Shire back in talks in the chase for Baxalta

Market Report: Investors expect a renewed bid to involve cash and shares

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)

Shire’s shareholders just don’t want a deal with Baxalta, especially not if it involves cash. Every time the drug maker closes in on another takeover bid for the US rare diseases firm, its share price plunges.

The FTSE 100 company, which slumped 210p to 4,089p yesterday, is said to have held talks with Baxalta over a second bid, having been rebuffed by Baxalta in August, just six weeks after it was spun out of Baxter.

After snapping up US biotech firm Dyax for $5.9bn (£3.9bn) last month, its chief executive Flemming Ornskov insisted Shire had not given up the chase for Baxalta.

On the previous terms, Shire’s all-share bid is worth $31.40 a share after a 30 per cent fall from the stock, making it around $6 cheaper than Baxalta’s share price. Investors expect a renewed bid to involve cash and shares.

The natural resources-heavy FTSE 100 extended its losing streak to eight sessions, closing down 78.72 points at a three-year low of 5,874.06 after another rout for commodity prices, which saw Brent crude oil lose 38 cents to $37.55 a barrel, near 11-year lows.

Miners dominated the biggest fallers, with Glencore the heaviest hit, down 5.37p at 80p, and Anglo American 12.15p lower at 280.8p.

Among the few blue-chip risers was InterContinental Hotels Group (IHG), the owner of Holiday Inn and Crowne Plaza, which picked up 16p to 2,511p after rival Accor snapped up the parent of Raffles and Fairmont in a $2.9bn deal. The City hopes IHG will be the next to be swept up by the wave of takeover activity in the hotels industry.

The FTSE 250, which is far less exposed to global forces, remains 4 per cent higher this year, compared with the FTSE 100’s 10 per cent dive.

On the mid-cap index, RPC rose 18.5p to a record high for the packaging group of 782.5p as it snapped up French bottle-top maker GCS Group from private equity firm PAI Partners for €650m (£473m).

Meanwhile, a profit warning from Tribal and a planned rights issue to raise £35m for the education services group, still without a chief executive, saw it plummet 26.88p to 27.5p.