Shire, the London-listed maker of treatments for ADHD and rare diseases, has finally agreed to a takeover by the Japanese firm Takeda after it raised its offer to £46bn, making it the biggest deal in the pharmaceutical sector since 2000.
After being rebuffed four times, Takeda secured a recommendation from the Shire board by raising the amount of cash in its offer to $30.33 (£22.43) a share. Shire shareholders will also receive 0.839 new Takeda shares for each share. That makes the offer worth £49.01 a share, about £5 more than Takeda’s initial bid in late March.
Shares in the FTSE 100 company rose by nearly 5% to £40.34 butremained well below the offer price, indicating that Shire shareholders have reservations about the deal. There are also concerns that the move will overstretch Takeda’s finances. Its shares have lost nearly a fifth of their value since it revealed its interest in Shire.
Takeda’s chief executive, Christophe Weber, is heading to London next week to explain the deal to shareholders. It needs support from 75% of Shire shareholders and two-thirds of Takeda investors to succeed.
Takeda, which was founded in Osaka in 1781, has set aside $9.1m for retention bonuses, which will double the pay and bonuses for Shire’s chief executive, Flemming Ørnskov, and its finance chief, Thomas Dittrich, who are staying on until the deal completes, which is expected to happen by mid-2019.
It will be the biggest overseas acquisition by a Japanese company, giving Takeda Shire’s lucrative rare diseases portfolio and a larger presence in the US.
The deal is expected to generate cost savings of at least $1.4bn (£1bn), 43% of which is expected to come from combining the two firms’ research and development operations, in particular the early stage pipelines.
There may be a 6-7% cut in the total workforce of 52,000, Weber indicated, representing up to 3,640 jobs. The bulk of the job cuts will affect sales and administration. Shire employs 300 people in the UK at a sales office in Paddington.
Ørnskov said the deal was in the best interests of shareholders and offered “an opportunity to improve the lives of even more patients globally with rare and highly specialised conditions”.
Shire investors will own about half of the combined group, which will be listed on the Tokyo stock exchange. As many as three Shire directors will join the Takeda board.
Shire was founded above a shop in Basingstoke, Hampshire, in 1986 and makes the ADHD drugs Adderall and Vyvanse, and the dry eye disease treatment Xiidra as well as treatments for rare diseases. The company is based in Dublin for tax purposes but is run from Boston where it also has most of its laboratories. It came close to being taken over by the US drugmaker AbbVie in 2014, but the deal was scuppered by a clampdown on tax inversions, through which US companies bought overseas businesses to secure a lower tax rate. Shire went on to acquire the US company Baxalta with its haemophilia portfolio for £24.7bn in 2016.
