Shire share price recovers as Baxalta rebuffs unsolicited tie-up bid

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 5, 2015
Updated: Apr 9, 2020

Shares in Shire Plc (LON:SHP) have recovered this morning, having posted a hefty drop yesterday, in the wake of the pharmco’s unsolicited takeover approach to US rival Baxalta (NYSE:BXLT) which yesterday said that the $45.23-per-share offer undervalued the company. The London-listed rare disease specialist meanwhile said that it would initiate a share buyback programme if the deal goes through.

As of 08:51 BST, Shire’s share price had added 1.11 percent to 5,455.00p, having closed more than five percent lower yesterday. The shares are outperforming the blue-chip FTSE 100 index which has inched marginally into positive territory. Shares in Baxalta, which was recently listed on the NYSE, jumped more than 12 percent in yesterday’s trading.
Shire, itself a former takeover target, yesterday announced to the London Stock Exchange that it had approached Baxalta with an all-stock merger proposal on July 10 which the US group had rejected, with the move prompting the London-listed group to turn to Baxalta’s shareholders. The US rare disease group confirmed in a separate statement that it had received Shire’s July proposal and had determined that it was not in the best interests of the company and its shareholders.

“The Board today reaffirmed its conclusion that Shire’s proposal significantly undervalues Baxalta and its attractive prospects for growth and value creation,” the US group’s chair Wayne T. Hockmeyer said in the statement, adding that “a merger at this time would be severely disruptive”.
Shire, whose merger with US pharma giant AbbVie Inc (NYSE:ABBV) collapsed less than a year ago, argues that the tie-up with Baxalta would generate $20 billion in product sales by 2020. Reuters yesterday quoted Shire’s chief executive Flemming Ornskov as telling analysts that he expected to launch a $10 billion share buyback after any deal closes. The Dane, however, declined to talk about tactics on Baxalta or discuss whether he was prepared to go hostile.
As of 09:35 BST, Wednesday, 05 August, Shire PLC share price is 5,452.50p.

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