Baxalta Confirms Receipt of Highly Conditional, Unsolicited Proposal from Shire

Same Proposal Rejected Privately on July 10, 2015

·        Board Reaffirms its Unanimous Conclusion that Shire's Proposal Significantly Undervalues Baxalta


DEERFIELD, Ill., August 4, 2015 – Baxalta Incorporated (NYSE:BXLT) today confirmed receipt from Shire plc (LSE: SHP, NASDAQ: SHPG) of a highly conditional, unsolicited proposal to acquire all of the outstanding common shares of Baxalta in an all-stock transaction under which Baxalta shareholders would receive for each Baxalta share 0.1687 Shire ADRs.


Baxalta noted that it received this same proposal privately on July 10, 2015. In accordance with its fiduciary duties, Baxalta's Board of Directors, in consultation with its financial and legal advisors, carefully reviewed the proposal and unanimously determined that it is not in the best interests of Baxalta or its shareholders.


"The Board today reaffirmed its conclusion that Shire's proposal significantly undervalues Baxalta and its attractive prospects for growth and value creation, and that a merger at this time would be severely disruptive at this very early stage of Baxalta's existence as a public company and presents a significant and real risk to value creation for our shareholders," said Wayne T. Hockmeyer, Ph.D., Chairman of the Board of Baxalta.


The following is the text of the letter that was sent by Ludwig N. Hantson, Ph.D., Baxalta's Chief Executive Officer and President, on July 31, 2015 to Shire's Chief Executive Officer, Flemming Ornskov, with respect to Shire's proposal:



Dear Flemming,

As I previously indicated I would do, I have thoroughly reviewed your July 10, 2015 proposal with the Baxalta Board of Directors with the assistance of our legal and financial advisors.  During our meeting this week, the Board unanimously concluded that it is not prepared to engage with Shire in a discussion about a combination of our companies based on the value you indicated in your proposal and other important factors as noted below.


Our board strongly believes that Baxalta's independent global infrastructure and world-class manufacturing operations will provide an excellent platform to grow value for our shareholders.  As a new, publicly-traded entity only since July 1, we are just in the initial stages of implementing our growth strategy as a standalone company and our stock has not yet achieved a price level that appropriately reflects the company's value and prospects.  A transaction at the exchange ratio you proposed significantly understates Baxalta's true value.


Moreover, we do not believe that a combination of our two companies would be strategically complementary, or that our respective product portfolios would benefit from such a combination.  And we do not think the combination would generate substantial operational or revenue synergies, which would be critical to any potential value creation for our shareholders.  Perhaps even more importantly, a transaction at this time would be severely disruptive to our young organization and the implementation of a wide variety of critical commercial, R&D, and operational initiatives and thus carries with it significant risks for our shareholders.


Our board is mindful of its fiduciary obligations to Baxalta's shareholders, and we are confident in our standalone plan and our ability to generate significant shareholder value based on that plan.  Baxalta's platform is well positioned to generate substantial value for our shareholders and proceeding with a transaction at this time presents a significant and real risk to that value creation.  Our Board has evaluated your proposal in this context and concluded that it is not a basis for further discussions.



Ludwig N. Hantson

Chief Executive Officer and President


The Board of Baxalta is being advised by Goldman Sachs and Citigroup as to financial matters and Kirkland & Ellis as to legal matters.


About Baxalta

Baxalta Incorporated (NYSE: BXLT) is a $6 billion global biopharmaceutical leader developing, manufacturing and commercializing therapies for orphan diseases and underserved conditions in hematology, oncology and immunology. Driven by passion to make a meaningful impact on patients' lives, Baxalta's broad and diverse pipeline includes biologics with novel mechanisms and advanced technology platforms such as gene therapy. The Baxalta Global Innovation and R&D Center is located in Cambridge, Massachusetts. Launched in 2015 following separation from Baxter International Inc., Baxalta's heritage in biopharmaceuticals spans decades. Baxalta's therapies are available in more than 100 countries and it has advanced biological manufacturing operations across 12 facilities, including state-of-the-art recombinant production and plasma fractionation. Headquartered in Northern Illinois, Baxalta employs 16,000 employees worldwide.


Forward-Looking Statements

This communication includes forward-looking statements, including, but not limited to, those related to Shire's unsolicited proposal to acquire Baxalta, Baxalta's prospects as a standalone business, Baxalta's business strategy, expectations regarding Baxalta's future financial results and the ability to create stockholder value, and expectations regarding anticipated growth. Statements that are predictive in nature, that depend upon or refer to future events or conditions, that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions and all other statements in this communication that are not statements of historical fact are forward-looking statements. Such statements are made as of the date that they were first issued and are based on current expectations, beliefs and assumptions of management. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Baxalta's control and which could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the following: future actions that may be taken by Shire in furtherance of its unsolicited proposal; clinical trial results; satisfaction of regulatory and other requirements; actions of regulatory bodies and other governmental authorities; changes in laws and regulations; product quality, manufacturing or supply issues; patient safety issues; and other risks identified in Baxalta's Registration Statement on Form 10 and other Securities and Exchange Commission filings, all of which are available on Baxalta's website. Given the risks and uncertainties inherent in forward-looking statements, investors are cautioned not to place undue reliance on any of Baxalta's forward-looking statements.  Subsequent events and developments may cause Baxalta's forward-looking statements to change.  Baxalta expressly disclaims any intent or obligation to update any forward-looking statements except as required by law.






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