TOKYO -- Takeda Pharmaceutical will make a formal offer to buy Irish drugmaker Shire for 46 billion pounds ($62.3 billion) in cash and stock on Tuesday, in a bid to seal the biggest overseas acquisition ever by a Japanese company.
A deal, which appears likely, would create a pharmaceutical group ranking ninth in the world by sales, with revenue surpassing $30 billion.
The two drugmakers have apparently agreed on the acquisition price, which works out to 49 pounds per share, but still need to settle nonfinancial terms. Shire's board will vote on the proposal Tuesday, and an announcement could follow the same day.
Japan's biggest drugmaker by sales aims to buy all of Shire, which would delist from the London Stock Exchange.
Takeda seeks Shire's portfolio of rare-disease treatments, or "orphan drugs," a high-margin business with few competitors. Buying Shire would add a fourth core treatment area alongside cancer, gastrointestinal and neurological ailments.
Takeda has made several buyout offers since the end of March. Shire rejected the initial offer, which valued the company at roughly 44 pounds a share, saying it underestimated the Dublin-based drugmaker's products and growth potential.
Stuck in a low-growth slump, Takeda raised its offer to 49 pounds per share on April 25, a proposal that Shire was willing to recommend to shareholders. British takeover rules require Takeda to announce a formal offer by 5 p.m. Tuesday in the U.K.
Completing the acquisition requires approval by 75% of Shire shareholders. Shire has said it would recommend Takeda's proposal to shareholders once due diligence and other conditions are cleared.
Takeda would need to issue roughly 4 trillion yen ($36.6 billion) worth of new shares, exceeding its 3.48 trillion yen market capitalization. The Japanese company also is expected to put the takeover plan to shareholders, but persuading them could prove difficult because their stakes would be diluted by more than half. Takeda insists the acquisition will boost earnings per share.
Shares in Takeda, which ranks 18th in the global drug industry by sales, have slumped in recent months amid concerns over the high acquisition price. Its Tokyo-listed stock fell for a third straight session on Monday, dropping 1.7% to 4,460 yen. Shire, which ranks 19th, closed at 38.56 pounds on Friday.
The combined group would surpass the current ninth-ranked drugmaker by revenue, U.S.-based Gilead Sciences.