Baxalta reportedly warms up to Shire’s $32B pitch, despite an 11th-hour

Now, Bloomberg reports, a cash and stock deal valuing Baxalta at about $32 billion is near. Final details of the transaction are still being negotiated and the timing and structure of any offer may change, the sources said. The price being discussed is $46.50 to $48 a share, two of the people said.

Dublin-based, Shire’s stock fell 3.4 per cent to 4,540 pence at 8:09 am in London.

Shire chief executive Flemming Ornskov’s hostile campaign earlier had drawn scepticism due in part to Baxalta’s “poison pill” provision due to which the U.S. company could have made it hard for Shire to build up a stake. It would include a cash component of about $20 per share, with the rest of it paid in Shire stock, said the sources, asking not to be identified because the negotiations are confidential.

Big established drug companies are turning to takeovers as a way to boost their line-ups of new drugs amid copy-cat competition in the production of older treatments.

A Shire spokeswoman said in an email Sunday that the company does not comment on speculation.

Shire’s original bid, an all-stock transaction was aimed to help preserve tax benefits of Baxalta’s July spinoff from Baxter International Inc. Furthermore, thanks to Shire’s Irish domicile, Baxalta’s effective tax rate would fall from about 23% to roughly 16%, the company said.

Baxalta would benefit from a lower tax rate if taken over by Shire, and the enlarged company would generate $20B in sales by 2020, with as many as 30 new drugs to launch over five years. Last January, it inked a $5.2 billion pact for NPS Pharmaceuticals that brought it GI therapy Gattex and hypoparathyroidism treatment Natpara.