|Baxalta CEO Ludwig Hantson|
Baxalta ($BXLT) CEO Ludwig Hantson, barely a month into his tenure, is already fending off an unwelcome takeover attempt, telling shareholders Monday that Shire's ($SHPG) roughly $30 billion offer is woefully inadequate and that he and his board have no intention of taking it.
Hantson, who ran Baxter's ($BAX) bioscience division before Baxalta launched July 1, is on the defensive after Shire went public with its proposed all-stock transaction, disclosed last week. As Hantson tells it, Shire "opportunistically showed up a handful of days after we began trading" with a pitch that valued Baxalta at $45 a share and promised significant cost synergies.
But Hantson isn't buying that. The $45 figure "significantly undervalues" Baxalta, he said--and, furthermore, it no longer exists: Wall Street's tepid response to Shire's offer has marred the company's market value and thus pushed the offer down to around $42 a share.
And those promised synergies are mostly talk, Hantson added, noting that while it's true both companies are active in rare diseases, there is almost no overlap in their core competencies. Shire has long worked in enzyme-replacement therapy, while Baxalta's expertise lies in the very different, very capital-intensive plasma business, he said.
"In some respects, the nature of Shire's interest in Baxalta is puzzling," Hantson said. "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 lowball valuation."
Baxalta's not saying it will never listen to an offer, but rather that Shire's proposal, boasting a roughly 27% premium, is far too low. The implied value of that offer is not dissimilar to what Baxalta and its advisers believe the company can achieve on its own in 6 to 12 months, Hantson said, and thus Shire's pitch is "wholly inadequate as a basis to engage."
Baxalta set sail last month with all of Baxter's on-the-market treatments, largely focused on hemophilia, and a pipeline padded by a string of recent deals. The company figures it can launch 20 of those in-development projects by 2020, heaping $2.5 billion in annual sales onto the roughly $6 billion in revenue it currently pulls in. And to keep its R&D engine running, Baxalta inked a 12-year lease on a 200,000-square-foot operation in Cambridge, MA's Kendall Square, setting up shop next to world-class research institutions and an increasingly popular hub for biotech innovation.
- read the a transcript of Hantson's call