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Will Shire agree to extend Takeda takeover talks?

UK rules mean Shire must agree to extend deadline

Shire

Shire is mulling over Takeda’s improved £42.4bn ($60 bn) - and must decide by 5pm UK time tomorrow whether or not it wants to extend a takeover talk deadline.

The new offer made on Friday is the fourth bid made by Takeda, and increases its overall value by around £455m, with the Japanese firm switching to offering more cash than stock compared to the previous offer, aimed at persuading Shire’s board and shareholders to agree to the deal.

The fourth proposal comprises £26 per share in new Takeda shares, to be listed in Japan and in the US through an ADR listing, and £21 per share in cash. This represents a potential value of £47 per share and around £42.4bn for the total issued and to-be-issued share capital of the company.

The previous offer would have given Shire shareholders a 51% controlling stake in the new Takeda entity, but the firm is now offering more cash, but a smaller 49% holding in the proposed merged company.

The bid comes after Allergan was mentioned as a potential rival bidder for Shire late last week, however negative shareholder sentiment quickly forced Allergan’s CEO Brent Saunders to rule out making a move for the Dublin-domiciled, UK-registered rare disease company.

Takeda’s CEO Christophe Weber remains committed to securing the acquisition, in contrast, even though there are plenty of analysts who believe the value of the merger is questionable.

Takeda says it “looks forward to engaging constructively with the Board of Shire to finalise the terms of a recommendable transaction”, before the deadline tomorrow, which was determined by UK takeover rules. If no deal is struck by then or if Shire doesn’t agree to extend the deadline, Takeda would have to wait a further six months before launching its takeover bid.

The Japanese firm’s efforts in putting together four incrementally more attractive bids suggests that it has reached its maximum bid ceiling, and won’t be able to stretch itself further.

Market reaction to the latest bid has been clear, with Takeda’s share price falling on Friday after it announced the new offer, while interest in Shire’s stocks were also muted.

Article by
Andrew McConaghie

24th April 2018

From: Sales

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