Shire and longtime target Baxalta meeting to talk takeover: Bloomberg

Shire ($SHPG) has refused to give up on target Baxalta ($BXLT), which first rejected it 5 months ago. And its persistence may finally be paying off.

The two drugmakers are in takeover talks that include a sweetened buyout offer, Bloomberg reports, though no final decision has been made. Baxalta has been holding out for a higher offer with a cash component since it shot down Shire's $30 billion, all-stock bid over the summer, sources told the news service.

Shire initially structured the bid as all-stock in order to keep the tax benefits of Baxalta's July spinoff from parent Baxter Labs ($BAX) intact--and that spinoff itself was another reason the Illinois pharma wasn't interested in joining up with the Irish drugmaker.

Baxalta CEO Ludwig Hantson

As CEO Ludwig Hantson told investors in August, Baxalta--a brand-new company--hadn't had time to see its growth strategy play out.

And on top of that, he considered Shire's offer a "lowball" bid that wouldn't "generate substantial operational or revenue synergies."

Shire, of course, has billed the possible transaction differently, talking up the pair's potential as a global leader in rare diseases. A combined company could generate $20 billion in sales by 2020, with as many as 30 new drugs rolling out over the next 5 years, it says.

But there's more in it for Baxalta, too. A takeover by Dublin-based Shire would lower Baxalta's taxes--the same benefit that helped spur a recent megamerger agreement between Dublin's Allergan ($AGN) and New York's Pfizer ($PFE). Baxalta's projected tax rate next year is 23%, while a Shire combo would yield an effective rate of between 16% and 17%, Bloomberg notes.

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