4th Aug 2015 11:54
LONDON (Alliance News) - Shire PLC on Tuesday said it proposed an all-share merger with US biotechnology company Baxalta Inc in a deal valued at around USD30 billion in July, but said the board of Baxalta refused to enter into talks, forcing it to take the bid hostile and go straight to Baxalta shareholders.
The FTSE 100-listed pharmaceutical company said that under the terms of its proposal, Baxalta shareholders would receive 0.1687 Shire American Depositary Receipts with a value of USD45.23, representing a 36% premium to Baxalta's closing share price on Monday. Should the merger go through, Baxalta shareholders would own 37% of the combined company.
Following closing of the deal, Shire said it will kick off a share buyback to repurchase, within two years, up to 13% of the combined post-transaction shares outstanding.
Shire said Baxalta declined to engage in talks with Shire on the proposal, and Shire has urged the company to enter into substantive talks by moving to take the offer directly to Baxalta shareholders.
Shire said the deal would create a company with more than 30 planned product launches and the largest rare diseases portfolio in the industry. It said it would target USD20 billion in annual product sales by 2020, should the merger be considered.
"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," said Flemming Ornskov, Shire's chief executive.
Shire shares dropped after news of the proposal was released Tuesday afternoon, down 4.2% to 5,490.00 pence to be the worst performer in the FTSE 100.
Ornskov, in a letter sent to Baxalta President and Chief Executive Ludwig Hantson, said Shire had decided to take the merger offer directly to Baxalta shareholders after the board of Baxalta showed a "surprising" lack of engagement, arguing it thinks the target company's shareholders "deserve an opportunity to consider it."
"Given the substantial value represented by our proposal and the compelling benefits of a combination, we urge you to engage with us without any further delay," Ornskov wrote to Hantson.
By Sam Unsted; [email protected]; @SamUAtAlliance
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