$62 bln Takeda-Shire deal biggest ever Japanese overseas purchase

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Takeda Pharmaceutical agreed to buy London-listed Shire for 45.3 billion pounds (62 billion US dollars) on Tuesday, the biggest yet in a wave of deals sweeping the drugs industry.

Assuming it wins the backing of shareholders, the deal will be the largest overseas purchase by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top 10 rankings of global drugmakers.

The tie-up crowns a hectic few months of M&A activity as big drugmakers, including Novartis and Sanofi, have brought in promising medicines developed by younger firms.

Christophe Weber, president and CEO of Takeda Pharmaceuticals Company /VCG Photo

The enlarged group will be a Japanese national champion in pharmaceuticals and a leader in gastroenterology, neuroscience, oncology, rare diseases and blood-derived therapies, used for serious conditions such as haemophilia.

Shire has profitable businesses selling drugs for hyperactivity and rare disorders but the size of the deal will make Takeda one of the most indebted drugmakers, prompting Standard & Poor's to warn of a potential credit downgrade.

To pay off debts quickly, Takeda plans to slash thousands of jobs and cut back on duplicated drug research.

The deal, struck on the last day Takeda had to make a firm bid, is around 46 percent cash and 54 percent stock, leaving Shire shareholders owning around half of the combination.

Shire had rejected four previous offers, due to price concerns and the fact that the Japanese company is proposing to pay for much of the acquisition in stock.

Shire said last month it would be willing to recommend an offer from Takeda after it rejected four previous approaches.

VCG Photo

Shire traces its roots back to 1986, when it began as a seller of calcium supplements to treat osteoporosis, operating from an office above a shop in Hampshire, southern England.

Since then, it has grown rapidly through acquisitions to generate revenues of about 15.2 billion US dollars last year.

But it has been under pressure in the past 12 months due to greater competition from generic drugs and debt from its widely criticized 32 billion US dollar acquisition of Baxalta in 2016.

Takeda told Shanghai Daily in 2014 that it viewed China as its second biggest pharmaceuticals market, and had plans to launch and develop innovative drugs in the country.

The company's China operations currently employ over 2,000 people, with a major manufacturing plant in north China's Tianjin set up in 1996 and a Shanghai-based development center established in 2012 to research oncology and general medicine in Asia.

Source(s): Reuters