Shire’s $30 Billion Baxalta Bid

REUTERS: London |

Drugmaker Shire (SHP.L) said on Tuesday it was seeking to buy Baxalta (BXLT.N), a company spun-off by Baxter International (BAX.N) last month, for $30 billion to forge the leading global specialist in rare diseases.

The London-listed group went public with its approach after the U.S. firm turned it down. Shire said its unsolicited all-share offer valued each Baxalta share at $45.23, based on Aug. 3 market prices. Shares in Baxalta had jumped 17 percent to $38.76 by around midday in New York.

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 $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 $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 U.S. 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.

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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 $10 billion share buyback after any deal closes, added that it remained his strong preference to reach a negotiated agreement.

Officials at Baxalta went no further than confirming it had received “an unsolicited conditional proposal”.

Dublin-based Shire, whose shares were down around 6 percent on the news, has a long history of acquisitions and only on Monday agreed to buy private eye drug company Foresight Biotherapeutics for $300 million.

Other notable deals include buying New River Pharmaceuticals for $2.3 billion in 2007, Viropharma in 2013 for $4.2 billion and NPS Pharma for $5.2 billion this year.

Last year Shire itself was the target of a failed $50 billion takeover attempt by AbbVie (ABBV.N), since when its shares have risen to a premium to AbbVie’s offer on growing optimism for its line-up of high-priced niche medicines.

The AbbVie deal unraveled after the U.S. government changed the rules on American companies domiciling overseas to take advantage of lower corporate tax rates.

Shire is, however, using its relatively low tax status as a selling point on this new deal, saying a combined group would have a 16-17 percent effective tax rate by 2017, down from around 21-24 percent for Baxalta.

But Ornskov told reporters the main driver was the strategic fit of the companies and the growth potential of a tie-up. “Tax is just one part of it, it’s not the main part,” he said.

Shares in Actelion (ATLN.VX), which had previously been tipped as a potential target for Shire, fell 2.9 percent.

Evercore and Morgan Stanley are acting as financial advisers to Shire.

(Additional reporting by Ben Hirschler and Ankur Banerjee; Editing by Kate Holton and Pravin Char)

ACE Award Goes to Baxter International

Baxter International Inc. Recognized by Healthcare Businesswomen’s Association with ACE Award for Its Baxter Women Leaders Business Resource Group
FAIRFIELD, N.J.–(BUSINESS WIRE)– The Healthcare Businesswomen’s Association (HBA) has named Baxter International’s Baxter Women Leaders (BWL) business resource group as the winner of the 2014 HBA ACE award. HBA created the award to recognize corporations’ efforts to strengthen the Advancement, Commitment and Engagement of women’s careers in the healthcare industry.

The ACE Award will be presented to Cathy Skala and Stacie Phillips, co-leaders of BWL, on November 14 at the 2014 HBA Leadership Conference in Chicago.

The first of eight business resource groups established at Baxter, BWL fosters a culture that creates professional growth opportunities for women at all levels and stages in their careers. As captured in the group’s tagline, ”inspire, connect, advance,” one of its main goals is to support an environment that increases education and networking opportunities for women across Baxter while also increasing representation in leadership positions. BWL’s other goals include advocating on behalf of women and engaging in women’s business issues as well as community-related activities.

BWL also provides opportunities for women to develop their skills by taking on leadership roles within BWL itself. By leading a workstream, chapter or special interest group, advocates (members) have the opportunity to lead a group of volunteers and help advance both the goals of the BWL and Baxter. BWL has seen a significant growth in the number of chapters across Baxter’s global operations both nationally and internationally. While BWL’s mission focuses on the development and advancement of women, the group welcomes the support of men, and both women and men are encouraged to become BWL advocates.

Ludwig Hantson, corporate vice president and president of Baxter’s BioScience business, and Jill Schaaf, corporate vice president and president of the company’s Renal business, are BWL’s executive sponsors. BWL has a strong governance model in place that allows for rotation and succession of leadership, as well as consistent contact with several levels of management across Baxter.

”BWL is an important part of the company’s broader commitment to an inclusive culture and a diverse workforce,” Hantson said. ”We believe an inclusive culture and diverse workforce can drive innovation, create trusted partnerships with customers, suppliers and community partners and ultimately, contribute to the success and sustainability of the business.”

”We have made great strides toward developing, leveraging and promoting the capabilities of women at all levels,” Schaaf said. ”The networking events, seminars aimed at building capabilities, community outreach and highlighting the success of our women leaders all support an inclusive culture and help us succeed as individuals and as a company.”

”The HBA is proud to honor Baxter International’s Baxter Women Leaders (BWL) business resource group as the winner of the 2014 HBA ACE award,” said Laurie Cooke, HBA’s CEO. ”One of the key ways the HBA accomplishes our mission to further the advancement and impact of women in healthcare worldwide is by recognizing companies that can serve as role models to others. The HBA serves as a convener supporting companies to learn from each other. By sharing what great looks like, we can inspire companies and achieve more from their gender diversity initiatives.”

A panel of industry leaders and academics judged ACE Award entrants against five criteria: measurable results and impact on target population; degree to which it supports the overall business; stewardship, or depth of commitment to the program; effectiveness of the execution; and built-in sustainability.

Judges for the 2014 ACE award were:

Terri Pascarelli, vice president, client development, YourEncore, Inc. – ACE Award Judging Chair
Shideh Sedgh Bina, founding partner of Insigniam and editor in chief of Insigniam Quarterly – 2014 HBA Woman of the Year
Cameron Durrant, MD, pharma/biotech CEO and board member
Paul Katz, MD, founding dean of the Cooper Medical School of Rowan University
Kristi Raube, adjunct professor and executive director of graduate programs in health management and international business development at UC Berkeley, Haas School of Business