Shire’s board last night set the stage for a potential Takeda acquisition by saying it would recommend to shareholders approval of Takeda’s approximately £46 billion ($64 billion) offer for the company—if other terms can be worked out.
In addition to resolving those terms, Shire disclosed in a statement, its acceptance of a Takeda takeover would hinge upon “completion of reciprocal due diligence by Shire on Takeda,” as well as a unanimous and unconditional recommendation by Shire’s board and final approval by Takeda’s board.
In separate statements, Shire and Takeda confirmed they are in ongoing talks and that they had agreed to extend to May 8 a deadline for reaching a deal.
Takeda’s latest bid—its fifth—prices Shire at £49 ($68) per share, consisting of £27.26 ($38) per share in new Takeda shares, to be listed in Japan and in the U.S. through an American Depositary Shares listing, and £21.75 ($30) per share cash. Upon completion of the deal, Shire shareholders would own approximately 50% of the combined company.
“Takeda and its Board have remained disciplined with respect to the terms of the Revised Proposal and Takeda intends to maintain its well-established dividend policy and investment grade credit rating,” Takeda said in a statement this morning.
Takeda’s latest bid rose above the Japanese pharma giant’s four previous offers for Shire, all rejected by its board. Those offers started with an approximately £41 billion ($57 billion) takeover bid, which would have left Shire shareholders owning 50% of the combined company.
Takeda raised its offers to approximately £43 billion (about $60 billion), then approximately £44 billion ($61 billion), followed by a slightly higher but still approximately £44 billion ($61 billion) proposal on Friday. The Friday offer valued Shire at £47 ($65.50) a share, up from £46.50 ($64.86).
The previous offers would have given Shire shareholders between 50% and 51% of the Shire–Takeda combo.
Takeda Stock Falls 18.5%
Takeda disclosed its intent to acquire Shire on March 28. Since then, Takeda shares have fallen 18.5% on the Tokyo Stock Exchange, from ¥5532 ($50.65) to ¥4510 ($41.30) at the close of trading early today. That includes a one-day drop of 7% from early yesterday, when shares closed at ¥4851 ($44.42).
During that same period, Shire’s share price has risen 13%, from £35.00 ($48.80) on March 28 to £39.58 ($55.18) as of 9:10 am today—including a one-day 0.7% rise from £39.30 ($54.79) yesterday.
Under CEO Christophe Weber, Ph.D., Takeda has increasingly sought to grow through mergers and acquisitions, in light of the shrinking population in its home market of Japan, as well several patent expirations, including that of blood cancer treatment Velcade® (bortezomib).
Takeda proceeded with one of those acquisitions today, joining with TiGenix to announce the start of the acceptance period of Takeda’s tender offer for all outstanding securities of TiGenix.
Takeda agreed in January to acquire TiGenix, a stem cell therapy developer, for up to €520 million ($633.5 million) in a deal designed to strengthen the buyer’s late-stage gastroenterology pipeline and presence in the U.S. specialty care market.
Takeda and Shire have yet to confirm whether Takeda’s offers for Shire include Shire’s oncology business—which Shire on April 16 agreed to sell to Servier for $2.4 billion. Takeda has 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.
All three categories are among Takeda’s key therapeutic areas.