Takeda, Shire reach agreement on buyout

Fredrick Soto
May 9, 2018

Japanese drugmaker Takeda has agreed to buy Shire for 46 billion pounds ($62.4 billion) in cash and stock, one of the biggest deals ever in the pharmaceuticals industry, the companies said Tuesday. Takeda's existing shareholders are facing a hard time as their stake will be reduced to half.

To help finance the deal, the company received a $31 billion bridge loan, alarming some investors. Having Shire also will increase Takeda's focus on gene-oriented treatments rather than traditional chemical compounds.

Takeda said it will launch a "review of the functions undertaken" at Shire's current headquarters in Dublin within the first year. The firm expects to general annual pretax cost synergies of $1.4 billion by the end of the third year.

Sequeira said the proposed acquisition of Shire will give Takeda more business in the U.S. More than 30 percent of Takeda's business is in the U.S., but that share will grow to about 50 percent after the purchase.

Takeda and Shire shareholders will each own about half of the combined company.

Shares in the FTSE 100 listed company rose by 5% n early trading but remain well below the offer price, indicating that Shire shareholders still have reservations about the deal.

S&P Global Ratings placed Takeda on a watch and warned it may lower the company's ratings by up to two notches, it said in a statement on Tuesday.

Takeda said the transaction will bring in savings of about $600 million in duplicated research and development costs.

Takeda, like many Japanese companies, been expanding overseas to compensate for slowing growth at home. The deal, which still needs approval from shareholders, would take effect in the first half of 2019.

And the acquisition would catapult Takeda, which has few late-stage experimental drugs in its own pipeline, into the ranks of the world's biggest pharmaceutical companies.

Christophe Weber, Takeda CEO, said: "Shire's highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda". The company was saddled with debt from its $32 billion acquisition of Baxalta in 2016, a widely criticized deal, while generic drug makers have stepped up competition.

In a separate statement today, Takeda said it will continue to focus on growing its oncology portfolio, which along with its hematology holdings expanded a year ago when Takeda acquired Ariad Pharmaceuticals for $5.2 billion.

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