Japan’s Takeda considers takeover tilt for Shire
Takeda said its consideration of an offer is at a ‘preliminary and exploratory stage’.
Shares in Irish pharmaceutical giant Shire surged after Japan’s Takeda said it is considering making a takeover approach for the £32.8 billion valued firm.
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Takeda said that its consideration of an offer is at a “preliminary and exploratory stage”, and that no approach has been made to Shire’s board.
“There can be no certainty that an approach, if made, will lead to any transaction,” the firm said.
The FTSE 100 firm’s shares rocketed on the news, rising more than 20% to 3,708p.
Takeda said a potential transaction with Shire presents an opportunity to create a “truly global, value-based Japanese biopharmaceutical leader”, strengthening its core oncology, gastrointestinal and neuroscience offerings.
In addition, a tie-up would help realise the Japanese company’s R&D strategy, drive financial value and allow it to exploit further opportunities in the US.
Takeda said: “Clearly defined strategic and financial objectives are core to Takeda’s disciplined approach to acquisitions, including in relation to its dividend policy and credit rating, which are well-established.
“Any potential offer for Shire, if made, would have to align with this strict investment criteria.”
According to UK takeover rules, Takeda must now either make an offer or walk away by April 25.
Shire confirmed in a stock exchange announcement that it has not received an approach from the Japanese firm.
Takeda, which was founded in 1781 and employs 30,000 people, has a strong presence in emerging markets and operates in more than 70 countries.
If a deal were to be struck, it would see the hunter become the hunted after Shire itself went on the acquisition trail only two years ago when it bought Baxalta for 32 billion US dollars (£22.6 billion).
Last year, Shire’s revenues doubled following the takeover to 3.57 billion US dollars (£2.52 billion), the bulk of which came from the Baxalta business.
When stripped of legacy Baxalta sales, revenues rose only 11% to 1.8 billion US dollars (£1.39 billion).
Peter Welford, equity analyst at Jefferies, said there is strategic rationale for the deal, but the firms’ different valuations raise questions over the structure of any deal.
He said: “We see the potential strategic rationale for the deal and have long highlighted Shire is currently trading at a substantial discount.
“Nevertheless, Takeda’s circa 42 billion US dollars market cap versus Shire’s circa 47 billion US dollars or 66 billion enterprise value raises questions on a potential deal structure.”
“We see the possible strategic fit given the Japanese pharma’s focus therapeutic areas of oncology, gastrointestinal and neuroscience, with Shire bolstering the latter two franchises.
“However, given the ongoing complex integration of Baxalta since June 2016, an acquisition at this time carries incremental risks, in our view.”