Takeda in talks with Shire after $61 billion bid rejected

Daniel Fowler
April 20, 2018

Allergan said it was in the early stages of considering a possible offer for Shire and there was no certainty of a bid, but the prospect of a bidding war sent Shire's stock higher on Thursday. Updating the market on Thursday, the Japanese firm revealed Shire's board had rejected its offer, which was equivalent to £46.50 a share.

Shire was founded in Basingstoke, Hampshire, in 1986, but the company has scaled back its presence in the United Kingdom and most of its operations are in the US.

It also confirmed that it was required by United Kingdom takeover law to make an offer or withdraw its interest by 17 May.

Based on Takeda's market capitalization, Shire shareholders would end up owning approximately 51 percent of the enlarged group, Shire noted. This review is now unlikely to lead either to a major acquisition or a breakup of the company, one of the sources said.

"Assuming a $200 per share Shire take-out price, the financials of such a combination would place Allergan/Shire at $31B+ in combined sales (or roughly the 9th largest global pharmaceutical company)", wrote Cowen analyst Ken Cacciatore, who recently broke down potential strategic options for Allergan.

The drugs company Shire is at the centre of a multibillion-pound takeover battle after the Botox-maker Allergan emerged as a rival suitor to Japan's Takeda, which is also hoping to clinch a deal.

FILE PHOTO: Vitamins made by Shire are displayed at a chemist's in northwest London, Britain, July 11, 2014.

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Buying Shire would be transformational for Takeda but would be a big financial stretch, since the company is worth in excess of $10 billion more than the Japanese group.

It offered £46.50 pounds per Shire share on April 12, 62 per cent of which would be in new Takeda stock. It would significant expand its presence in the all-important US market.

The value of M&A involving British firms rose by 56.5 percent to $164.3 billion in the first three months of the year, the most since 2007, Thomson Reuters data shows.

Takeda's offer would value the FTSE 100 firm at around GBP42.41 billion.

However, already new reports are emerging that suggest Shire's board of directors have knocked back the bid. Steward Partners Investment Advisory LLC purchased a new stake in shares of Shire during the 3rd quarter valued at approximately $159,000.

Shire said in January that it would run its attention deficit hyperactivity disorder (ADHD) business, which consists mainly of its blockbuster drug Vyvanse, separately and possibly seek a separate listing.

Shire is up 2% premarket on robust volume.

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