BUZZ-Shire: falling share price puts Baxalta deal under strain

** Continuing weakness in Shire (Xetra: S7E.DE - news) 's share price putting deal to acquire Baxalta (Berlin: 9BX.BE - news) under strain as synergies evaporate, according to traders and analysts

** Original (LSE: 0IQ2.L - news) offer of 0.1687 Shire ADRs for every Baxalta share valued deal at $30 bln or c.$45/shr as at Aug 4

** However, a 25 pct fall in Shire on pessimism over the deal, as well as sector weakness, means co will likely have to sweeten its offer or abandon pursuit of Baxalta. Chart: http://link.reuters.com/cet75w

** Original offer would have seen earnings accretion of 11 pct by 2016 and 18 by 2020 based on Shire's share price (£57.20) at the time of the bid, according to Berenberg

** Current share price would make deal loss making in first two years and only 2 pct accretive by 2020

** Tax position of Baxalta listing (co was spun off from Baxter in July) means cash cannot be offered - Berenberg estimates Shire would need to offer 0.24 ADRs/shr to break $50/shr level

** Baxalta has already rejected $45/shr offer; strong anti-takeover defences also a stumbling block

** Shire PE of 15.6x now back at a discount to peer group (17.2x) and historic valuation (17.1x) - could draw out buyers if deal is abandoned, traders say Chart: http://link.reuters.com/fet75w

(RM (LSE: RM.L - news) : alasdair.pal.thomsonreuters.com@reuters.net)