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Japan's Takeda to buy Ireland's Shire for $62bn

posted onMay 8, 2018

Takeda, Japan's 237-year-old pharma group said it had agreed to buy Ireland-based rare diseases specialist Shire for 46 billion pounds ($62.3 billion) in a cash and stock deal. The agreement was reached after a monthlong pursuit by Takeda, during which London-listed Shire rejected four previous offers, saying they undervalued the company. 

Under the terms of the acquisition, each Shire shareholder will be entitled to receive $30.33 in cash for each Shire share and either 0.839 new Takeda shares or 1.678 Takeda ADSs. The transaction has been approved by both companies’ boards of directors, and is expected to close in the first half of calendar year 2019. Immediately following completion of the transaction, Takeda shareholders will hold approximately 50 percent of the combined group. 

If the deal goes through, it will be the largest overseas takeover by a Japanese company to date and will put Takeda among world's top 10 drugmakers by revenue. Up to three Shire directors will join the Takeda board after the buyout is completed. 

“Shire’s highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda. Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies" Christopher Weber (pictured) president and chief executive officer of Takeda said.

"We are looking forward to the benefits this combination will bring to patients worldwide, the opportunities it will bring for our employees and the returns it will deliver for our shareholders” he added.

Takeda CEO Christopher Weber

Weber, a Frenchman who became Takeda's first non-Japanese CEO in 2015 has been seeking growth in new markets, hunting for acquisitions amid patent expirations and drug pricing pressures at home. Last year, the company expanded its footprint in the U.S. oncology market with the $4.7 billion purchase of Ariad Pharmaceuticals Inc.

“With a truly innovative portfolio and pipeline, I believe that the combination of the two companies is in the best interests of shareholders and offers an opportunity to improve the lives of even more patients globally with rare and highly specialized conditions” Flemming Ornskov, chief executive officer of Shire, said. 

Takeda said the integrated company will maintain its headquarters in Japan expand its R&D presence in the Boston area and have major regional locations in Japan, Singapore, Switzerland and the U.S. Together, the combined group will have leading positions in two of the largest drug markets globally: the U.S. and Japan.

The acquisition is expected to result in Takeda being the only pharmaceutical company listed on both the Tokyo Stock Exchange in Japan, where it will continue to have its primary listing, and the NYSE in the U.S., enabling it to access two of the world’s largest capital markets. 

Shares in Shire have soared about 30% since late March and rose 3% to £39.82 in early trade today. Meanwhile, Takeda’s shares have fallen nearly 18 per cent since it revealed its interest in Shire.

Takeda was advised by Evercore, J.P. Morgan, and Nomura, while Shire received financial advice from Citi, Goldman Sachs, and Morgan Stanley. To help fund the cash portion of the deal, Takeda said it had agreed to a $30.85 billion bridge loan from JPMorgan Chase Bank NA, Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd., among others.

The company expects it may reduce the combined 52,000 workforce by 6 percent to 7 percent in the three years after the takeover. 

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