Dublin-based pharmaceutical company Shire agreed to buy cancer-drug maker Baxalta for $32 billion, the latest tie-up in a rapidly consolidating health-care sector.
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Under the deal, Baxalta shareholders will swap each share for $18 in cash and 0.1482 Shire American depositary shares. Based on Shire's closing American depositary share price Friday, the deal implies a total current value of $45.57 per Baxalta share.
The value of $45.57 represents a 37.5% premium on Baxalta's share price Aug. 3 before Shire's initial offer was made public.
Shire's first offer for Baxalta, worth $45.23 a share at the time, was made entirely in stock, as introducing cash into the deal could risk jeopardizing the tax-free status of Baxalta's recent spinoff from parent Baxter International U.S. law requires that tax-free spinoffs not be used as a "device" to funnel cash to shareholders.
Shire said Monday that it and its tax advisor have concluded that a merger with the proposed cash consideration of $18 per Baxalta share will maintain the tax-free status of the Baxalta spinoff from Baxter.
Baxalta shareholders will have a 34% stake in the combined company.
Shire Chief Executive Flemming Ornskov said Monday that the combined company's expanded portfolio and larger geographic presence is anticipated to drive annual revenue growth to more than $20 billion by 2020.
"Our due diligence has reinforced our belief in the combination," he said.
The combined company is expected to be the 19th-largest pharmaceutical company by sales, leapfrogging Celgene, Biogen and others, according to market-research firm EvaluatePharma.
Taxes would be one area of savings for the combined company, as corporate taxes in Ireland are generally lower than in the U.S. Shire, which has a tax rate in the midteens, is projecting a tax rate of 16% to 17% for the combined company, compared with Baxalta's current rate of about 23%.
The Wall Street Journal reported last week that Deerfield, Ill.-based Baxalta and Shire were in advanced talks.
Write to Anne Steele at Anne.Steele@wsj.com