Japanese drugmaker buying Shire for $62.4 billion

09 May, 2018, 00:38 | Author: Barbara Daniel
  • 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

In one of the biggest deals in the pharmaceutical industry's history and the biggest worldwide takeover by a Japanese company, Takeda Pharmaceutical today struck a deal to buy its larger Irish rival Shire Plc for $62 billion (£46 billion).

The drug maker will be paying almost 49 pounds in cash and stock for each share of the Ireland based company, Shire, as per the closing shire price of Takeda on 23 April (the day before the preliminary deal was announced).

Shire shareholders will own about half of the combined group after the deal, which will be the biggest in the sector since 2000 if approved by shareholders. Together, the two companies now employ about 50,000 staff.

On May 8, Japanese pharmaceutical giant Takeda announced it had finally come to an agreement to acquire Dublin-based drug maker Shire.

Takeda Pharmaceutical Co.'s largest acquisition would catapult the company into the top 10 within the global pharmaceutical industry.

"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.

To help finance the deal, the company received a $31 billion bridge loan, alarming some investors.

Takeda had previously said that expanding its oncology business was a significant reason why it was considering a bid for Shire, along with the desire to expand in along with gastrointestinal medicine and neuroscience.

Takeda faced a deadline of Tuesday set by United Kingdom regulators to make a firm offer for Shire, walk away or extend the deadline.

Although based in Ireland, Shire has most of its operations in Lexington and Cambridge and more than 3,000 workers in MA. The company expects $1.4bn in overall savings by the third year.

Takeda aims to maintain a net debt to EBITDA ratio of 2 times over the medium term, which the company described as a period of between three to five years.

It's also the largest takeover ever carried out by a Japanese company, according to data provider Dealogic.

The deal increases Takeda's exposure to the United States, the world's biggest pharmaceutical market.

Shares in Shire, meanwhile, have soared about 30% since late March. Takeda's largest previous purchase was a US$13.7 billion takeover of Nycomed in 2011. Last year, the company expanded its footprint in the U.S. oncology market with the $4.7bn purchase of Ariad Pharmaceuticals.

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