Shire to improve offer for Baxalta with GBP 8bn cash sweetener
Shire [LON:SHP], an Anglo-Irish pharmaceuticals group, is preparing a GBP 8bn (EUR 10.96bn) cash sweetener for its takeover bid for Bannockburn, Illinois-based rival Baxalta [NYSE:BXLT], The Sunday Times reported.
The newspaper cited senior City sources who said the improved offer would revive Shire's GBP 20bn bid, which had seemed to be about to unravel.
Shire tabled an entirely share-based bid for Baxalta in July, which was confirmed by Baxalta in August, although Baxalta said the offer significantly undervalued its business and that the offer was not a basis for further talks.
Relations between Shire and Baxalta improved recently after the Irish company said it was willing to include a large cash component in its offer, the article said.
Shire could offer to pay up to 40% of the offer in cash, the item said, citing sources close to the talks.
Shire’s position on the sweetener means the two companies could agree a deal within weeks, the item said. Shire is believed to be looking to agree the takeover ahead of a pharmaceuticals conference in San Francisco in the middle of next month, according to the newspaper.
Sources cited by the report said there remains a chance that the two parties will not agree a deal. It is known that Shire CEO Flemming Ornskov is prepared to abandon the bid should Baxalta insist on a price he considers too high, the item said.
Shire had initially structured its offer as an all-share bid so as to maintain the tax benefits arising from Baxalta’s spin-off from Baxter, the article continued. However, sources said Shire now thinks it can include a cash component in its offer without putting the tax benefits at risk, according to the report.
Baxalta's market capitalisation stood at USD 26.06bn (GBP 17.48bn)
Shire refused to comment, according to the report.
Sunday Times