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Japan’s Takeda plans to buy London-based Shire for $62Bn

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Published on : May 09, 2018

Merger and acquisition activities have been reshaping the contours of the strategic landscape in the global pharmaceutical industry in recent years. Large drugmakers, especially in developed markets, are using these strategic deals as springboard to introduce promising drug candidates. Japan’s Takeda Pharmaceutical Company Ltd., a globally prominent drugmaker, announced on May 8, 2018 that it is buying Shire Plc., an Irish-headquartered specialty biopharmaceutical company. The deal is valued at 45.3 Bn pounds (US$62 Bn) and is a combination of 46 percent cash and 54 percent stock by Takeda. The deal is considered by many as the largest overseas purchase made so far by a Japanese company, provided it gets a nod by shareholders of both the companies.

Acquisition to enable Takeda to consolidate its Operations, Globally

The combined group will enable Takeda to emerge as a nationally prominent drug maker and lead the pack with its offerings on neurology, gastroenterology, oncology, and rare diseases, in addition to its blood-derived therapies.

Though London-listed Shire has a significant clout in the business for drugs meant to treat rare disorders and hyperactivity, the massive size of the deal will put Takeda under debts. To get rid of the debts, it plans to prune its workforce slashing it by as much 6 - 7 percent, put an end to duplicate drug research, and strive to generate sizeable cash flows.

Merger Deal to Generate Substantial Cash Flows and Annual Cost Synergies for Takeda

Under the deal, the investors of Jersey-registered biopharmaceutical will receive US$30.33 in cash and either of the two: 0.839 new Takeda shares and 1.678 Takeda American depositary shares (ADSs) for each of its share.

For the deal to go through, it should secure the support of 75 percent of voting shareholders in Shire while it should earn two-thirds nod from Takeda shareholders. For long, the Osaka-headquartered drugmaker has been keen on leveraging on the potential of acquisition to expand its global reach. Only last year, it has bought the U.S. oncology company ARIAD Pharmaceuticals, Inc. The company believes that post the recent acquisition, substantial cash flows that it will generate and the annual cost synergies will have a massive bearing on its underlying profit.