Published: Wed, April 25, 2018
Finance | By Jaime Brady

Shire to recommend sweetened Takeda takeover bid

Shire to recommend sweetened Takeda takeover bid

Shire PLC, the second-largest biotech employer in MA, said Tuesday that it had received yet another buyout proposal from Takeda Pharmaceutical as a deadline for making a firm offer looms.

The companies say they have a deadline of May 8 to reach a full deal.

Takeda wants Shire, a specialist in the treatment of rare conditions, to help it expand its worldwide interests - particularly in the USA - as it faces down the prospect of weaker drug prices in its home market.

The decision comes after Dublin-based Shire rejected a string of overtures from Takeda, Japan's largest pharmaceutical company, saying the offers were too low.

However, that deadline can be moved back at the request of the FTSE 100 drugmaker and Takeda had said on Friday it hoped negotiations with Shire would lead to an extension.

Shire PLC (NASDAQ:SHPG) traded down 0.52% during midday trading on Monday, hitting $164.17.

Takeda added in its own statement that it meant to maintain its dividend policy and investment-grade credit rating following the deal.

Takeda, led by Frenchman Christophe Weber, has been actively looking overseas for acquisitions.

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Ambitious cost cutting is also seen as necessary to make the deal pay, and the uncertainties facing an enlarged group would spell a big change in the investment case for holding Takeda.

Dealmaking has surged in the drug industry this year as large players look to improve their pipelines.

The Japanese firm first officially expressed interest in Shire last month, but has had a series of offers rebuffed.

Shire CEO Flemming Ornskov's biggest acquisition was the takeover of rare disease competitor Baxalta in 2016 for $32 billion.

Under terms of its fifth proposal, the Japanese company would offer 0.839 of its shares and 21.75 pounds in cash for each ordinary Shire share, or about 49 pounds apiece.

Last week, Botox maker Allergan said it was considering making a counter-offer for Shire, raising the prospect of a bidding war, but then confirmed it would not make a bid.

If Takeda's bid is successful, the takeover would be the biggest ever by a Japanese company. If the bid is to go ahead, Shire shareholders will need to accept a bid that is 56% newTakeda shares.

Earlier this year, we explored the issues surrounding Shire over the last few years.

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