Shire To Combine With Baxalta In $32 Bln Cash And Stock Deal

(RTTNews) - Shire Plc. (SHP.L, SHPG) and Baxalta Inc. (BXLT) Monday said the boards of directors of both companies have reached an agreement for Shire to combine with Baxalta. Under the agreement, Baxalta shareholders will receive $18.00 in cash and 0.1482 Shire ADS per Baxalta share.

Based on Shire's closing ADS price on January 8, this implies a total current value of $45.57 per Baxalta share, representing an aggregate consideration of around $32 billion. The transaction is expected to be accretive to non-GAAP earnings per share in 2017, the first calendar year of ownership, and beyond.

The value of the offer, as of Shire's January 8, 2016 closing ADS price, represents a premium of approximately 37.5 percent to Baxalta's unaffected share price on August 3, 2015, the day prior to the public announcement of Shire's initial offer for Baxalta.

This will provide Baxalta shareholders with around 34 percent ownership in the combined company. The parties expect the transaction to close mid-2016.

The combination creates a leading global biotechnology company projected to deliver double-digit top-line growth with over $20 billion in annual revenues by 2020.

Shire Chief Executive Officer Flemming Ornskov, M.D., M.P.H., said, "This proposed combination allows us to realize our vision of building the leading biotechnology company focused on rare diseases. Together, we will have leadership positions in multiple, high-value franchises and become the clear partner of choice in rare diseases."

Shire expects to realize more than $500 million in annual cost synergies, to be achieved within the first three years post-closing.

The combined company is expected to generate annual operating cash flow of $6.0 billion beginning in 2018, underpinning an attractive ROIC that will exceed Shire's cost of capital in 2020.