Shire Weighing Options to Sweeten All-Stock Offer for Baxalta
13 Septiembre 2015 - 7:50PM
Noticias Dow Jones
LONDON—Shire PLC is weighing options for sweetening its
multibillion-dollar, all-stock offer for U.S. biotechnology firm
Baxalta Inc. by putting cash into shareholders' hands sooner, said
people familiar with the matter.
The Dublin-based drug maker's unsolicited proposal—disclosed
last month and valued at $30.6 billion based on Shire's stock price
at the time—excluded any cash. Shire said that was to maintain the
tax-free status of Baxalta's recent spinoff from Baxter
International Inc., both based in Deerfield, Ill.
Shire said instead it would return cash to Baxalta investors by
launching a share buyback program "promptly after" the close of the
deal. Baxalta, which was spun off from Baxter in July, rejected the
offer as too low.
Now, Shire has communicated to some Baxalta shareholders that it
is considering how it might fashion a revised deal that would hand
cash to shareholders sooner than the buyback plan allows, without
jeopardizing the tax-free status of the spinoff, according to the
people familiar with the matter.
It isn't clear what specific avenues Shire and its advisers are
pursuing—or whether Shire is now considering boosting the overall
value of its offer. One complication for Shire is that the value of
its stock has fallen some 17% since it made its approach to Baxalta
public in early August. That decline could require it to sweeten
its bid beyond simply speeding up the payment of cash to
investors.
The issue is far from clear-cut, say tax lawyers, because there
are few well-known examples of a company being purchased so soon
after a spinoff.
Tax experts say one option could involve Baxalta agreeing to
take out a loan to pay a special dividend to its shareholders
before an all-share acquisition by Shire.
U.S. law provides for tax-free spinoffs in most cases. But there
are restrictions, including a provision that such spinoffs not be
used as a "device" to funnel cash to shareholders. Tax experts say
a quick sale that involves cash being paid to Baxalta shareholders
could run afoul of this stipulation.
Anything that disqualifies the tax-free treatment of the spinoff
would put Baxter in line to pay a 35% corporation tax on its gains
from the spinoff.
A dividend payment might not raise the same issue. The device
test "doesn't preclude people from paying dividends," said Robert
Willens, an independent tax expert.
Bill Dantzler, a New York-based partner at the law firm White
& Case LLP, which isn't involved in the deal, said the law has
gray areas. "There aren't clear bright lines as to what is a device
and what is not," he said.
Shire Chief Executive Flemming Ornskov has spent the weeks since
going public with his proposal trying to convince shareholders that
a combination of the companies would create a global rare-disease
powerhouse. Both companies made around $6 billion in revenue in
2014.
Shire is best known for its hyperactivity drugs, but its focus
has shifted toward rare diseases in recent years. Baxalta
specializes in treatments for the bleeding disease hemophilia and
immune deficiencies.
While Shire's attempt to acquire Baxalta so soon after its
spinoff is unusual, there have been a handful of cases in which
companies have successfully acquired recent spinoffs for cash after
a bit more time. In 2011, Google Inc. acquired cellphone maker
Motorola Mobility Holdings Inc. in an all-cash deal seven months
after Motorola Mobility had been spun off by parent company
Motorola Inc. Google later sold the unit to Lenovo Group Ltd.
In 2006, Apollo Global Management LLC paid cash to acquire
real-estate broker group Realogy, which had been spun out of the
now defunct Cendant Corp. 4½ months earlier. Apollo has since
exited that investment.
Amid those high-profile examples, the passage of time can work
in Shire's favor. "Every day that passes, probably helps the tax
analysis," Mr. Dantzler said.
Write to Shayndi Raice at shayndi.raice@wsj.com and Denise
Roland at Denise.Roland@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 13, 2015 20:35 ET (00:35 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
(MM) (NASDAQ:GOOCV)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
(MM) (NASDAQ:GOOCV)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024