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Shire’s Merger With Baxalta Merger Is Nearly Done

January 8, 2016, 12:15 PM UTC
AbbVie Inc. To Buy Shire For $54.8 Billion
FILE PHOTO: Shire logos sit on the boxes of Elvanse 50mg tablets, produced by Shire Plc, left, and Mezavant XL 1200mg tablets, produced by Shire Plc, in this arranged photograph taken at a pharmacy in London, U.K., on Tuesday, July 8, 2014. AbbVie Inc. agreed to buy Shire Plc for about 32 billion pounds ($54.8 billion), becoming the latest U.S. health-care company to shift its tax residence abroad in a record surge in industry deals.Photographer: Simon Dawson/Bloomberg via Getty Images
Photograph by Simon Dawson — Bloomberg via Getty Images

Shire Pharmaceuticals Plc (SHPGF) is preparing to announce it’s buying U.S. peer Baxalta (BXLT) for roughly $32.5 billion as early as Monday, according to people familiar with the matter. The deal would continue a trend of big-ticket mergers in the pharma and health care sector after a record-breaking 2015.

The cash-and-stock deal will value Baxalta at around $48 per share, with a cash component just shy of $20 per share, the people said on Thursday.

Baxalta shares were trading on Thursday just under $39 and Shire stock was at $190.45 a share.

Both parties are confident tax concerns arising from Baxalta’s spin out from Baxter International will not be an impediment to the transaction but are waiting for a formal legal opinion to come through before signing their merger agreement, the people added.

The sources asked not to be identified because the negotiations are confidential. Shire and Baxalta declined to comment.

The acquisition would mark the culmination of a long pursuit that depended partly on how much cash Shire could offer without triggering additional taxes for Baxalta. Reuters first reported Shire’s renewed effort to court Baxalta in November.

Shire has been eyeing the maker of rare disease drugs since July, when it proposed an all-stock deal for just over $45 per share that was rejected by Baxalta’s board.

Baxalta was initially concerned that accepting a cash offer too soon after being spun off from parent company Baxter could violate rules designed to prevent spinoffs from being used to dodge taxes.

Baxalta develops biotech treatments for rare blood conditions, cancers and immune system disorders. The deal would advance Shire’s strategy of building out a broad platform within the rare diseases space.

In November, Shire announced a deal to acquire another rare disease drug maker, Dyax, for $5.9 billion.

The deal would mark a strong start to healthcare M&A in 2016, after the sector saw its biggest deal-making streak in history last year.