Baxalta Inc (NYSE:BXLT) – a company that develops drugs for blood, cancer, and immune disorder has announced the start of an underwritten public offering that is approximated at $2.34 billion. The public offer is for its common stock that was previously issued to the company and is currently owned by Baxter International Inc (NYSE:BAX), that is Baxalta’s former parent company. In this offering, Baxalta will not receive any proceed or debt-for-equity exchange since it is not selling any share.
Before the closure of the offering, Baxter will trade the share of Baxalta common stock that are to be sold in offering for indebtedness of Baxter currently held by four securities which are, BofA Merrill Lynch, UBS Securities LLC, Credit Suisse Securities and J.P. Morgan Securities LLC. The four banks are collectively referred to as the Selling Stockholder in this case. After the debt-for-equity exchange, Baxter ownership stake in Baxalta will be reduced from about 13.8% to 5.1% based on Baxalta closing stock price on March 14, 2016. Baxter will exchange approximately 59.4 million Baxalta’s shares, with the four banks.
Baxalta shares slid by 0.6 to $37.90 in after-hours trading while Baxter shares remained unchanged at $40.12
The Selling Stockholder will then sell Baxalta common stock to underwriters in connection with the public offering. BofA Merrill Lynch, J.P. Morgan, UBS Investment Bank and Credit Suisse are acting as the underwriters for the offering.
In January Shire PLC – Dublin-based pharmaceutical company agreed to buy Baxalta for approximately $32 billion after a six-month pursuit which happened in a rapidly consolidating sector. During the same period, Baxter reduced its Baxalta stake from 19.4 in a stock offering.
Baxalta noted in February that it’s fourth quarterly earnings dropped amid spinoff expenses. The company also recorded a 2.4% revenue decline in the hemophilia business that it attributed to adverse exchange rates.
A registration statement on Form S-1 has been filed with the Securities and Exchange though it has not yet become effective. This means that these securities cannot be sold nor make offers to buy or accept any offer made until the registration statement becomes effective. The notice of the public offer should not be used to constitute a tender to sell or accept offers to buy.