising,” Ornskov said in a letter to his counterpart at Baxalta, Ludwig N. Hantson. “As a result, you have left us with no choice but to make our proposal known to your shareholders. We believe they deserve an opportunity to consider it.” Shire added that under the proposed deal, shareholders in the US group would hold about 37 percent of the enlarged company. Baxalta had not issued a statement at the time of writing.
The move comes after Shire yesterday inked a deal to acquire New York-based, privately held Foresight Biotherapeutics Inc for $300 million, whose assets include a therapy in late-stage development for the treatment of infectious conjunctivitis. The London-listed group has been on an acquisition spree in the past few months, having snapped up NPS Pharmaceuticals and Meritage Pharma earlier this year.
As of 14:15 BST, Tuesday, 04 August, Shire PLC share price is 5,502.50p.

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