Market Report: Shire could turn to Radius Health if Baxalta deal falls through

Shire releases its third-quarter results next Friday

Shire’s all-stock offer in August was worth $45 a share to Baxalta shareholders – about $12 higher than its share price at the time. (Corbis)

A takeover of Baxalta might be looking less likely by the day but rumour has it the Irish drugmaker Shire has its sights on another US rare disease specialist if that deal doesn’t go through.

Radius Health, which makes an osteoporosis treatment, is the name doing the rounds. Its Nasdaq-listed shares jumped more than 30 per cent over the past few days as speculation mounted, while Shire reacted similarly in London, gaining 136p to 4,511p.

Shire’s all-stock offer in August was worth $45 a share to Baxalta shareholders – about $12 higher than its share price at the time. Since the bid was rebuffed, however, Shire’s shares have tumbled 21 per cent, so the original terms value Baxalta at just $35 a share, meaning Shire will have to raise the stakes significantly or move on to another target.

Shire could provide illumination on its acquisition plans next Friday when it releases third-quarter results.

Blue chips finished the week on a high as the FTSE 100 rose 39.67 points to 6,378.34 with the prospect of a rise in US interest rates this year looking increasingly distant.

Investors gobbled up supermarket shares after healthy third-quarter numbers from the French giant Carrefour. Tesco rose 4.8p to 196.95p, Sainsbury’s gained 2.1p to 264.9p, while Morrisons put on 1.1p to 174.8p after a sell-off earlier in the week.

Burberry finished a dreadful week 25p lower at 1,277p as its luxury rival Hugo Boss followed its lead by slashing profit guidance following a slowdown in Chinese spending.

Liberum Capital heaped more pressure on the embattled engineers with a flood of downgrades. Analyst Ben Bourne acknowledged the sector’s stock market malaise but warned that “it is too soon to turn more positive”.

He suggested clients dump the oil-exposed engineers Weir Group, down 78p at 1,164p, and Rotork, which fell 4.1p to 177.1p.

GKN was the biggest blue-chip faller, down 10.2p to 270.3p, after Mr Bourne cut his target price to 300p.

On AIM, delays at the Humpback well hurt Falkland Oil & Gas, which lost 2.75p to 21.25p.