Takeda Closes In On Shire With Revised £49/Share Offer
Executive Summary
Takeda further ups its offer for Shire to around £49 per share, which Shire’s board has said it is willing to recommend to shareholders, although any final deal remains subject to conditions and Takeda investors appear concerned over the size of the transaction.
Shire PLC has confirmed it has received another revised acquisition proposal from determined suitor Takeda Pharmaceutical Co. Ltd., which ups the Japanese company’s offer from the equivalent of £47 per ordinary share to around £49 per share.
The deal, if agreed, would value Shire – which currently exceeds Takeda's roughly $33bn market capitalization by some $17bn – at around £46bn ($64.3bn). However, certain conditions and due diligence remain to be completed, meaning that formal finalization could take several more weeks, assuming no other bidders come forward.
Takeda shares slid by around 5% in early trading in Tokyo on April 25, apparently on ongoing investor concerns over how the deal will be financed and its effect on Takeda's debt, credit status and share dilution. They had slumped by around 7% by mid-afternoon, potentially further complicating the share component of the acquisition and meaning that more Takeda stock may need to be offered.
Reports in Japan have suggested that a consortium of banks in Japan is planning to offer Takeda several trillions of yen in bridge loans, but concerns that the company may be biting off more than it can chew financially have led to its shares falling about 18% overall since it first disclosed discussions with Shire, which has seen its own valuation surge.
“The Board of Shire has indicated to Takeda that it would be willing to recommend the Revised Proposal to Shire shareholders, subject to satisfactory resolution of the other terms of the possible offer,” Takeda said in a statement.
The company had disclosed late on April 24 in Japan that it had made another revised offer, following its latest and fourth, of £47 per share. (Also see "Sweet Enough? Takeda Raises, Adds Cash To Shire Offer " - Scrip, 22 Apr, 2018.)
Takeda confirmed that its new revised proposal comprises 0.839 new Takeda shares (to be issued in Japan and as ADRs in the US) and $30.33 in cash per Shire share. Based on Takeda’s share price at the time and current exchange rates, this implies an offer of around £49 per Shire share (comprising £27.26 in new Takeda shares and £21.75 in cash).
The cash component remains around 44% of the total, despite some analysts saying Takeda may have to further raise this percentage to make an offer more attractive.
Existing Shire shareholders would also be entitled to any dividends paid by Shire prior to the completion of any final transaction, and would own around 50% of the merged operation.
The two companies said they would continue to engage in discussions, and Takeda stressed that any firm offer remains subject to agreement of certain other terms, completion of due diligence, and final approval by its own board.
The deadline for an offer under the UK takeover code (under which Shire falls) has now been extended from April 25 to 5pm UK time on May 8, and may be further extended with regulatory and Shire’s consent.
From the editors of PharmAsia News.