Shire and Baxalta ended months of M&A speculation this morning by announcing a $32 billion merger that the companies said would create a global market leader in rare diseases.

The boards of both companies have approved the deal, which is subject to approval by shareholders of Shire and Baxalta, plus regulatory approvals, redelivery of tax opinions delivered at signing, and other customary closing conditions. The deal is expected to close in mid-2016.

The companies projected they would generate more than $20 billion in combined annual revenues by 2020—a benchmark Shire has committed to in recent years—with rare disease holdings expected to account for 65% of total revenues.

“In sum, the combination will provide multiple billion-dollar franchises, each with best-in-class products and a platform for sustainable innovation, sustainable growth and value creation,” Shire CEO Flemming Ornskov, M.D., said this morning on a conference call with analysts. “This combination will create an industry-leading platform with significant opportunity for future growth.”

Shire brings to the combined company products in gastrointestinal/endocrine diseases; hereditary angioedema (HAE); neuroscience; and lysosomal storage diseases. Baxalta contributes products in its specialty areas of hematology, immunology, and oncology.

The combined company said it will also oversee pipelines ranging from Baxalta’s oncology candidates to Shire’s candidates in ophthalmics, which include Lifitegrast, projected to launch this year pending regulatory approvals.

Shire and Baxalta said the merged company will oversee a combined pipeline of more than 60 programs in development, including more than 50 focused on rare diseases and Baxalta products approved in recent years.

These include ADYNOVATE, (Antihemophilic Factor [Recombinant], PEGylated), approved by FDA in November for adults and adolescents, aged 12 years and older, who have Hemophilia A; VONVENDI, the first recombinant von Willebrand factor approved by the FDA last month; and OBIZUR [Antihemophilic Factor (Recombinant), Porcine Sequence] for bleeding episodes in adults with acquired hemophilia A (acquired Factor VIII [FVIII] deficiency), approved in 2014.

“The more I‘ve seen of Baxalta, the more I and we have been impressed with their capabilities, their people, and their portfolio,” Dr. Ornskov said.

Shire said it expected to carry out more than $500 million in cost-cutting or “synergies” within the first three years after the deal closes. Shire said the synergies will be achieved by increasing efficiency, scaling up of the combined business, aligning Baxalta programs to Shire’s lean operating model, and optimizing the combined R&D portfolio.

Shire added that it expects to generate additional revenue synergies and a combined non-GAAP effective tax rate of 16-17% by 2017.

The companies said their merger is expected to add to non-GAAP diluted EPS in 2017, the first calendar year after the projected close of the deal, and beyond, while generating annual operating cash flow of $6 billion beginning in 2018.

Baxalta shareholders will receive $18 in cash and 0.1482 Shire ADS per Baxalta share. The deal assumes a total current value of $45.57per Baxalta share based on Shire’s closing ADS price on January 8.

Shire said it secured an $18 billion fully underwritten bank facility to finance the combination. The new bank facility has a one year life, with a one-year extension available at Shire’s option.

Wayne T. Hockmeyer, Baxalta’s chairman, is expected to become deputy chairman of the combined company’s board, which will include two additional directors from Baxalta’s board, the companies said.

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