Company Insiders Claim Baxalta Abandoned Ariad Acquisition Attempt

Company Insiders Claim Baxalta Abandoned Ariad Acquisition Attempt
September 3, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Only days after rumors spread that Baxalta was in talks to acquire Cambridge, Mass.-based Ariad Pharmaceuticals, Inc. , unidentified sources, according to Bloomberg Business, reported that talks ended. The sources indicate the negotiations fell apart over price.

Baxalta, headquartered in Bannockburn, Ill., was spun off from Baxter International in early July. It has since been fending off a takeover attempt by Dublin-based Shire .

In early July, not long after the Baxter spinoff, Shire approached Baxalta regarding an acquisition. When Baxalta executives did not engage on the offer, Shire pressured the company by going public on Aug. 4, hoping to force Baxalta executives, board and investors into considering the deal.

The initial offer was for $45.23 per Baxalta share, or about $30 billion, which Baxalta has indicated undervalues the company. Baxalta also argues that a merger so soon after the acquisition would be too disruptive. There have been some indications that if Shire sweetened the deal, Baxalta might consider it. Further complicating the Shire-Baxalta dealings is the nature of the spinoff from Baxter, which would be all stock because of the tax situation. In other words, if Shire or a competitive bidder planned to improve on the deal by adding cash, they would probably incur a tax penalty.

Meanwhile, apparently Baxalta has been involved in talks with Ariad on an acquisition. Although neither company has said anything publicly about such a deal, which has been struggling for some time, jumped nearly 40 percent at the news. Shares traded on Oct. 13, 2014 for $5.02, rose to a high of $9.71 on April 24, 2015, then began to drop, hitting $7.56 on July 8 and $6.44 on Aug. 24. It spiked to $9.98 on Aug. 28, but has since declined. It is currently trading at $7.55.

An acquisition of Ariad would have included its oncology drug, Iclusig (ponatinib). The drug has been doing reasonably well on the U.S. and European markets and the company’s chairman and chief executive officer, Harvey Berger, said in a statement, “We expect additional commercial launches and positive pricing and reimbursement decisions in several European countries during the remainder of the year.”

As reported by Bloomberg, the talks over an Ariad purchase fell apart over price, but also over negative responses about the deal from Baxalta investors. At the price of $7.34 per share, Ariad would have been valued at about $1.4 billion. The offer was reported to be approximately $2 billion.

Yesterday Baxalta announced that it had filed a Registration Statement with the U.S. Securities and Exchange Commission (SEC) about a secondary offering of up to $1.45 billion of common stock, which is currently being held by Baxter. Baxalta also reported that as of yesterday, it will begin trading ex-dividend. Shareholders who purchased BXLT stock before the ex-dividend date are eligible to receive a cash dividend payment of $0.07 per share to be paid on Oct. 1, 2015.

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