Following months of speculation Shire has now confirmed that it is buying Baxter spin-out Baxalta in a deal valued at around $32 billion, creating the world’s leading global biotech and rare disease specialist.
The company is giving Baxalta stockholders $18.00 in cash and 0.1482 Shire ADS per share which, based on Shire’s closing price on January 8, implies a total current value of $45.57 per Baxalta share, and thus gives an approximate 34% ownership in the new company.
According to the firms, the marriage will create the number one rare diseases platform in revenue and pipeline depth, which is predicted to generate annual sales of more than $20 billion by 2020.
The combined portfolio will house more than 60 programs in development, including over 50 that will address rare diseases, and Shire anticipates more than 30 recent and planned product launches from the combined pipeline, contributing around $5 billion in annual revenues by 2020.
Shire says the move should realise more than $500 million in annual cost synergies (within the first three years of closing), with additional revenue synergies and a combined non-GAAP effective tax rate of 16-17%, and that it expects the deal to be accretive to earnings from 2017, the first calendar year of ownership.
“Together, Shire and Baxalta create a platform for sustainable innovation, growth and value creation,” said Shire’s chair Susan Kilsby. “Stakeholders of both companies are expected to benefit from the enhanced growth prospects, superior operational scale and efficiency and the strong financial and organisational profile of the combined entity”.
The transaction is expected to close mid 2016.