Shire Plc has finally won over Baxalta as it has added cash to a takeover bid bring the deal to $32 billion. The combined company will become the largest maker in the world of drugs to treat rare diseases.
The deal’s price includes 0.148 of the American depository receipts of Shire and cash of $18 per share for each Baxalta share, the companies said in a statement.
Baxalta rebuffed a bid of $30 billion that was unsolicited for all stock that valued the company, based in Deerfield, Illinois in July at $45.23 per share.
Shares of Shire dropped to their lowest in the past 15 months in trading in London Monday afternoon.
The acquisition will increase the position of Shire, based in Dublin, Ireland, in the rare-disease treatments, which have been projected to increase by over 60% during the next five years.
With the acquisition of Baxalta, Shire will hold a dominant position in the treatment of hemophilia, which is a bleeding disorder affecting about 20,000 in the U.S.
Baxalta’s Advate, a drug for treating hemophilia A, can cost between $200,000 and $500,000 per year and insurers are good in reimbursing.
That adds to the list of drugs for rare diseases that Shire will have, which includes Cinryze that is for an inflammatory disease. That drug is amongst one of the bestsellers for Shire and one of its and one of the world’s most expensive with a cost per year of as high as $630,000.
Shire fell 7.5% on Monday, to its lowest since October of 2014, due to investors remaining skeptical of the tax hurdles remaining and the benefits of this deal.
In this deal, Baxalta will be a beneficiary of a lower rate of tax since it is being taken over by Shire, which has a legal address in Dublin despite it having a number of operations in other parts of the world.
The drug maker in the U.S. projected earlier this year a 23% tax rate for 2016, but a combination of the two companies would yield them a tax rate of between 16% and 17%, by the end of 2017.
Baxalta shares were down by 2.1% in trading on Wall Street. The stock has increased by 17% since Baxter Inc spun it off in 2015.