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18 Jan 2016

Highlights of Shire – Baxalta Deal

  • Shire acquires drug maker Baxalta on recently announced deal valued at about $32 billion.
  • The combination would create a giant in the treatment of rare diseases.
  • Baxalta, which was spun off from Baxter International, generates a large portion of its sales from Advate, a drug for hemophilia. It also has a portfolio of plasma therapies and treatments for immune diseases. Baxalta has been a stand-alone company for only six months. The drug maker was spun off from Baxter in July to streamline its operations with a focus on specialty drugs. Baxter, a medical supplies giant, still owns more than 19 percent and remains the largest shareholder, so the deal with Shire is incumbent upon its support. Baxter filly supported the proposed merger of Shire – Baxalta.
  • Shire will pay $45.57 in cash and stock for each Baxalta share, or a total of $31 billion. That price represents a 37.5 percent premium to Baxalta’s share price before Shire first announced in August that it had made a takeover approach.

Tax Saving as a part of the deal :

Part of Shire’s ability to pay such a premium for Baxalta is tax savings.

Because Shire is based in Dublin, while Baxalta is based in Bannockburn, Ill., outside Chicago, the combined company will be able to achieve a lower tax rate than Baxalta can as a stand-alone. The combined company will have an estimated tax rate of 16 to 17 percent by next year, compared with Baxalta’s current rate of 23 to 24 percent.

Shire said that it expected to realize more than $500 million in annual cost savings within the first three years after the deal closes.

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