Takeda’s fifth tweak to its cash-and-stock offer for Shire seems to have done the trick, with the two companies reaching a preliminary agreement on a deal that values Shire at £46bn (around $65bn).
The latest £49-per-share bid – consisting of £27.26bn in new Takeda shares and £21.75bn in cash – has broken the deadlock of the last few weeks, and pushed back the deadline for talks to 8 May. Shire now says it would be “willing to recommend the revised proposal” to its shareholders, although it cautioned that still depends on resolving other terms before the offer can be made firm.
Shire also said it was possible that the deadline could be extended beyond 8 May if necessary.
The Dublin-headquartered and London-listed company says its shareholders would own around 50% of the enlarged Takeda if the deal goes through, a touch above the 49% ownership of the fourth offer which included a larger cash component. The new offer is £5 per share higher than Takeda’s opening bid.
Under chief executive Christophe Weber, Takeda has made no secret of its desire to pursue aggressive international expansion and deals to bolster a product portfolio under pressure from patent expiries. Analysts suggest however that negative sentiment could still scupper a deal that is by far the largest ever undertaken by the company – and the biggest in pharma since the $70bn Actavis/Allergan merger in 2015.
Takeda’s share price has continued its recent slide after the latest announcement, reflecting investor uncertainty about the plan, and analysts continued to voice their concerns that the acquisition could be too large for the Japanese drug maker to handle, particularly after it absorbed debt to fund its $5.2bn takeover of cancer company Ariad last year. Spooked shareholders may decide to vote down a deal if the stock declines too far, it has been suggested.
Meanwhile, questions are also being voiced about the value being placed on Shire, and whether its pipeline and R&D capabilities are worthy of such a hefty price tag, even after its $32bn takeover of Baxalta two years ago.
The announcement of the preliminary agreement issued by Shire notes that Takeda is still free to revert to a lower offer or walk away entirely if due diligence and further negotiations change its view of the takeover. And of course, it is still possible that other suitors may emerge – Allergan confirmed it had started preliminary talks last week but quickly excluded itself from making a firm offer.