Takeda gets $62bn Shire deal after its long battle

Bloomberg

Christophe Weber, the chief executive officer of Takeda Pharmaceutical Co., has faced a string of challenges in his $62 billion pursuit of UK drugmaker Shire Plc. The Japanese company’s shares have tumbled, dissident shareholders complained and Shire repeatedly rebuffed his bids before agreeing to a deal.
Now the Frenchman has scored a big victory with Takeda saying the deal received support from at least 88 percent of votes at a special shareholders meeting in Osaka. That clears one of the last hurdles for the biggest acquisition announced globally this year. Shire’s shareholders were expected to vote on Wednesday, and if they approve the deal, it will be on track to close January 8.
Weber, 52, is now poised to head one of the world’s biggest drugmakers with lucrative therapies for rare diseases and a sizable footprint in the US. But it also leaves him managing more than $30 billion in additional debt, and he faces pressure to ensure that the 237-year-old company holds on to its Japanese heritage even as it looks overseas for growth.
Takeda shares whipsawed between gains and losses in trading in Tokyo. They were up 0.7 percent. The acquisition hasn’t helped the stock, which has fallen 24 percent since the Japanese company announced its interest in Shire in March. Shire, meanwhile, has seen its shares rally, jumping 48 percent since March 27. The cash flow from the deal gives Takeda three to five years of added time to build up its own pipeline of experimental drugs, most of which are still in the early stages of development, Fumiyoshi Sakai, an analyst at Credit Suisse, said.
“Takeda is buying time,” Sakai said. “In that sense, Shire is the perfect match to fill in the gap. Now is 7 trillion yen worth five years? That’s yet to be seen.”
Weber is Takeda’s first foreign chief executive and one of the few senior international leaders left in Japan, a country already grappling with the recent ouster of Nissan Motor Co.’s iconic chairman, Carlos Ghosn. The Takeda CEO has sought to revive growth by revamping its research department and expanding overseas as the Japanese market slows.
A small group of Takeda shareholders in Japan publicly campaigned against the Shire deal in recent months. Its members said they are primarily concerned with the financial risk of the added debt, as well as the impact on earnings and the company’s dividend. Some argued that Takeda would no longer be a Japanese company if the deal went through.
Weber has sought to persuade investors of the benefits of acquiring Shire, saying that the added cash flow will help fund better research. His public statements after the announcement of the deal have often started with a pledge to keep Takeda’s Japanese roots even as it pursues global expansion. The combined company’s headquarters will be in Japan.
When Takeda and Shire arrived at an agreement in May, the $62 billion cash and stock deal was the largest announced globally this year, data compiled by Bloomberg show.
Takeda will benefit from a greater presence in the US, the world’s largest pharmaceutical market. Its portion of sales from the US will grow to 48 percent of revenue from 34 percent after it completes the purchase.
“The expansion of Takeda’s US footprint is a big part of the rationale for this deal,” said Morningstar analyst Karen Andersen. Many of Shire’s products, particularly plasma and rare disease therapies, are sold to hospitals, which could give Takeda more leverage with negotiations for some of its own products, Andersen said.