Takeda joins pharma giants with $62bn Shire deal

Takeda Pharma offers $62 billion in takeover of Britain's Shire

Japanese pharmaceutical company Takeda has agreed to acquire biotech company Shire for $62 billion. The pharmco's shares have lost more than 12 percent of their value over the past year, as compared with about a 3.6-percent gain in the Footsie.

Shire, the Dublin-headquartered biotechnology giant focused on rare diseases, looks set to be acquired by Takeda Pharmaceutical in a deal worth £46bn after an offer by the Japanese group was recommended to shareholders. Shareholders in the United Kingdom group will hold about 50 percent in the enlarged drugmaker following completion of the deal, which is slated for the first half of next year.

The companies have agreed that up to three Shire directors will join the board of the newly combined business. According to MarketBeat, Shire now has a consensus "buy" rating and an average price target of 4,585.75p.

Analysts have described Shire as an attractive target for Takeda, with a portfolio of existing treatments in fields where the barriers to entry are high and profits large. The company was saddled with debt from its $32 billion acquisition of Baxalta in 2016, a widely criticized deal, while generic drug makers have stepped up competition. Takeda's existing shareholders are facing a hard time as their stake will be reduced to half.

The takeover, reached after Shire rejected four of Takeda's prior offers, gives Takeda the wider global reach it has sought under CEO Christophe Weber, and adds to its portfolio drugs like Shire's blockbuster ADHD medicine Vyvanse.

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The deal is by far the largest acquisition of a foreign firm by a Japanese company, dwarfing SoftBank Group's 2016 acquisition of Britain's ARM Holdings in a $24.3 billion deal. Takeda is offering Shire shareholders a mixture of cash and stock.

Takeda expects substantial cost synergies of at least $1.4 billion.

Shire has a strong pipeline of potential drugs in development that complement's Takeda's work, she said.

The deal should help Takeda pivot away from its home base to more lucrative markets like the US and Europe, and add new drugs to its shrinking pool of patent-protected products. Takeda's largest previous purchase was a US$13.7 billion takeover of Nycomed in 2011. The deal, which still needs approval from shareholders, would take effect in the first half of 2019. Last year, the company expanded its footprint in the United States oncology market with the $4.7bn purchase of Ariad Pharmaceuticals.

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