Baxalta wants Shire to raise its $30 billion bid before talks

Baxalta wants Shire to sweeten its $30-billion bid before it engages in talks with the Dublin-based pharmaceutical major.

Shire could be willing to do so provided it gets to see the US biotech company's books, Reuters reported quoting unnamed sources on both sides.

Both sides are keen on getting the upper hand in the latest in the series of takeover battles in the healthcare sector.

On the back of shareholder support, Baxalta's management has dug in its heels and dismissed Shire's initial approach as woefully inadequate for a newly-listed company, which expects its shares to rise as it becomes better known.

Shire wants Baxalta, which is focused on biotech treatments for rare blood conditions, cancers and immune system disorders, to create a global leader in rare diseases.

In May, Shire had said it was interested in acquiring Baxalta, a company spun-off by Baxter International, for $30 billion to emerge as the leading global specialist in rare diseases. (See: Baxalta rejects drugmaker Shire's approach).

A combined company would see revenues of over $20 billion a year by 2020. Its size would rule out a takeover by all but the biggest pharma firms, like Pfizer, according to analysts.

AbbVie Inc, a research-based US bio-pharmaceutical company had last year sought to take over Shire's rare disease and hyperactivity drugs portfolio.

Though the deal was finally settled for $50 billion, the transaction failed to materialise due to changes in US rules to curb tax inversion (AbbVie calls off $55-bn acquisition of Shire over US tax rules).

Shire's current offer of 0.1687 of its American depositary receipts for each share of Baxalta, was extended privately on 10 July Bloomberg reported.

Twenty days later, Baxalta reported second-quarter earnings, even as it raised its revenue growth projection this year to as much as 7 per cent, up from 4 per cent.

Shire then went public with its proposal on 4 August without change of terms to account for the new growth projection.

The all-stock offer currently valued Baxalta at $41.81 a share. The company's stock increased less than 1 per cent to $38.25 at the close in New York.

According to Baxalta its higher sales forecast was the result of its hemophilia division growing faster than expected as also new product launches and strong international demand for its products.

Shire wanted further details on the revised outlook to work out a new offer, according to the person familiar with the matter, who asked not to be identified discussing private information.