Shire’s $30bn move on Baxalta

Pharma giant Shire has made an unsolicited $30bn all-share offer for America’s Baxalta.

15-8-6-Shire-634

Shire is testing investors' tolerance

Pharmaceuticals giant Shire, Dublin-based and UK-listed, has made an unsolicited $30bn all-share offer for America's Baxalta. Shire said a tie-up with Baxalta would produce a group with $20bn in sales by 2020. Shire's shares fell on the news. The pharma mergers and acquisitions boom shows no sign of cooling: $400bn of transactions have been announced since January, 80% up from the same period in 2014.

What the commentators said

But there's also "a fair slug of industrial logic", said Neil Unmack on breakingviews.com. Putting the two groups together should produce a strong presence in haemophilia, and as it grows its global presence, it will gain the scale to invest in new drugs, boost prices and beef up marketing, with a view to becoming a leader in rare disease drugs. Yet Shire shareholders seem unconvinced, said Helen Thomas in The Wall Street Journal.

One worry is that Baxalta's haemophilia drugs, which account for half of sales, are about to face competition. What's more, the price is worth a hefty 16 times operating earnings, and is only likely to go higher as negotiations get underway. Shire's recent appetite for "ever bigger, more risky dealmaking is testing investors' tolerance".

Most Popular

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021
The future belongs to emerging markets – three EM stocks to buy now
Share tips

The future belongs to emerging markets – three EM stocks to buy now

Professional investor Carlos von Hardenberg of Mobius Capital Partners picks three of his favourite emerging-market stocks.
5 Jul 2021