Shire Rejects Takeda’s Acquisition Bid
Shire Rejects Takeda’s $60 Billion Acquisition Bid and Allergan Reportedly In Talks with Shire
By Mark Terry
According to Reuters UK, Takeda Pharmaceutical has made an official bid to acquire London’s Shire for about $60 billion. And in breaking news, Shire rejected the bid, saying it undervalued the company.
Analysts at United First Partners said in a note, “We think that Takeda’s recently expressed interest in Shire may flush out other potential bidders, most likely among the U.S. pharma heavyweights including Pfizer, Amgen and AbbVie.”
And they were right in the new bidder, if not the specifics—so far. Dublin-based Allergan is reportedly in talks with Shire over an acquisition, although Reuters notes it’s not clear if they have made an actual offer.
Takeda made a statement suggesting that it would not resort to a hostile takeover. “Takeda and its board,” the company stated, “reiterate that it will remain disciplined with respect to the terms of any such offer.” It also added that Takeda remains, “well-positioned to continue its transformation, delivering portfolio growth while strengthening its pipeline and boosting profitability.”
In late March, Takeda had expressed an interest, although at the time, Shire said it had not been approached by the company. But per UK law, Takeda had to make an official offer by 5:00 p.m. (London time) on April 25, 2018.
The acquisition, if completed, would boost Takeda’s cancer, gastrointestinal and neurology drug portfolio, and rare diseases. In addition, Takeda has been concentrating much of its research-and-development activities in the Boston area, where its R&D chief, Andy Plump, is based. Shire has been preparing new facilities in Cambridge close to its main international headquarters in Lexington, Massachusetts.
Takeda has also been restructuring its R&D operations worldwide, cutting back on employees while conducting more deals with partners like Denali.
The proposed deal is reportedly for about 46.50 pounds per share, or $66.20 (U.S.).
Earlier this week, Shire sold its oncology business to France’s Servier for $2.4 billion. At the time, Reuters noted, “The [Servier] deal suggests there is value locked up within Shire’s portfolio—despite a dismal share price performance in the past two years—as its management braces for a possible $50-billion bid battle with Japan’s biggest drugmaker.”
Shire, for its part, suggested the proceeds from the sale might be returned to shareholders via a buyback. It also indicated that further sales of non-strategic assets were a possibility.
The sale of the oncology franchise was not a reaction to the Takeda bid rumors. It began looking to sell its oncology business in December and started the actual sale process in January.
The market value of Shire is about $47 billion. Although the Shire acquisition would be transformational for Takeda, Shire is worth about $10 billion more than Takeda, and at the end of 2017 had debt of around $19 billion.
Flemming Ornskov, Shire’s chief executive officer, said in a statement at the time, “This transaction is a key milestone for Shire, demonstrating the clear value embedded in our portfolio. While the Oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire’s longer-term strategy. We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets.”
Last year the oncology business brought in revenues of $262 million.
In 2017, Takeda acquired ARIAD Pharmaceuticals for $4.7 billion.
Currently, Shire shares are up almost five percent in pre-market trading. Takeda shares are holding steady at 5,095 JJPY.
In an earlier statement, Takeda said that it “believes that a potential transaction with Shire presents an opportunity to advance Takeda’s stated Vision 2025, build on its current strong momentum, and create a truly global, value-based Japanese biopharmaceutical leader.”
Takeda, founded in 1781, employs 30,000 people and operates in more than 70 countries. Shire, headquartered in Dublin, UK, has 24,000 employees, most of them in the U.S. The company was founded in the UK in 1986. In 2016, it acquired Baxalta for $32 billion from Baxter International after a dramatic six-month courtship. At the time, Baxalta had recently spun off from Baxter. Baxalta declined the offer, but Shire went public with it in hopes of pressuring the Baxalta board and shareholders. It took several increasingly strong offers before Baxalta agreed to be acquired.
The Baxalta acquisition boosted Shire’s orphan drugs and rare diseases portfolio. Products included Baxalta’s hematology drug, Adynovate, Antihemophilic Factor (Recombinant), PEGylated, to treat hemophilia A, and Hyqvia, a next-generation subcutaneous immunoglobulin (IG) product for primary immunodeficiency. Shire’s top drug was Vyvanse, for attention deficit hyperactivity disorder (ADHD) and for moderate-to-severe Binge Eating Disorder. Shire also has a strong presence in lysosomal storage diseases, gastrointestinal and endocrine, HAE, and ophthalmics.