Shire and Baxalta in takeover stand-off around $35bn bid

Drug maker Shire is likely to improve its takeover offer for US competitor Baxalta after its first offer was rebuffed, but has put pressure on its rival to make some concessions first.

The Dublin-headquartered pharmaceuticals group will have to add around $5 per share to its initial $45.23 all-share offer for Baxalta, sources told various Sunday newspapers.

But the sources said Shire wants the US drug group to grant access to its accounts first.

Any increase to the bid will need to be made in exchange for Shire shares, rather than in cash, in order to keep the deal attractive from a tax perspective to Baxalta's US shareholders, though this will mean further dilution for existing Shire shareholders.

Read more: Shire urges Baxalta to enter talks after $30.6bn offer declined

Nevertheless, Shire's chief executive Flemming Ornskov and American chairwoman Susan Kilsby are confident the US company's board and shareholders are interested, and have been busily lobbying institutional investors on both sides.

Kilsby's appointment at Shire initially was focused on fending off the unwanted advances of US rival AbbVie, but her real experience is in dealmaking, having headed the mergers and acquisitions department of Credit Suisse.

She and Ornskov, who is a former colleague of Baxalta boss Ludwig Hantson at Switzerland's Novartis, remain optimistic and people close to Baxalta told the FT that the US company is not opposed to a deal, even though it was only just spun out of parent company Baxalta in early July.

Read more: Shire to begin Baxalta bid talks despite poison pill

The pair have been forced to slow their burners as many bankers and executives are away for their summer holidays.

But, according to the Mail on Sunday, sources on both sides said the August impasse was not likely to last too long as Ornskov "is not the sort of person to let the grass grow under his feet".

The sources said the opening offer "wasn’t close, but we’ll have to see how it plays out".