Shire Drops as Funds Sell Baxalta for Baxter Exchange Offer
(Bloomberg) -- Shire, which is buying Baxalta in a cash & stock deal, closed 3% lower in London as tender arbitrage funds are selling Baxalta stock, according to Oppenheimer event driven trader Cliff Ackers.
- Note that today is the first of the three days which will be used to calculate VWAP for the Baxter, Baxalta exchange offer
- Under the exchange offer, for each $100 of Baxter common stock tendered, holders will get ~$107.52 of Baxalta common stock, a ~7.5% discount
- Ackers says the Shire/Baxalta deal spread is “already a large position for the risk arbitrage community,” and the added supply from the selling of Baxalta shares is causing the spread to widen
- Widening began yesterday as some of the tender arbs positioned themselves to get in front of this event, Ackers says
- Says expectation was that there was not enough supply of Baxalta shares to make much of a difference, but just demonstrates how the market is positioned on the arb spread
- This is an opportunity to set Baxalta/Shire ADR spread ahead of the May 27 vote, for those few that have capacity: Ackers
- Shire ADR/Baxalta deal spread is trading at $2.15 vs Wednesday close of $1.80
- Short Interest as of May 11: Baxter has 10.4% of shares outstanding, Shire ADR 21%, Baxalta 0.5%: Markit
Alert:
HALISTERSource: BFW (Bloomberg First Word)
Tickers BXLT US (Baxalta Inc)
BAX US (Baxter International Inc)
SHP LN (Shire PLC)
People Cliff Ackers (Oppenheimer Holdings Inc)
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