Takeda/Shire Clears Last Antimonopoly Hurdle – Shareholders Up Next
Executive Summary
European Commission gives an expected conditional regulatory approval for the acquisition of Shire by Takeda, removing the last potential antitrust hurdle to the deal, meaning that attention is now turning to the upcoming shareholders' meetings that would open the final path to the early January completion of the record-setting transaction.
The European Commission (EC) has given formal antitrust clearance to Takeda Pharmaceutical Co. Ltd.’s proposed acquisition of Shire PLC, removing a potential final regulatory hurdle to the deal and further paving the way for this to be completed in early January.
As expected - and already offered by the Japanese company - the Commission’s approval was given on condition of fulfillment of a commitment by both companies to divest Shire’s Phase III pipeline asset SHP647.
The EC saw future potential overlap for this with Takeda’s marketed drug Entyvio (vedolizumab), given that both are indicated for inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease. (Also see "Takeda Offers Shire Asset Disposal To Assuage EC Merger Concerns" - Scrip, 28 Oct, 2018.)
Takeda and Shire have now formally committed to divesting this along with certain associated rights, although Takeda stressed in a statement that the move is not a condition for the completion of the $62bn acquisition of its larger target.
Despite the overnight news from Europe, Takeda’s share price fell by about 3.6% in morning trading in Tokyo on Nov. 21, apparently reflecting some lingering investor uncertainty over the upcoming shareholder approval of the deal.
In the meantime, Takeda apparently sees few problems with the process for shedding SHP647, saying it "is an exciting pipeline compound and Takeda expects the asset to attract interest from a number of potential buyers,” adding that it remains committed to Entyvio as the “cornerstone” of its specialty gastrointestinal portfolio.
Shareholders Up Next
Following smooth antimonopoly nods from other major jurisdictions such as the US and Japan, the EC approval was the last such regulatory clearance needed to proceed with the acquisition. While this has lifted some of the remaining uncertainty surrounding the deal, it still needs to be approved by the shareholders of both companies, a process towards which attention is now turning.
Both Takeda and Shire have now set shareholder meetings for Dec. 5, and Takeda re-confirmed that, subject to approvals at these and the court sanction of a Shire scheme of arrangement, formal completion of the deal - the biggest ever overseas M&A transaction in Japanese corporate history - is set for Jan. 8.
While there are still some pockets of shareholder resistance, mainly centered around a group linked to members of Takeda’s founding family that together holds an estimated 10% stake, Takeda President and CEO Christophe Weber said in a statement that “we are optimistic that our shareholders recognize the significant long-term value creation potential of this powerful combination.”
A two-thirds majority shareholder vote would be needed to move ahead with the deal, which will involve the issue of new shares as part of funding arrangements and result in the merged entity being 50% owned by current Takeda investors.
The dissident group, which excluding the Takeda family is thought to hold around 1%, has expressed its intention to continue pushing against the deal until the end, but there has so far been little apparent support for this stance from retail investors, which currently hold around a quarter of all Takeda shares.
In other developments related to funding arrangements, Takeda recently announced the issue price of $5.5bn in unsecured, US dollar-denominated senior notes and €7.5bn in unsecured Euro-denominated senior notes.
From the editors of PharmAsia News.