Combination creates leading global biotechnology company projected to deliver double-digit top-line growth with over $20 billion in annual revenues by 2020 

• No. 1 platform in rare diseases expected to generate 65% of total annual revenues    
• Multiple, durable billion-dollar franchises, each with best-in-class products   
• Robust portfolio includes over 30 recent and planned product launches with $5 billion sales potential by 2020  
• Efficient structure expected to yield annual operating cost synergies of over $500 million, with additionalrevenue synergies and a combined non-GAAP effective tax rate of 16-17%   
• Accretion to non-GAAP diluted EPS anticipated in 2017, the first full calendar year of ownership, and beyond  
• Attractive ROIC expected to exceed Shire’s cost of capital in 2020  
• Wayne T. Hockmeyer,  Baxalta’s Chairman, expected to become Deputy Chairman, and two additional Directors to be included from the Baxalta Board   

Shire plc and Baxalta Incorporated announced that the boards of directors of both companies have reached an agreement under which Shire will combine with Baxalta. Under the agreement, Baxalta shareholders will receive $18.00 in cash and 0.1482 Shire ADS per Baxalta share.  Based on Shire’s closing ADS price on January 8, 2016, this implies a total current value of $45.57 per Baxalta share, representing an aggregate consideration of approximately $32 billion. The exchange ratio is based on Shire’s 30-day trading day volume weighted average ADS price of $199.03 as of January 8, 2016, which implies a total value of $47.50 per Baxalta share.

The value of the offer, as of Shire’s January 8, 2016 closing ADS price, represents a premium of approximately 37.5% to Baxalta’s unaffected share price on August 3, 2015, the day prior to the public announcement of Shire’s initial offer for Baxalta. This will provide Baxalta shareholders with approximately 34% ownership in the combined company. The parties expect the transaction to close mid-2016.

Shire Chief Executive Officer Flemming Ornskov, M.D., M.P.H., commented:  

“This proposed combination allows us to realize our vision of building the leading biotechnology company focused on rare diseases. Together, we will have leadership positions in multiple, high-value franchises and become the clear partner of choice in rare diseases. Our expanded portfolio and presence in more than 100 countries will drive our growth to over $20 billion in anticipated annual revenues by 2020. Our due diligence has reinforced our belief in the combination, and we look forward to welcoming Baxalta colleagues to a shared entrepreneurial, patient-driven culture.”  

Susan Kilsby, Chairman of Shire, commented:  

“Together, Shire and Baxalta create a platform for sustainable innovation, growth and value creation. Shire is an experienced and disciplined acquirer with a track record of delivering shareholder value. Stakeholders of both companies are expected to benefit from the enhanced growth prospects, superior operational scale and efficiency and the strong financial and organizational profile of the combined entity.”

Baxalta Chief Executive Officer Ludwig N. Hantson, Ph.D., commented:  

“Today’s announcement marks a new path forward for our organization and is a testament to the significant progress we have made in achieving our strategic business priorities. This transaction presents a unique opportunity for Baxalta shareholders, who will receive substantial immediate value as well as an ongoing stake in a combined global leader in rare diseases with strong growth prospects. We bring to Shire a strong portfolio and pipeline of market-leading products, high-quality manufacturing capabilities and a talented global workforce that places patients at the center of everything we do. The combined organization will be well positioned to accelerate innovation and deliver enhanced value for all stakeholders.”

Wayne T. Hockmeyer, Ph.D., Chairman of Baxalta, commented:  

“We launched Baxalta to focus on purpose-driven performance, sustainable growth, and continuing our leadership in developing treatments for orphan and underserved diseases. While we have made great progress to date and have had a measurable impact across all our businesses, I look forward to joining the board of the combined company to help ensure that we infuse the best of both organizations and foster a new shared culture that has the resources, the passion, and the commitment to continue to make a meaningful difference in the lives of our patients and their families.”

Baxter International Chairman and Chief Executive Officer José E. Almeida commented:  

“Baxter fully supports the proposed combination of Shire and Baxalta, which will create a major biotechnology company and global leader in rare diseases. Baxter is pleased to support this value enhancing transaction.”

