Baxalta wants Shire to raise its $30 billion bid before talks

“Flemming Ornskov is a hard-driving and well-respected CEO and he might make this deal work, nevertheless”.

With its second-quarter earnings, Baxalta ($BXLT) raised its revenue forecast on hemophilia growth, new product launches and strong global demand, predicting 7% growth for the year. Shire forced Baxalta into a corner by going public with its offer last week, after Baxalta’s management spurned its approach in private talks.

Any increase to the bid will need to be made in exchange for Shire shares, rather than in cash, in order to keep the deal attractive from a tax perspective to Baxalta’s US shareholders, though this will mean further dilution for existing Shire shareholders.

“Now the funnel is closing in on value”, the person close to Shire said.

A deal if agreed would create a major world player in rare diseases, Shire has claimed.

The Baxalta biopharma business became an independent public company when it was spun off by health care giant Baxter worldwide last month.

The two sides are locked in a stalemate after Baxalta’s chief executive, Ludwig Hantson, rejected Shire’s approach as substantially undervaluing the rare diseases treatment company.

Ornskov and Shire’s chairwoman Susan Kilsby, a former mergers and acquisition banker, met Baxalta buyers on each side of the Atlantic on the finish of final week and can proceed the allure offensive this week.

A combined company would have revenues of more than $20 billion a year by 2020, and its size would rule out a takeover by all but the biggest pharma firms, like Pfizer (PFE.N), according to analysts.

“They didn’t say “no way, no how, never”.

The Sunday Times yesterday quoted unidentified people working on the deal as reporting that Shire, which last month offered $45.23 a share for Baxalta, would have to go as high as $50 to interest the US group’s board, with that amount likely to only be a starting point for negotiations.

He has a battle on his arms, with buyers in newly listed Baxalta arguing he should pay extra, though one individual near the -based drugmaker stated there had been “encouraging suggestions” from shareholders on the logic of the tie-up.