Takeda Agrees To Buy Shire In £46bn Deal

Analysts say the deal would be a smart move by Takeda as it looks to diversify but there are also concerns that it could be overextending itself financially

Takeda has agreed that up to three Shire directors will join the company's board once the acquisition is completed.

To help fund the cash portion of the deal, Takeda said it has secured a bridge loan facility of $31bn with JPMorgan Chase, Sumitomo Mitsui Banking and MUFG Bank, among others.

Takeda announced the news today, May 8. Its agreed $62 billion takeover of much larger Shire Plc would push combined revenue above $31 billion as the Japanese firm seeks growth in new markets amid patent expirations and drug pricing pressures at home.

"Shire's highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda", Christophe Weber, Takeda CEO, said in a statement. And prospects looked increasingly dim after news of Takeda's interest sent its shares south and Shire's soaring.

"Over the last 30 years, Shire has become the global leader in treating rare diseases, delivering innovative products that transform patients' lives", said Shire chairman Susan Kilsby. Takeda added that Shire's drug portfolio would benefit from greater exposure in Japan and emerging markets.

Although based in Ireland, Shire has most of its operations in Lexington and Cambridge and more than 3,000 workers in MA.

Japanese drug makers have pursued growth overseas as sales slow at home.

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Based on regulations in Britain's stock exchange, where Shire is now listed, the two drugmakers have extended the deadline for announcing whether they will formally propose the acquisition from 5 p.m. on April 25 to 5 p.m. on Tuesday London time.

Takeda said it represents a premium of around 64% compared with the price of its shares in late March, when rumours of Takeda's interest began to swirl.

While the deal would boost Takeda's earnings potential, it also comes with risks. Takeda's research and development also includes vaccines.

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.

Takeda and Shire's annual sales total almost $31 billion taken together, which would make the combined company larger than many industry stalwarts like AstraZeneca and Eli Lilly. Shire shares traded up 3.7%.

The deal is by far the largest acquisition of a foreign firm by a Japanese company, dwarfing SoftBank Group's 2016 acquisition of Britain's ARM Holdings in a $24.3 billion deal.

During this period, Shire sold its oncology business to France's Servier for $2.4 billion.

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