Six months after being spun off from Baxter, Baxalta reached an agreement Monday to combine with Shire, an Irish drugmaker, for about $32 billion in cash and stock.
With the combination, Shire said it will become a global leader in treating rare diseases, with about $12 billion in revenue.
The company foresees saving $500 million in annual costs following the transaction, which is expected to be completed by mid-2016. About half of the cost cuts will come from corporate administrative functions, Shire executives said, which is not good news for Baxalta’s approximately 800 employees in suburban Chicago.
The merger reflects how frenzied dealmaking has become in the pharmaceutical industry. Baxalta separated from Baxter in July, and a few days later received an unsolicited offer from Shire, which went public with the proposal in August. Baxalta initially spurned the offer, saying the price was too low and a potential deal too disruptive so soon after it became an independent company. But Shire kept up its pursuit and didn’t have to go the hostile route, persuading Baxalta’s board of directors to come to the bargaining table. Baxalta investors will receive $18 in cash and 0.1482 shares of Shire for each share. Based on Shire’s closing price Friday, this implies a total value of $45.57 per Baxalta share. Baxalta closed at $40.01 Friday.
The agreed-upon price is about 4.5 percent higher than what Shire initially offered in July.
In trading Monday, shares of Shire dropped $16.63, or 8.9 percent, to $169.37, and shares of Baxalta dropped 91 cents, or 2.3 percent, to $39.10.