Baxalta Inc.’s CEO told investors Monday that Shire Plc is trying to steal his company away at a bargain price of $30 billion before the one-month-old drugmaker has a chance to realize its true value.
In a call with investors, Baxalta’s Chief Executive Officer Ludwig Hantson said Shire had been opportunistic in targeting his company just days after it was spun off from Baxter International Inc. in July.
“In some respects, the nature of Shire’s interest in Baxalta is puzzling,” Hantson said, according to a transcript of the call filed with regulators. “Is it trying to opportunistically acquire our attractive hemophilia, immunology and growing oncology platforms without true synergies? We have an attractive set of franchises and it would be a shame to hand it over for a low-ball valuation.”
Shire offered about $30 billion in stock on Aug. 4 to buy Baxalta, taking the offer public after being rejected in earlier, private discussions. Hantson argued that the proposal is too low, and that investors haven’t had time to properly assess Baxalta’s value just a month after it became a stand-alone company.
In the meantime, executives from Dublin-based Shire have approached Baxalta shareholders to garner support for a deal, according to people familiar with the matter. Shire’s feedback from shareholders has been positive, according to one of the people.
“Shire remains interested to opening discussions with Baxalta management on the proposed combination, as it offers a strong strategic fit and significant value for both companies,” Michele Galen, a spokeswoman for Shire, said in an e-mail. “It would be in the best interests of shareholders to move forward as soon as possible and complete a negotiated transaction.”
Hantson told investors Monday that many of the shareholders he had spoken with felt Baxalta could be valued “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.”
Shire has offered to pay $42.46 a share. Baxalta closed Monday at $39.79, suggesting that investors are skeptical that a deal will get done.
Despite Baxalta rejecting the initial approach, Hantson said the board wasn’t entrenched but that “Shire’s proposal wasn’t close to where we should consider it as a basis for engaging.”
Analysts have been skeptical about Shire’s ability to force Baxalta into a sale. The U.S. company has a staggered board, meaning its directors can not be voted out simultaneously, and the ability to issue shares to existing investors at a discount should Shire acquire more than 10 percent of the company.
Baxalta would give Shire a significant position in the much-coveted rare-disease market, which has attracted drugmakers because of the potential for high-priced products and incentives offered by regulators, including periods of sales exclusivity. The Food and Drug Administration defines rare diseases as those that affect fewer than 200,000 people in the U.S.
Shire is seeking to grow after a proposed $52 billion sale to AbbVie Inc. collapsed last year. In February, it expanded its portfolio of rare-disease treatments with the purchase of NPS Pharmaceuticals Inc., gaining a medicine for short bowel syndrome. Baxalta derives about about half of its sales from hemophilia, a bleeding disorder.