Shire/Baxalta M&A deal: tax status proved a focal point, says expert

As with previous big pharma deals, tax status has proved a focal point, as the major players juggle jurisdictions while striving to remain on the right side of regulators to keep a lid on costs – successfully in this case, according to Joe Stelzer, managing partner at Cavendish Corporate Finance commenting on Monday’s revised terms for the Shire (LSE: SHP) bid for Baxalta (NYSE: BXLT).

Mr Stelzer continued: “Investors will be relieved that the protracted negotiations to bind Shire and Baxalta are finally at an end. As with previous headline deals in big pharma, tax status has proved a focal point, as the major players juggle jurisdictions while striving to remain on the right side of regulators in order to keep a lid on costs – successfully in this case, as Baxalta’s effective tax rate will be significantly slashed thanks to the deal.

“The bigger picture for Shire is the need to diversify away from an uneven pipeline of products towards a new emphasis on rare diseases and biotech – the modus operandi being the frenetic pace of acquisitions that has become commonplace across global big pharma. Hot on the heels of its $6 billion Dyax acquisition, this mega-deal will add Baxalta’s treatments for rare blood conditions, cancers and immune system disorders to what has emerged as a world leading rare diseases platform.