BAXTER INTERNATIONAL INC. 
LONDON (Reuters) - Shire (>> Shire PLC) Chief Executive Flemming Ornskov is stepping up his campaign to get Baxalta (>> Baxalta Inc) to the negotiating table as he pushes the benefits a $30 billion takeover offer to the U.S. biotech company's shareholders.
He has a fight on his hands, with investors in newly listed Baxalta arguing he must pay more, although one person close to the Dublin-based drugmaker said there had been "encouraging feedback" from shareholders on the logic of the tie-up.
Ornskov and Shire's chairwoman Susan Kilsby, a former mergers and acquisition banker, met Baxalta investors on both sides of the Atlantic at the end of last week and will continue the charm offensive this week.
Baxalta CEO Ludwig Hantson, meanwhile, reiterated his belief that the value of Shire's offer was "wholly inadequate".
Shares in Shire and Baxalta both rose on Monday, helped by a bullish note from Cowen analyst Ken Cacciatore, who said a takeover did not preclude an eventual acquisition of the enlarged group by a potential suitor like Pfizer (>> Pfizer Inc.).
Shire, which took the market by surprise with its move to forge the world's leading rare diseases company by buying Baxalta, also needs to reassure its own investors.
Joe Walters, senior portfolio manager at Royal London Asset Management, a top 20 investor in Shire, said buying Baxalta was riskier than its previous smaller deals but he was ready to see a bump in the all-share offer, which was worth $45.23 a share at Aug. 3 market prices.
“Around the $50 mark is what it seems management would have to up their offer to, and I think shareholders would be comfortable, or at least mildly comfortable, at that level," he told Reuters. "But I think they would start to get a little nervous if the offer went much above that price."
Rudi Van den Eynde, head of thematic global equity at European investment firm Candriam, which has exposure to both companies, was more cautious and described the proposed transaction as "somewhat negative".
"We would have preferred a deal around a new, promising investigational drug instead of this major deal that comes close to empire building," he said. "Flemming Ornskov is a hard-driving and well-respected CEO and he could make this deal work, however."
POISON PILL
Shire needs to get Baxalta talking if its proposal is to have a chance, since the U.S. group boasts state-of-the-art defenses, with a "poison pill" that effectively stops unwanted suitors buying more than 10 percent and a hard-to-replace board.
In dismissing the offer, Baxalta argues its shares have not yet achieved a price level that appropriately reflect its prospects, since it was only spun off from Baxter International (>> Baxter International Inc) last month.
"We expect that our stock will move up in price and valuation over the next couple of quarters, just as with nearly every other spin," CEO Hantson said on a call hosted by Cowen on Monday.
"The implied value of Shire’s proposal is no different from what we think we can achieve on our own in the next six to 12 months, and our investors and analysts agree. In this environment, given our prospects and our outlook, Shire’s offer is not compelling."
If Shire were to sweeten the offer, however, it might be open to negotiations, said one person familiar with the U.S. company.
Share price fluctuations since Aug. 3 mean Shire's offer is currently worth around $42.50.
(Additional reporting by Nishant Kumar and Greg Roumeliotis; Editing by Jane Merriman)
By Ben Hirschler and Sinead Cruise
