Published: Wed, May 09, 2018
Markets | By Noel Gibbs

Takeda clinches $62B deal to buy drugmaker Shire

Takeda clinches $62B deal to buy drugmaker Shire

Japanese pharmaceutical company Takeda has agreed to acquire biotech company Shire for $62 billion.

Takeda has been conducting due diligence for the past two weeks, but Shire had rejected its offer four times on price disagreement and also because it wanted more in cash and less in stock.

The deal, which has now been recommended to shareholders, values Shire at about £48.17 per share based on stock price and exchange rates yesterday, a 57 per cent premium, and was unchanged from the agreement towards the end of last month.

The combined company plans to complement Takeda's areas of therapeutic focus-namely oncology, gastroenterology, and neuroscience therapeutic areas plus vaccines-with Shire's strengths in rare diseases and other areas.

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Takeda and Shire expect the transaction to close in the top half of 2019; upon completion, Takeda shareholders will own around 50 percent of the combined entity.

If it materialises, the deal would give Takeda greater access to the U.S. and European healthcare markets.

For the deal between Takeda and Shire to proceed, 75% of Shire's voting shareholders must support the transaction.

Up to three Shire directors will join the board when the deal is completed and Takeda will retain the services of key staff, including Shire CEO Flemming Ornskov, who will get 200 percent of his 2018 annual salary and target bonus.

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"Shire's highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda", said Takeda CEO Christophe Weber. Its stock (London:SHP) closed in London at £4.0345, a gain of 4.6 percent on the previous close, reflecting continued uncertainties about the feasibility of the deal and the large component of Takeda paper contained therein.

The transaction gives Takeda, a maker of cancer and gastroenterology drugs, greater access to the United States market, while Shire will get greater exposure in Japan and emerging markets.

Takeda, which has seen its market value slide to $34 billion since announcing its interest, is taking over a much bigger rival. Dan Mahoney, fund manager for Polar Capital, told Reuters, "I think it is a good deal for Shire shareholders but not everybody may think that". Takeda also announced that the deal will cut R&D costs by about $600 million, with overall savings of $1.4 billion by the third year. Last year, the company expanded its footprint in the USA oncology market with the $4.7 billion purchase of Ariad Pharmaceuticals Inc.

Jobs will go, with the group's combined 52,000 workforce likely to be reduced by 6-7 percent.

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Takeda said it will maintain its headquarters in Japan and will evaluate consolidating Shire's operations into Takeda's in the Boston area, Switzerland and Singapore. "That's where you could have some portfolio assessment and potentially some disposals", Weber said.

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