Shire Open to Higher Takeda Offer After Rejecting $60 Billion

• April 19 2018
• John Lauerman, Marthe Fourcade

Shire Plc said it has turned down repeated takeover offers from Takeda Pharmaceutical Co., the latest for about $60 billion, and said the two sides are in talks about another “more attractive” transaction.

Shire Plc said it has turned down repeated takeover offers from Takeda Pharmaceutical Co., the latest for about $60 billion, and said the two sides are in talks about another “more attractive” transaction.

Takeda said it offered 46.50 pounds ($66.16) a share in cash and stock last week for Shire in a bid to extend its global reach. The U.S. company’s board and its advisers found the offers “significantly undervalue the company and Shire’s growth prospects and pipeline.”

Takeda has been ramping up its takeover ambitions under Chief Executive Officer Christophe Weber, as the company seeks growth overseas amid patent expirations and a shrinking domestic population. Shire would bring new assets in gastrointestinal diseases and nervous-system ailments, and key treatments in the late stages of testing.

Shire was responding to a statement earlier Thursday from Takeda, in which the Japanese company said the U.K.-listed drugmaker had rejected its advances. Under British takeover rules, Takeda had until next week to make an offer or walk away, after it initially expressed interest in Shire last month.

Regardless of the outcome of the talks, Takeda said it remains “well-positioned to continue its transformation, delivering portfolio growth while strengthening its pipeline and boosting profitability.”

“Takeda and its board reiterate that it will remain disciplined with respect to the terms of any such offer,” the company’s statement said. Takeda suggested it wouldn’t go hostile, seeking instead the unanimous backing of Shire’s board.

Flushing Out Bidders

The most recent bid is a 51 percent premium to Shire’s closing price on March 27, the day before Takeda confirmed its interest. Shares of Lexington, Massachusetts-based Shire surged as much as 12 percent in London, where they’re listed.

“We think that Takeda’s recently expressed interest in Shire may flush out other potential bidders, most likely among the U.S. pharma heavyweights including Pfizer, Amgen and AbbVie,” analysts at United First Partners said in a note.

Takeda made offers of 44 pounds a share on March 29, and 45.50 pounds a share on April 11, Shire said. With a market value of about $38 billion, the Japanese company is smaller than the target.

Deal Flurry

The latest proposal, made last week, comes amid a flurry of transactions in the pharmaceutical sector, marked by GlaxoSmithKline Plc’s $13 billion agreement last month to buy out Novartis AG’s stake in the two companies’ consumer-health joint venture.

Just this week, Merck KGaA agreed to sell its over-the-counter unit to Procter & Gamble Co. for $4.2 billion, Sanofi said it would sell its European generic-drug business to buyout firm Advent International Corp. and Shire agreed to sell its cancer unit to France’s Servier SAS for $2.4 billion.

Takeda’s largest purchase to date was a $13.7 billion takeover of Nycomed A/S in 2011. Last year, the company expanded its footprint in the U.S. oncology market with the $4.7 billion purchase of Ariad Pharmaceuticals Inc.

"Where there’s a will there’s a way," said John Schroer, sector head of U.S. health care at Allianz Global Investors. "If they really want to force this, they can get this done. But it’s going to require a tremendous amount of leverage."

— With assistance by Cynthia Koons