Baxalta Shares Up 13% on Shire Public Offer

Share On Facebook
share on Linkedin
Print

Baxalta shares (NYSE:BXLT) shares have risen by more than 13% to 38.47 today following publication of a hostile takeover bid by Shire PLC (LSE:SHP).

U.S.-based Baxalta is a $6 billion global biopharmaceutical leader, developing, manufacturing and commercializing therapies for orphan diseases and underserved conditions in hematology, oncology and immunology. Baxalta’s broad and diverse pipeline includes biologics with novel mechanisms and advanced technology platforms such as gene therapy. Baxalta was incorporated in 2014 and has operated independently of Baxter International, Inc. (NYSE:BAX) since July 1, 2015. That’s right, just a month ago.

Dublin-based Shire made public its intention to acquire Baxalta for $30 billion, which is a premium of 36% on yesterday’s closing share price of 33.15. Shire shares hit an intraday high of 5,870.00 at 12:28 p.m., then fell sharply to 5,275 by 12:43 p.m. The public announcement was released at 12:30 p.m. Trading in Shire was modest until the revelation of the offer. Volume this afternoon has already exceeded 3.8 million shares, nearly 350% above normal.

The Back Story

Representatives of Shire met with Dr. Ludwig Hantson, Baxalta President and CEO, on 10 July to propose the acquisition, but it appears that Dr. Hantson passively rebuffed the overture, not proffering a response until 31 July, at which time he concluded that the offer represented “no basis for discussion.” Since he offered no substantive information in his response, we might assume that his lack of interest could be based on the absence of any cash in the proposal.

Regardless, Shire is displaying its determination to obtain Baxalta by taking the proposal out of the conference room and into the headlines, putting it squarely before the company’s shareholders in hopes that the offer will no longer fall on deaf ears.

Shire CEO, Fleming Ornskov, reiterated the benefits of the proposal to Hatson in a letter, also made public within the content of the announcement. He said, in part, that the deal would:

  • Significantly accelerating the value and mitigating the risk of Baxalta’s standalone strategy while providing a substantial immediate premium to Baxalta’s current share price and participation in future upside;
  • Strong expected operating synergies as well as benefits from our tax structure to drive meaningful earnings accretion and provide an enhanced growth profile relative to the standalone Baxalta strategy; and
  • A stronger balance sheet that would provide financial flexibility and the ability to launch a sizable share buy-back program to enhance the capital structure and further improve the per share earnings profile of the combined company.

The Best Time to Sell

If you’ve ever been in the middle of mergers and acquisitions, you already know that there can be a myriad of personal and corporate issues that are intricately involved in the process, but which are never exposed to the light of day. For that reason alone, I would offer Dr. Hantson a piece of advice that has proven to be priceless:

The best time to sell anything is when someone wants to buy it.

Dr. Hantson, this is the time. It doesn’t matter what your ego or your vision is. You do not know what tomorrow holds. Given the market response today, you are being sent a clear message (discounting those who are looking to make a quick buck by betting on the deal). You may think that you can withdraw into the shell of your new-found corporate independence, but what you may really be doing is burying your head in the sand.

The saddest part of burying your head in the sand is not that you miss what is going on, but that your butt is up in the air, exposed to anyone who wants to kick it.

My advice: Get your head out of the sand before you get your butt kicked.

 

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20211028 03:11:41