Biggest ever drug industry deal struck
Japan's Takeda Pharmaceutical buys its Irish rival Shire for $62bn
11 May, 2018
The acquisition will propel Takeda into the top 10 rankings of global drugmakers.
Japanese drugmaker Takeda reached a $62bn deal to buy rival Shire, marking the biggest deal yet in a wave of transactions sweeping the drugs industry, news wires reported. It's also the largest takeover ever carried out by a Japanese company, according to data provider Dealogic. Analysts say Takeda is eager to acquire Shire in order to boost its global presence and get hold of its portfolio of rare disease medicines, which have high profit margins. The acquisition will propel the Japanese company, led by Frenchman Christophe Weber, into the top 10 rankings of global drugmakers.
The deal values Dublin-based Shire at $62.1bn, excluding debt. Including Shire's debt, the takeover is worth more than $80bn, according to Dealogic. Shire's main markets are in the US, China and Japan. Most of its employees are in the US. Takeda said it would maintain its global headquarters in Japan and evaluate consolidating Shire's operations into those of Takeda in the Boston area, Switzerland and Singapore.
The agreement for acquisition came on the last day for Takeda to make a firm bid. Shire had rejected four previous offers, due to price concerns and the fact that the Japanese company is proposing to pay for much of the acquisition in stock. The final deal is approximately 46% cash and 54% stock, leaving Shire shareholders owning around half of the combined group. “I think it is a good deal for Shire shareholders, but not everybody may think that. However, the risk is that if shareholders vote this down then the shares are going to go down a lot,” said Polar Capital fund manager Dan Mahony, who owns both Shire and Takeda stock. The deal must get the support of 75% of Shire's voting shareholders. While some of them do not want to hold Takeda paper, Christophe Weber told reporters he believed investors would back the transaction. The deal also needs two-thirds approval from Takeda shareholders.
Weber became Takeda's first non-Japanese CEO in 2015 and has been hunting for acquisitions to make the company more global and reduce its exposure to a mature Japanese pharmaceutical market. Prior to his arrival, Takeda bought Nycomed for $14bn in 2011 in its previous biggest deal. Last year, Weber bought US cancer specialist Ariad Pharmaceuticals for $5bn.
Some analysts have suggested Takeda could sell off certain Shire businesses to make the deal more manageable, but Weber said gastroenterology, neuroscience, oncology, rare diseases and blood products were all important areas to be retained.
Shire traces its roots back to 1986, when it began as a seller of calcium supplements to treat osteoporosis, operating from an office above a shop in Hampshire, southern England. Since then, it has grown rapidly through acquisitions to generate revenues of about $15.2bn last year. But it has been under pressure in the past 12 months due to greater competition from generic drugs and debt from its $32bn acquisition of Baxalta in 2016, a widely criticised deal.