Shire will host a conference call for investors and analysts today, January 11, 2016 at 1:30 p.m. GMT / 8:30 a.m. EST / 5:30 a.m. PST. (Details below)

Combination Creates the Global Leader in Rare Diseases with a Sustainable Platform for Future Innovation, Growth and Value Creation  

The combination of Baxalta and Shire will create the number one rare diseases platform in revenue and pipeline depth, with best-in-class products in each of the following growing, multi-billion-dollar franchises: Hematology; Immunology; Neuroscience; Lysosomal Storage Diseases; Gastrointestinal / Endocrine; and Hereditary Angioedema (HAE).  The combined company will also possess a growing franchise in Oncology, with approved products and innovative compounds in development, as well as a robust late-stage Ophthalmics pipeline.

The combined portfolio will have an expanded range of therapeutic areas with more than 60 programs in development, including over 50 that will address rare diseases and the newly-approved Baxalta products ADYNOVATE, VONVENDI, and OBIZUR. Shire anticipates more than 30 recent and planned product launches from the combined pipeline, contributing approximately $5 billion in annual revenues by 2020.

Further, the combined company will benefit from expanded geographic reach across more than 100 countries, with a high-quality commercial organization and world-class manufacturing operations. Through a balanced portfolio and expanded therapeutic expertise and capabilities, the combination will enhance revenue diversification and optionality for the business, while strong cash flows will increase financial and operational scale. In total, the proposed combination will create a sustainable platform for future innovation and growth, yielding projected near- and long-term value for shareholders.

Leading Franchises, Each with Best-in-Class Products and a Foundation for Sustained Category Leadership in Rare Diseases  

The portfolio will include over 20 leading brands and a robust pipeline of expected new product launches with complementary positions across growing multi-billion-dollar franchises:  

Hematology   

• Baxalta has a well-established hematology portfolio based on its heritage and legacy of leadership in hemophilia. Baxalta offers a comprehensive portfolio of innovative therapeutics, including ADYNOVATE, Antihemophilic Factor (Recombinant), PEGylated, an extended circulating half-life recombinant factor VIII (rFVIII) treatment for hemophilia A which was recently approved in the U.S., and is focused on introducing new treatments for hemophilia and other rare chronic bleeding disorders to further reduce patient burdens

Immunology   

• Baxalta is contributing the broadest portfolio of immunoglobulin (IG) products in the industry, most notably the recently launched HYQVIA, a next generation subcutaneous IG treatment for patients with primary immunodeficiency, as well as a pipeline of innovative products across a broad range of potential new indications

Neuroscience   

• Shire has over 20 years of experience in neuroscience with a strong, growing ADHD franchise and pipeline, including a new VYVANSE indication for adults with moderate-to-severe Binge Eating Disorder

Lysosomal Storage Diseases  

• Shire brings industry-leading capabilities in the development and commercialization of a wide range of therapies for multiple rare and devastating genetic diseases including: VPRIV for long-term enzyme replacement therapy (ERT) for patients with type 1 Gaucher disease; ELAPRASE for patients with Hunter syndrome (Mucopolysaccharidosis II, MPS II); and REPLAGAL for long-term ERT in patients with a confirmed diagnosis of Fabry disease

Gastrointestinal / Endocrine  

• Shire’s Gastrointestinal / Endocrine portfolio is built on the strength of its 5-ASA products, LIALDA, for the treatment of mild to moderate ulcerative colitis, and PENTASA, for the treatment of mildly to moderately active ulcerative colitis, and recent additions of GATTEX/REVESTIVE, for adults with short bowel syndrome who are dependent on parenteral support, and NATPARA, as an adjunct to calcium and vitamin D to control hypocalcemia in patients with hypoparathyroidism

HAE  

• Shire brings HAE leadership through its currently approved prophylactic and acute therapies, CINRYZE and FIRAZYR, respectively,  and-pending completion of the Dyax acquisition-a Phase 3, potentially transformative prophylactic therapy

Ophthalmics   

• Shire is focused on building franchise leadership in ophthalmology with the 2016 projected launch of Lifitegrast, contingent upon regulatory approval, for dry eye disease; SHP640 for infectious conjunctivitis entering Phase 3 trials in 2016, and SHP607 for the treatment of retinopathy of prematurity, generating results from its Phase 2 trials which are expected in 2016

Oncology  

• Baxalta brings a growing oncology business and a broad platform that positions the combined company at the leading-edge of discovery and development of innovative therapies in hematological and other cancers. The portfolio includes ONCASPAR (pegaspargase), a marketed biologic treatment for acute lymphocytic leukemia, and late-stage, partnered products such as pacritinib, an investigational oral kinase inhibitor for the treatment of patients with myelofibrosis, and ONIVYDE (irinotecan liposome injection) for the treatment of patients with metastatic pancreatic cancer  

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