LONDON/TOKYO: Takeda Pharmaceutical agreed to buy London-listed Shire for 45.3 billion pounds ($62 billion) Tuesday, the biggest yet in a wave of deals sweeping the drugs industry. Assuming it wins the backing of shareholders, the deal will be the largest overseas purchase by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top 10 rankings of global drugmakers. The tie-up crowns a hectic few months of M&A activity as big drugmakers, including Novartis and Sanofi, have brought in promising medicines developed by younger firms.
The enlarged group will be a Japanese national champion in pharmaceuticals and a leader in gastroenterology, neuroscience, oncology, rare diseases and blood-derived therapies, used for serious conditions such as hemophilia.
Shire has profitable businesses selling drugs for hyperactivity and rare disorders but the size of the deal will make Takeda one of the most indebted drugmakers, prompting Standard & Poor’s to warn of a potential credit downgrade.
To pay off debts quickly, Takeda plans to slash thousands of jobs and cut back on duplicated drug research.
The deal, struck on the last day Takeda had to make a firm bid, is around 46 percent cash and 54 percent stock, leaving Shire shareholders owning around half of the combination. 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.
Shire investors will receive $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda American depositary shares for each share, valuing the offer at 48.17 pounds a share based on the latest price and exchange rate.
That is a 60 percent premium to the price before Takeda first declared its interest six weeks ago.
Shire’s shares were trading 4 percent up on the previous close at just over 40 pounds by 1230 GMT, still well below the agreed price and indicating that some uncertainty remains.
“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 percent of Shire’s voting shareholders. While some of them do not want to hold Takeda paper, Weber told reporters he believed most would accept.
“Their board and our board is confident that both shareholders will see the benefit of the acquisition,” he said.