Sunday 17 December 2017

Shire's $30bn bid scoffed at by Baxalta boss

Ashley Armstrong

The chief executive of US drug group Baxalta has launched a vociferous defence of his one-month old company as he fends off an unwanted $30bn takeover approach from Irish-based rival Shire.

Ludwig Hantson called Shire’s hostile approach “puzzling” and said that the bid from its rare disease rival “wasn’t close to where we should consider it as a basis for engaging”.

Mr Hantson told investors on a call hosted by Cowen & Comany that he has had “recent conversations with Baxalta investors who have confirmed that Shire’s proposal significantly undervalues our company.” The Telegraph revealed that investors were pressing for a higher offer from Dublin-based Shire.

"Many investors see value well north of Shire’s proposal without any of the risk inherent in taking Shire stock or giving away the control premium that our shareholders can enjoy in the future", said Mr Hantson.

Dublin-headquartered Shire last week made its $45.23-a-share all stock takeover proposal public, which it said was a 36pc premium. However, the premium has since fallen to around 27pc as a result of Shire’s sagging share price since making the biggest acquisition offer in its history.

Mr Hantson also scorned the deal’s rationale and said that he did not believe that a combination of the two rare disease companies would generate substantial operation or revenue synergies.

Shire’s chief executive, Flemming Ornskov, said last week that a takeover of Shire’s “copy-cat” would double the company’s revenues to $20bn by 2020 and said a combination would also reduce the US group’s tax bill.

 However, Mr Hantson has hit back and said that “with continued debate in Washington about taxes, we do not believe tax synergies should be the primary driver of any long-term strategic transaction”.

Shire was last year jilted by US drug group AbbVie, which abandoned its $54bn takeover after changes to US tax rules made its inversion deal unworkable.

“We are not entrenched or intransigent, but given Shire’s proposal, our board made a considered and correct decision to not engage based on it”, Mr Hantson said.

Baxalta was spun-off from Baxter International on July 1 and nine days later Shire approached.

Mr Hantson said: "At this point, our stock has not yet achieved a price level that appropriately reflects our company’s value and prospects".

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