Takeda reaches deal to buy Shire for around 46 billion pounds

Takeda reached an agreement to acquire Shire for approximately 46 billion pounds ($62.2 billion), with the offer representing 49.01 pounds ($66.22) per share, comprised of $30.33 per share in cash and 0.839 shares of the Japanese drugmaker, the companies announced Tuesday. The deal has been approved by both boards, and is expected to close in the first half of 2019.

Christophe Weber, Takeda CEO, said "Shire's highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda." Weber added "together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies."

Last month, Shire said that it would "be willing to recommend" that shareholders accept a revised takeover offer from Takeda, valued at 46 billion pounds, comprised of 21.75 pounds ($29.39) in cash and 27.26 pounds ($36.83) in stock, for a value of 49 pounds ($66.21) per Shire share. Takeda had previously submitted four proposals to acquire Shire, having disclosed in March that it was considering making an offer to buy the drugmaker.

Commenting on the deal, Shire chairman Susan Kilsby said "we firmly believe that this combination recognises the strong growth potential of our leading products and innovative pipeline and is in the best interests of our shareholders."

According to the companies, upon the closing of the transaction, Takeda shareholders will own approximately 50 percent of the combined group, which will have its headquarters in Japan. Meanwhile, Takeda will evaluate consolidating Shire's operations into its own in the Boston area, Switzerland and Singapore, with the combined company's workforce of around 52 000 employees likely to be cut by between 6 percent and 7 percent.

Some Takeda investors have expressed concern about the size of the transaction, with the Japanese drugmaker using a $30.1 billion bridge loan to finance the deal. However, Weber suggested that the acquisition will generate substantial cash flow, enabling the debt to be paid down quickly.  In addition, Takeda may also look to sell some of Shire's businesses. "There is 25 percent (of the portfolio) which is more isolated products. Some are doing very well, some less well. That's where you could have some portfolio assessment and potentially some disposals," Weber said.

Takeda indicated that the purchase will also allow for "significant recurring cost synergies," with savings of about $600 million in duplicated R&D costs and overall savings of $1.4 billion by the third year. "The cost synergies seem to be much bigger than expected in the next three years," remarked Credit Suisse analyst Fumiyoshi Sakai.

For related analysis, see ViewPoints: Weber's world - Takeda lays out its potentially biggest move to date.

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