SHIRE 
An agreement would successfully end Dublin-based Shire's five-month pursuit of Bannockburn, Illinois-based Baxalta and create one of the world's leading specialists in rare diseases.
Baxalta's board rejected an all-stock offer from Shire in August, saying it had significantly undervalued the company.
While the exact terms of the deal could not be learned, Shire has now added enough cash to its previous all-stock offer for talks to advance, the people said. Baxalta would be valued in excess of $30 billion in any deal, one of the people added.
Baxalta shares were up 4.4 percent at $39.74 in afternoon trading in New York. American depository shares of Shire were trading down 0.4 percent at $194.40.
The sources asked not to be identified because the negotiations are confidential. Baxalta and Shire spokespeople offered no comment.
The challenging deal talks with Baxalta came after Shire pursued other deals in the rare diseases sector. Shire announced on Nov. 2 it was buying Dyax, which manufactures treatments for a rare genetic disease, for $5.9 billion.
A combination of Shire and Baxalta would add to the more than $600 billion in healthcare merger deals this year, which has been the busiest in the history of healthcare deal making.
Baxalta develops biotech treatments for rare blood conditions, cancers and immune system disorders. It was spun off was spun off from Baxter International Inc in July.
By Carl O'Donnell and Pamela Barbaglia
