Shire $12.1 billion note offering to repay loans for Baxalta acquisition

October 3, 2016

REUTERS/Yuriko NakaoShire plc recently sold billions of dollars in debt to help repay borrowings under a credit facility used to fund the pharmaceutical company’s acquisition of Baxalta Inc.

Ireland-based Shire filed a supplemental prospectus with the Securities and Exchange Commission on Sept. 20 pricing the note offering worth about $12.1 billion.

According to the prospectus, the company’s subsidiary, Shire Acquisitions Investments Ireland DAC, will sell four series of senior notes in aggregate principal amounts ranging from $2.5 billion to $3.3 billion.

The interest rate on each series is 1.9 percent, 2.4 percent, 2.875 percent and 3.2 percent, respectively. The earliest series of notes to mature does so in 2019 and the longest-term series matures in 2026, the prospectus says.

Shire initially filed a prospectus in connection with the offering Sept. 8 but had not priced the sale at that time. In that filing, the company said it will use proceeds from the offering to repay loans outstanding under its January 2016 “Bridge Facilities Agreement.”

The Bridge Facilities Agreement is a revolving credit facility, pursuant to which Shire borrowed $12.39 billion to finance a portion of its previously announced acquisition of Baxalta, according to the Sept. 8 prospectus.

Baxalta merger

In a joint statement issued Jan. 11, Shire and Baxalta announced their agreement to combine in a transaction valued at about $32 billion. Shire initially offered to acquire Baxalta in August 2015, according to the statement.

Baxalta is the former global biopharmaceuticals business segment of pharmaceutical company Baxter International Inc. but was spun off into a standalone company in 2014, the statement said. Since Baxter still owned a significant stake in Baxalta, Baxter is also a party to the merger agreement with Shire, according to the statement.

The companies said Baxalta shareholders would receive $18 in cash and 0.1482 Shire shares in exchange for each Baxalta share.

Based on Shire’s closing price at the time of the announcement, the companies said the cash and equity compensation implied a total current value of $45.57 per Baxalta share.

The deal value represented a 37.5 percent premium to Baxalta’s share price as of Aug. 3, 2015, the day before Shire announced its initial offer for Baxalta, according to the companies’ statement.

The companies said former Baxalta shareholders would own about 34 percent of the combined company’s outstanding shares following consummation of the merger.

The companies announced completion of the acquisition June 3.

Shire plc Form FWP, 2016 WL 04991721 (Sept. 20, 2016).