Pharmaceutical firm Shire may need to find an antidote for a poison pill before it can win shareholders in Baxalta over to its $30 billion bid.
For Ireland-based Shire -- which is still dismissed by many as a company specializing in attention deficit hyperactivity disorder (ADHD) treatments -- buying Baxalta could mark the moment it becomes a fully fledged pharma giant. Shire's $45.23 per share offer represents a 36 percent premium to the smaller company's closing price on August 3, the day before the deal emerged. Yet the bidding process is unlikely to be straightforward.
As part of U.S.-listed Baxalta's spin-out from its parent, Baxter, in July there are several clauses aimed at stopping future takeovers.
They include a "poison pill" stopping any shareholder building over a 10 percent stake – and even any group of shareholders owning 10 percent in total from banding together to take over the company.
Baxter itself still owns 19.5 percent of Baxalta, a rare diseases specialist with impressive sales in hematology and the rapidly-growing cancer treatment field immuno-oncology. This is the shareholder Shire will really have to work hard on winning over with its arguments for a "strategically and financially attractive" deal. Tax advantages may be important here – Shire, which originated in the U.K. but gets most of its revenues from the U.S., is already headquartered in Ireland to lower its tax bill, and Baxalta shareholders would also get the benefit of its arrangements.
If Baxalta management are not convinced, and so far they seem to have been very clear in their lack of enthusiasm, Shire could be in for a long, drawn-out process to secure this particular deal.
- By CNBC's Catherine Boyle