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Shire, Baxalta to merge in $32 billion big-pharma deal

Shire said upcoming drugs such as Adynovate and Vonvendi could yield about $5 billion in annual revenue.

Jeff Lagasse, Associate Editor

Ireland-based Shire and Illinois-based Baxalta announced Monday they will be joining forces, merging in a deal estimated to be worth about $32 billion.

The agreement, which should be finalized later this year, is expected to create a leading biotechnology company with double-digit growth, netting a projected $20 billion in annual revenues by 2020.

Shire will pay $18 a share in cash and 0.1482 shares of the combined company for each Baxalta share, valuing the company at $45.57 a share.

[Also: Pfizer, Allergan announce $160 billion merger, 'inversion' deal would shift HQ overseas]

The joint company will have a hand in a number of different areas, including neuroscience, immunology, hereditary angiodema, oncology, hematology and late-stage ophthalmics.

Baxalta also has a line on the development of a number of rare disease drugs, which could result in the combined company pumping out a fair amount of treatments over the coming years; Shire said in a statement that in four years' time, some upcoming drugs such as Adynovate and Vonvendi could yield about $5 billion in annual revenues.

Dr. Ludwig Hantson, CEO of Baxalta, said in a statement that the merger is good news for Baxalta shareholders, "who will receive substantial immediate value s well as an ongoing stake in a combined global leader in rare diseases with strong growth prospects."

[Also: Drug price pressure holds pharma stocks back on Wall Street, Morningstar says]

Susan Kilsby, chairman of Shire, said stakeholders of both companies "are expected to benefit from the enhanced growth prospects, superior operational scale and efficiency and the strong financial and organizational profile of the combined entity."

Baxalta stands to benefit from Shire's lower tax rate. Its current rate is 20 percent, while the combined company anticipates an effective tax rate of between 16 and 17 percent.

Twitter: @JELagasse

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