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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Takeda Pharmaceutical Company Limited    4502   JP3463000004

TAKEDA PHARMACEUTICAL COMPANY LIMITED

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Shire rejects $63 billion Takeda bid as Allergan drops pursuit

04/19/2018 | 02:48pm EST
FILE PHOTO: Takeda Pharmaceutical's signboard is seen on its headquarters building in Tokyo

NEW YORK/LONDON (Reuters) - Rare disease drug maker Shire Plc (>> Shire) said on Thursday it had rejected a $63 billion cash-and-stock acquisition offer by Japan's Takeda Pharmaceutical Co Ltd (>> Takeda Pharmaceutical Co Ltd), while Allergan Plc (>> Allergan plc) reversed course on pursuing a rival bid.

NEW YORK/LONDON (Reuters) - Rare disease drug maker Shire Plc said on Thursday it had rejected a $63 billion cash-and-stock acquisition offer by Japan's Takeda Pharmaceutical Co Ltd, while Allergan Plc reversed course on pursuing a rival bid.

The high-stakes drama underscores the surge in dealmaking this year in the pharmaceutical sector, as large players look for promising assets to improve their pipelines. An acquisition of Shire by Takeda would be by far the biggest acquisition of a drug company year-to-date.

Botox-maker Allergan confirmed on Thursday it was considering an offer for Shire after Reuters reported on its interest, sending its shares down 7 percent.

Later on Thursday, Allergan Chief Executive Brent Saunders decided to drop his pursuit of London-listed Shire after receiving pushback from some of his shareholders, who were concerned about the company overstretching its resources, according to people familiar with the matter, who asked not be identified discussing confidential talks. Allergan then issued a second announcement stating it did not intend to make an offer for Shire.

Dublin-based Allergan, which has a market capitalization of $52 billion, had $30 billion in debt as of the end of December, the legacy of a string of acquisitions. This has weighed on Allergan's ability to carry out big acquisitions.

Allergan's exploration of a bid for Shire was part of its wider strategic review, Allergan said in a statement. This review is currently unlikely to lead either to a major acquisition or a breakup of the company, one of the sources said.

Reuters also first reported on Thursday that Takeda had made a cash-and-stock offer of 46.50 pounds ($66.20) a share for Shire. This prompted both companies to confirm the move and announce that Shire had rejected it, although their negotiations are continuing.

Buying Shire would be the largest ever overseas acquisition by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top ranks of global drugmakers.

It would be Weber's boldest move by far, significantly boosting Takeda's position in rare diseases, including a blockbuster hemophilia franchise, gastrointestinal disorders and neuroscience, where Shire is a leader in drugs to treat hyperactivity.

But it would be a big financial stretch since Shire, with a market value of more than 34 billion pounds ($48.3 billion), is worth a lot more than Japan's biggest drugmaker, which has a market capitalization of 4.1 trillion yen ($31 billion).

An acquisition of Shire would have given Allergan heft in the rare diseases space at a time when Saunders is seeking to cement its status as a purveyor of innovative drugs. Saunders' plans to sell Allergan to Pfizer for $160 billion were scuppered two years ago after the U.S. Treasury changed the rules on corporate tax inversions.

Saunders "was a huge deal guy and everyone was kind of waiting for the next big deal," said Kevin Kedra, an analyst with Gabelli & Co, which holds shares of both Allergan and Shire.

If there was to be a big share component to a deal it would have to come before a vote of shareholders, he noted. "Shareholders seem to be voting this morning," Kedra said.

Takeda said it would remain disciplined in its approach and intended to maintain its dividend policy and investment-grade credit rating, adding that: "Discussions between the parties regarding a potential offer are ongoing."

MORE CASH WANTED

Shire confirmed it had received three conditional proposals from Takeda, but said they significantly undervalued the company's growth prospects and drugs in development.

Takeda's latest 46.50 pounds offer was made on April 12 and comprised 17.75 pounds in cash, which would be paid in U.S. dollars, and 28.75 pounds worth of new Takeda shares. Shire said that valued it at approximately 44 billion pounds ($62.6 billion), based on total issued and to be issued share capital.

The two earlier cash-and-share offers were worth 44 and 45.50 pounds per share, respectively.

Under UK takeover rules, Takeda has until April 25 to make a firm offer or walk away, after it said last month it was considering a bid.

Based on Takeda's market capitalization, Shire shareholders would end up owning approximately 51 percent of the enlarged group, Shire noted.

Bernstein analyst Wimal Kapadia said Shire was likely to be pushing for a larger cash component in current talks but Takeda was already stretched, suggesting the chances of a deal being consummated were still "reasonably risky."

Shire has been under pressure in the past 12 months, with its shares down by a third before Takeda's interest was made public, due to greater competition from generic drugs and debts from its $32 billion acquisition of Baxalta in 2016.

Shire said in January it would run its attention deficit hyperactivity disorder (ADHD) business, which consists mainly of its blockbuster drug Vyvanse, separately and possibly seek a separate listing.

Earlier this week it struck a deal to sell its cancer drugs for $2.4 billion to unlisted French group Servier.

(Reporting by Greg Roumeliotis in New York and Ben Martin and Ben Hirschler; Additional reporting by Paul Sandle, Carl O'Donnell and Bill Berkrot; editing by Bill Trott and Lisa Shumaker)

By Greg Roumeliotis, Ben Martin and Ben Hirschler

Stocks treated in this article : Takeda Pharmaceutical Co Ltd, Shire, Allergan plc

© Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
ALLERGAN PLC 0.00%End-of-day quote.0.97%
JUST GROUP PLC -1.46% 74.35 Delayed Quote.7.30%
NEXT PLC -0.03% 7880 Delayed Quote.11.21%
SEEK LIMITED 1.26% 28.83 End-of-day quote.1.05%
SPACE CO.,LTD. 0.13% 790 End-of-day quote.0.13%
TAKEDA PHARMACEUTICAL COMPANY LIMITED 3.54% 3714 End-of-day quote.-1.09%
THE LEAD CO., INC. 0.49% 824 End-of-day quote.-1.90%
US DOLLAR / JAPANESE YEN (USD/JPY) 0.08% 103.693 Delayed Quote.0.58%
WILL GROUP, INC. 4.97% 1057 End-of-day quote.5.07%
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Financials
Sales 2021 3 228 B 31 148 M 31 148 M
Net income 2021 202 B 1 947 M 1 947 M
Net Debt 2021 3 840 B 37 053 M 37 053 M
P/E ratio 2021 35,7x
Yield 2021 4,76%
Capitalization 5 913 B 57 034 M 57 045 M
EV / Sales 2021 3,02x
EV / Sales 2022 2,83x
Nbr of Employees 47 495
Free-Float 99,1%
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Technical analysis trends TAKEDA PHARMACEUTICAL COMPANY LIMITED
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TrendsNeutralNeutralNeutral
Income Statement Evolution
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Mean consensus BUY
Number of Analysts 13
Average target price 5 150,00 JPY
Last Close Price 3 782,00 JPY
Spread / Highest target 71,9%
Spread / Average Target 36,2%
Spread / Lowest Target 8,41%
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Managers and Directors
NameTitle
Christophe Weber President, CEO & Representative Director
Constantine Saroukos Chief Financial Officer & Director
Andrew S. Plump Director, Research & Development President
Michael E. Mendelsohn Chief Medical & Scientific Officer
Yasuhiko Yamanaka Director
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