LONDON / NEW YORK (Reuters) – London-based pharmaceutical giant Shire Plc announced that it would recommend a deal with Takeda Pharmaceutical Co to its shareholders after the Japanese firm announced its takeover bid at £ 46 billion ($ 64 billion ) have sweetened.
The development, first reported by Reuters, represents a major breakthrough for companies in their negotiations, following a prosecution that began on March 28, when Takeda said that it had an offer for Shire considered. Since then, Takeda has made five offers, most recently on Tuesday.
Shire said in a statement that it had agreed to extend a Wednesday deadline for the conclusion of the negotiations to 8 May so that Takeda could exercise more diligence and substantiate its offer. Shire added that the deadline might be extended.
Takeda's shares slid nearly 6 percent on Tokyo's early trading day Wednesday as investors worried that they might finance cash and stock trading.
Any transaction between the two companies is still subject to resolution of several issues, including Shire's due diligence on Takeda, Shire said.
Takeda added in his own statement that it intends to maintain its dividend policy and investment grade rating after the deal.
Shire focuses on treatments for rare diseases and attention deficit hyperactivity disorder. A deal would be the largest overseas acquisition of a Japanese company and would lead Takeda, led by Frenchman Christophe Weber, into the top tier of global pharmaceutical companies.
Takeda's position in gastrointestinal disorders, neurosciences, and rare diseases, including a blockbuster hemophilia franchise, would be significantly increased.
But the transaction would be an enormous financial burden, as Shire is worth much more than the Japanese group. To pay for the business requires ambitious cost reductions.
In the drug industry this year, demand is high for promising facilities to improve their pipelines. A Takeda-Shire transaction would be by far the largest. For a long time Shire was considered a likely takeover target and was almost completely bought by the US pharmaceutical company AbbVie Inc in 2014 until the changes in US tax regulations led to the business breaking apart. Shire also has a track record of acquisitions, but the biggest transaction of all time – Baxalta's $ 32 billion acquisition in 2016 – has been widely criticized by shareholders.
Dublin-based Shire, a member of the British FTSE 100 stock index, said that Takeda's fifth bid was worth £ 49.01 per share, making £ 27.26 per share in new Takeda shares and 21 , Equivalent to 75 pounds per share in cash. Under these conditions, Shire shareholders would own half of the combined company.
Allergan Plc, the US manufacturer of Botox, had considered competing for Shire, but was banned from bidding last week.
Shire also announced last week that it is selling its oncology business to unlisted French pharmaceutical company Servier for $ 2.4 billion.
Takeda has lost more than 17 percent since news hit that it considered an offer for Shire and reduced its market value to 3.6 trillion yen ($ 33 billion).
Takeda investors were skeptical of the benefits of a Shire business, given the size of the potential buy and likely need for a large stock issue that could be highly diluted.
Weber was promoted to CEO in 2015 and was the first non-Japanese boss of the pharmaceutical company.
Shire dates back to 1986 when he started out as a seller of calcium supplements to treat osteoporosis and operated from an office over a store in Hampshire. Since then, it has grown rapidly through acquisitions, generating $ 15.2 billion in sales last year.
Reporting by Ben Martin in London and Carl O'Donnell in New York, Additional coverage by Padraic Halpin in Dublin and Ben Hirschler in New York and Sam Nussey in Tokyo; Edited by Richard Chang, Rosalba O'Brien and Edwina Gibbs