London-listed drugmaker Shire is seeking to buy Baxalta, a company spun-off by Baxter International last month, for US$30 billion to forge the leading global specialist in rare diseases.
The Dublin-based group went public with its approach after the US firm turned it down during private talks last month.
Baxalta rebuffed the offer on Tuesday and said in a statement that Shire’s unsolicited offer significantly undervalued the company.
Shire’s all-share offer values each Baxalta share at US$45.23, based on Aug. 3 market prices. Baxalta’s shares closed up nearly 12 percent at US$37.10. Shire’s stock closed down about 6 percent.
The Illinois-based firm, which has a staff of around 16,000, develops biotech treatments for rare blood conditions, cancers and immune system disorders. It had proforma revenue of US$6 billion in 2014.
Baxalta offers Shire a promising range of new products to complement its growing portfolio of high-priced treatments for rare or “orphan” diseases, analysts said. But there is no guarantee that Shire, itself the target of a failed takeover in 2014, will land its prey.
“Shire may need to go hostile and success rates of pharma hostile bids are low,” said Leerink analyst Jason Gerberry.
Shire said it would create an unrivalled rare diseases champion with product sales of around US$20 billion by 2020 and double-digit percent annual sales growth.
The move is the latest in a wave of mergers and acquisitions in the healthcare sector since the start of 2014, stretching from large drugmakers buying up smaller rivals to consolidation among makers of generic medicines and tie-ups between insurers.
Shire’s offer of 0.1687 Shire American depositary receipts per share, which represents a premium of 36 percent over Baxalta’s stock price on Aug. 3, would give the US firm’s shareholders about 37 percent of the combined group.
Shire chief executive Flemming Ornskov said he had gone public with its plan, which it first proposed privately last month, after Baxalta’s board declined to engage in substantive discussions.
He declined to talk about tactics on Baxalta or discuss whether he was prepared to go hostile, but said the deal offered both tax and revenue synergies and would be good for both sets of shareholders.
Ornskov said he had tried to engage with Baxalta CEO Ludwig Hantson since early July. Apart from a brief “cordial” meeting on July 10, however, there had been no meaningful interaction, he added.
“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,” the Shire boss wrote in an Aug. 4 letter to Hantson.
Ornskov, who expects to launch a US$10 billion share buyback after any deal closes, added that it remained his strong preference to reach a negotiated agreement.
Meanwhile, US drugmaker Pfizer gained European Union antitrust approval for its proposed US$15 billion acquisition of US rival Hospira after pledging to sell some drugs to allay competition concerns.
The deal will boost Pfizer’s portfolio of generic injectable drugs and copies of biotech medicines, the report said.
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