Market Report: Shire higher as investors rethink its $32 billion Baxalta pharma deal

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Investors are coming round to the $32 billion (£22 billion) bid for Baxalta by Shire, having for the past six months feared the deal could burn a hole in the Dublin-based drugmaker’s pocket.

Shire is buying the US rare diseases firm in a cash-and-shares deal after its initial all-stock bid was rejected in July.

The longer things went on, the more expensive a deal began to look to investors, who were concerned it would have to stuff the deal with so much cash it would no longer be worth the effort.

The shares dropped 25% from the all-time high they reached before the bid became public. 

Chief executive Flemming Ornskov predicted the company could make $500 million a year in cost savings, but yesterday revealed at the JP Morgan Healthcare Conference in San Francisco that “our internal synergy goals are much higher”.

Investors liked the sound of that and the shares rose 172p or 4.2% to 4286p, their second consecutive daily rise after tumbling 8.2% on Monday when the bid was accepted.

Shire was among the winners on the FTSE 100, which rose 66.38 points to 5995.62 as the oil price stabilised and with no shockwaves from China.

Shares in Jimmy Choo dipped 3.3p to 131.7p as Barclays cut its rating on the luxury shoe maker to equal weight ahead of its trading update, with China again highlighted as the reason.

“The short-term outlook for luxury is uncertain with China macro issues a key sector concern triggering weak global stock markets that can also have a knock-on effect on trading,” Barclays’ number-crunchers said.

Backers of Jimmy Choo will watch Richemont and Burberry’s trading statements tomorrow for clues about the real impact of the Chinese slowdown on business.


Downgraded: Designer shoemaker Jimmy Choo

Investors appeared pleased that Game Digital, 5p better off at 105p, avoided a second profit warning in three weeks, while the unusually mild weather was blamed for poor trading from home furnishing retailer Dunelm, which slipped 27.5p to 877.5p.

Meanwhile on the junior AIM market, Tungsten Corp’s resurgence continued as the shares advanced 3.5p to 65.5p when it emerged that founder and City rainmaker Edi Truell snapped up 100,000 CFD shares, lifting his stake to 15.85%.

That puts more daylight between him and the second-largest shareholder, Odey Asset Management, which has been building its stake despite an 80% crash last year.

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January 14, 2016 |
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