Takeda to buy Shire in $62b 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

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

Japanese drugmaker Takeda has reached a $62 billion deal to buy rival Shire in the world's biggest takeover so far this year.

As part of the merger agreement, Shire shareholders will be entitled to receive $30.33 in cash for each Shire share owned and 0.839 shares either 0.839 new Takeda shares or 1.678 new Takeda ADSs, according to Takeda.

Takeda and Shire shareholders will each own about half of the combined company.

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". It represents a 60% premium to the share price low from before Takeda confirmed its interest in a buy, he wrote in a Tuesday note to clients.

The companies have agreed that up to three Shire directors will join the board of the newly combined business.

Shire had said last month that it was "willing to recommend" the proposal - the fifth offer in a series of improved bids - subject to certain conditions being met.

Susan Kilsby, chairman of Shire, added that by combining with Takeda, "Shire helps create an even stronger biopharmaceutical company, with a robust R&D pipeline and expanded global footprint".

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The move comes after UK-listed Shire, a rare disease specialist, had rejected Takeda's advances four times since late March.

Shire's forte is rare diseases in fields such as blood and immunity, as well as nerve diseases.

The acquisition is expected to see Takeda gain potentially promising new drugs and also to expand its sales channels.

Takeda has focused on developing and commercialising innovative therapies that address unmet clinical needs in gastroenterology, oncology and neuroscience plus vaccines. The company expects $1.4-billion in overall savings by the third year.

The Japanese company has a market value of just $33 billion, stoking fears about how much debt it will have to take on to fund the acquisition.

Takeda is the largest pharmaceutical in Japan.

Shire has offered Takeda a large presence in the US and an expertise in the rare diseses. Last year, the company expanded its footprint in the U.S. oncology market with the US$4.7 billion purchase of Ariad Pharmaceuticals. The combined company will be headquartered in Japan, but Takeda said it will boost its research and development presence in the Boston area, where both companies have sites.

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