Integration and Acquisition Costs

For the year ended December 31, 2016, Shire recorded integration and acquisition costs of $883.9 million, primarily due to the acquisition and integration of Baxalta and Dyax and related contract termination costs. The Baxalta integration is estimated to be completed by mid to late 2019 and the integration of Dyax is substantially complete as of December 31, 2016.

As part of the Company’s activities to integrate Baxalta, it terminated certain employees and announced plans to close certain facilities. For the year ended December 31, 2016, the Company incurred costs relating to employee termination benefits of $381.2 million including severance and acceleration of stock compensation. The Baxalta integration activities are ongoing and the Company is continuing to evaluate the total costs expected to be incurred and the time-frame.

The following table summarizes the related reserve as of December 31, 2016:



(In millions)	Severance and employee benefits
As of January 1, 2016	$	—
Amount charged to integration costs	267.3
Paid/utilized	(193.3		)
As of December 31, 2016	$	74.0

For the year ended December 31, 2015, Shire recorded net integration and acquisition costs of $39.8 million. The net integration and acquisition costs principally comprises costs related to the acquisition and integration of NPS Pharma, Viropharma, Dyax and Baxalta of $189.7 million, offset by a net credit relating to the change in the fair value of contingent consideration liabilities of $149.9 million. This net credit principally relates to the acquisition of Lumena, reflecting the agreement in the third quarter of 2015 to settle all future contingent milestones payable to former Lumena shareholders for a one-time cash payment of $90.0 million and the acquisition of Lotus Tissue Repair, Inc. reflecting a lower probability of success for the SHP608 asset (for the treatment of Dystrophic Epidermolysis Bullosa (“DEB”)) as a result of certain preclinical toxicity findings.

For the year ended December 31, 2014, Shire recorded integration and acquisition costs of $158.8 million, comprised of $144.1 million relating to the acquisition and integration of ViroPharma and a net charge of $14.7 million relating to the change in fair value of contingent consideration liabilities mainly related to the acquisition of SARcode Bioscience Inc. (“SARcode”) offset by credits in relation to the acquisition of FerroKin BioSciences, Inc., reflecting the decision to place the Phase 2 clinical trial for SHP602 on clinical hold.