Shire-Baxalta Combination Official, Shareholders Get $18 In Cash And Shares

Shares of

were trading higher by 1.80 percent at $189.34 early Monday morning while shares of

spiked higher by more than 5 percent at $42.20 after the companies confirmed a merger agreement. Shire and Baxalta

on Monday morning that their respective boards of directors have reached an agreement in which Shire will combine its business with Baxalta. As part of the agreement, Baxalta shareholders will receive $18.00 in cash and 0.1482 Share ADS for each Baxalta share owned. Based on Shire's closing price on January 8, the deal implies a valuation of $45.57 per Baxalta shares, representing a premium of nearly 38 percent to Baxalta's share price on August 3, 2015 - the day prior to Shire's initial offer to acquire the company. Baxalta shareholders will own approximately 34 percent of the newly combined entity. "This proposed combination allows us to realize our vision of building the leading biotechnology company focused on rare diseases," shire's CEO Flemming Ornskov said. "Together, we will have leadership positions in multiple, high-value franchises and become the clear partner of choice in rare diseases. Our expanded portfolio and presence in more than 100 countries will drive our growth to over $20 billion in anticipated annual revenues by 2020. Our due diligence has reinforced our belief in the combination, and we look forward to welcoming Baxalta colleagues to a shared entrepreneurial, patient-driven culture." "Today's announcement marks a new path forward for our organization and is a testament to the significant progress we have made in achieving our strategic business priorities," Baxalta's CEO Ludwig N. Hanston said. "This transaction presents a unique opportunity for Baxalta shareholders, who will receive substantial immediate value as well as an ongoing stake in a combined global leader in rare diseases with strong growth prospects. We bring to Shire a strong portfolio and pipeline of market-leading products, high-quality manufacturing capabilities and a talented global workforce that places patients at the center of everything we do. The combined organization will be well positioned to accelerate innovation and deliver enhanced value for all stakeholders."