Tuesday 22 May 2018

Takeda wins Shire over at the fifth attempt

Takeda Pharmaceutical’s Tokyo office in Japan. Photo: Getty Images
Takeda Pharmaceutical’s Tokyo office in Japan. Photo: Getty Images

Ben Martin

Rare disease specialist Shire said on Wednesday it was willing to recommend a sweetened $64bn (€52.35bn) takeover offer from Japan's Takeda Pharmaceutical to shareholders, in what would be the biggest acquisition of a drug company this year.

But shares in Takeda extended recent losses, tumbling 7pc as investors fretted over its ability to buy a company twice its size, raising doubts about whether Shire shareholders will accept a bid that is 56pc in new Takeda shares.

The stock slide - 18pc since the news of a possible bid broke - makes the cash-and-share deal less appealing to Shire shareholders, some of whom may be reluctant or unable to hold Takeda shares.

Shire is listed in London, but has its tax base in Ireland.

"The chances are UK shareholders in particular are not going to want Takeda shares, so there's going to be a forced discount because some people are going to sell it," said Neil Dwane, global strategist at Allianz Global Investors, which holds 1.1pc of Shire, Thomson Reuters data showed.

Shire shares were up just 0.8pc at £39.60 by midday, well below Takeda's £49 offer, signalling scepticism about the deal as Takeda's falling stock price erodes the bid's $64bn headline value.

Without a deal, Shire shares could fall back to mid-March levels of £30 to £32, pressuring management to find other ways to realize value. Prior to Takeda's approach, Shire was already considering divestments and a split in its operations.

It is now four weeks since Takeda first revealed it was considering a bid and the absence of firm interest from rivals means investors see only a low chance of an interloper emerging. GlaxoSmithKline ruled itself out of the running for Shire on Wednesday.

The latest development, first reported by Reuters, comes after London-listed Shire rejected four previous offers from Takeda. The fifth offer is worth £49.01 per share, comprised of £27.26 per share in new Takeda shares and £21.75 per share in cash. That represents a 4.3pc premium to Takeda's fourth proposal on April 20 and 11.4pc more than its first approach on March 29.

Any deal is subject to the resolution of several issues, including completion of due diligence by Shire on Takeda. (Reuters)

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