Megadeal Merger
On December 5 shareholders of Takeda Pharmaceutical Co. voted in favor of the company’s $62 billion megadeal to purchase Shire PLC with 88 percent of the votes supporting the megadeal. The vote, which was seen by some observers as an endorsement of Chief Executive Officer Christophe Weber’s strategy to transform the Japanese drugmaker into a global powerhouse, crushed an opposition campaign to “derail the biggest overseas acquisition by a Japanese company,” according to the Wall Street Journal.
The merger would allow Takeda to gain entry to the rare disease market. Investors in Shire, which is based in the United Kingdom, overwhelmingly approved the deal with 99.8 percent voting in favor. The deal is expected to be completed on January 8.
Takeda waged a nine-month campaign to convince investors to approve the deal. It puts Takeda into the top 10 drug-makers in terms of revenue, with emphasis on rare diseases and plasma-derived therapies. The merger will also give Takeda a larger presence in the U.S., the world’s largest pharmaceutical market, and resources to bolster its R&D and pipeline of experimental drugs. Takeda is assuming $30 billion in added debt in the deal and faces risks of a rating cut.
Shareholders who opposed the deal were concerned that Takeda was abandoning its Japanese roots. They were also anxious about financial risks and the impact on earnings and the company’s dividend.
Takeda shares dropped 2.2 percent in Tokyo on December 5, and the stock has dropped 25 percent since Takeda announced that it wanted to buy Shire in March. The Japanese drug-maker anticipates that the cash flow generated from the acquisition will help reduce the company’s debt following the completion of the merger. Takeda expects to cut its debt to two times adjusted earnings within three to five years. Takeda investors anticipate new figures on cost and synergies from the merger. The may also be asset disposals and a possible $10 billion divestment plan to cut debt.
On the other hand, Shire has seen its shares soar, rising 48 percent since March 27. Shire’s shares went up another 3 percent when the shareholder approval was announced.
According to Christophe Weber, “With shareholder approval secured, we are looking forward to closing the acquisition in the coming weeks to create a more competitive, agile, highly profitable, and therefore more resilient company, poised to deliver highly innovative medicines and transformative care to patients around the world.”
Takeda had stated that would divest Shire’s pipeline compound SHP647, which is now in Phase III clinical trials, to reduce concerns about a future potential overlap between the companies’ inflammatory bowel disease products. The takeover has already obtained clearance from regulators in the US, Japan, China and Brazil.
Headquartered in Japan, Takeda is the largest pharmaceutical company in Asia and one of the top 20 largest pharmaceutical companies in the world by revenue. Its focus is on metabolic disorders, gastroenterology, neurology and inflammation, as well as oncology through its independent subsidiary, Takeda Oncology. Shire, which describes itself as “the leading global biotechnology company focused on serving people with rare diseases,” has products for hematology, immunology, neuroscience, lysosomal storage disorders, gastrointestinal/internal medicine/endocrine and hereditary angioedema, oncology and ophthalmics.
