Shire and Takeda agree £46 billion takeover deal

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Shire and Takeda agree £46 billion takeover deal

The board of FTSE 100 drug firm Shire (LON:SHP) has recommended that shareholders accept Takeda’s takeover bid. The offer of $33.03 in cash and 0.839 New Takeda shares values the company at approximately £46 billion.

The Dublin-based outfit had received five prior offers since March from its Japanese rival. Shire management rejected the prior bids due to the valuations and the ratios of cash and stock contained in the offers. The companies’ management teams believe that the deal will offer compelling financial benefits by combining complementary R&D platforms with an attractive geographic footprint.

The deal still needs to be approved by the shareholders of both companies and is not expected to complete until the first half of next year. Up to three of Shire’s directors will join the Takeda board after completion is finalised.

While Shire stockholders  may have cause to celebrate, opinion may be cooler in Japan. To fund the deal, Takeda will take on debt equal to more than 5 times EBITDA. The firms expect that improved cash flow after the deal will allow rapid deleveraging, but Takeda shareholders will need to approve the deal and may yet prove a roadblock.

Shire’s Chairman, Susan Kilsby said: “We firmly believe that this combination recognizes the strong growth potential of our leading products and innovative pipeline and is in the best interests of our shareholders, our patients and the communities we serve.”

Christophe Weber, Chief Executive Officer of Takeda, said: “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. 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.

Shares in Shire were up by 159p to 4,015p at 13:50 BST.

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