Japan's Takeda agrees $62 billion takeover of Shire

Japan's Takeda agrees $62 billion takeover of Shire

Japan's Takeda agrees $62 billion takeover of Shire

Takeda offered to acquire all of Shire's shares for £46 billion. The two companies reached a merger agreement Tuesday.

Takeda said that it may reduce the combined workforce by 6 per cent to 7 per cent in the three years, post closing.

Takeda chief executive Christophe Weber said: "Shire's highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda".

With few late-stage experimental drugs in its own pipeline, Takeda needs lucrative new therapies.

The combination merges Shire's portfolio of treatments for rare diseases with Takeda's for cancer, gastroenterology and neuroscience. Takeda also would get increased exposure to the USA, the world's biggest pharmaceutical market and where Shire generates most of its revenue.

Shire, founded in a small office in Basingstoke 32 years ago before embarking on a rapid expansion, is domiciled in Dublin for tax purposes but has its head office in London.

Takeda said $30.1 billion in bridge loan financing would be replaced with a combination of long-term debt, hybrid capital and available cash ahead of completion, without providing a breakdown.

Takeda was advised by Evercore, J.P. Morgan and Nomura, while Shire worked with Citi, Goldman Sachs and Morgan Stanley.

The firms had been due to conclude the deal in April.

Takeda confirmed its pursuit of Shire in late March. Shore Capital, which also has a "buy" rating on the group, meanwhile lowered its valuation on the shares from 4,025p to 3,856p.

In view of high buyout price, Takeda Pharma's shares have continuously slipped in the recent months.

While the deal would boost Takeda's earnings potential, it also comes with risks. The company is based in Dublin for tax purposes but run from Boston and has shifted most of its operations from the United Kingdom to the US.

The companies eventually expect to realize about $1.4 billion in annual cost savings from combining, the majority of which will come from reducing duplicative functions in sales and marketing, Takeda said. The agreement comes more than three years after United States drugmaker AbbVie scrapped its agreed takeover of the London-listed rare disease specialist, following a clampdown on tax inversion deals by the Obama administration.

Takeda shareholders will own approximately 50% of the new company, which will be headquartered in Tokyo.

Previously, SoftBank Group Corp.'s 2016 purchase of British semiconductor designer ARM Holdings Plc. for 24 billion pounds was the largest foreign acquisition by a Japanese company.

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.

Takeda said it would maintain its headquarters in Japan and would evaluate consolidating Shire's operations into Takeda's in the Boston area, in Switzerland and in Singapore.

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