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Business deals

Takeda's $60bn offer for Shire rejected as too low

'More attractive' proposal requested for would-be record acquisition

Takeda is in talks to purchase Irish rival Shire, which would be the largest offshore acquisition by a Japanese company.   © Reuters

LONDON -- Takeda Pharmaceutical confirmed Thursday that it seeks to buy Shire, though the Irish drugmaker -- whose market value trumps that of its Japanese peer -- agreed only to talks with the suitor after finding its proposal unsatisfactory.

Japan's biggest drugmaker by sales proposes buying all of Shire for 42.7 billion pounds ($60.7 billion) in cash and stock, according to a company statement.

The bid values Shire at 46.50 pounds per share, a 24% premium to the London-listed company's closing price Wednesday. Takeda would pay cash equal to 17.75 pounds per share and the rest in new Takeda stock.

The deal would mark the largest overseas acquisition by a Japanese corporation, surpassing SoftBank Group's 24 billion pound purchase of British chip designer ARM Holdings in 2016. Takeda would need to issue over 4 trillion yen ($37.1 billion) in new shares to complete the takeover, a sum on par with the group's market capitalization as of Thursday.

Shire's board of directors rejected this proposal, saying Thursday it undervalued the company. Shire reported that it had received three conditional proposals from Takeda between late March and mid-April. The Irish company said it entered talks with Takeda about the possibility of "a further, more attractive proposal."

Osaka-based Takeda's persistence comes as it struggles to keep pace with large global rivals such as Pfizer and Roche. Though two-century-old Takeda leads Japanese drugmakers in revenue, it hovers around 17th place internationally.

Shire took in over $15 billion in revenue last year, which is in line with Takeda's annual figure and places the Irish company around 20th in global rankings. If Takeda lands Shire, the combined entity would have revenue of around $30 billion, on equal standing with ninth-place Gilead Sciences, a U.S. rival.

Takeda sees value in Shire's portfolio of drugs that treat rare diseases, a field in which the Irish company has an outsize presence. Shire also possesses technology for developing biopharmaceuticals.

Strengths for Takeda include treatments for cancers as well as gastrointestinal and neurological diseases, CEO Christophe Weber says. Drugs for ulcerative colitis and leukemia have produced some of its strongest sales growth at home and abroad.

To focus more resources on its development pipeline, Takeda has been offloading noncore assets -- such its stake in Japanese reagent unit Wako Pure Chemical, which it sold to Fujifilm -- and drugs whose patents have expired.

Shire would not be the first megadeal for Takeda, which bought U.S. biodrug company Millennium Pharmaceuticals for $8.8 billion in 2008. It followed that by paying more than $13 billion for Switzerland-based Nycomed in 2011.

Yet whether these acquisitions have paid off in terms of revenue growth is debatable. By that measure, Takeda lags bigger names like Pfizer, which has expanded by swallowing up smaller rivals with promising novel drugs, and Gilead, which rose into the global top 10 on the strength of its groundbreaking hepatitis C treatment.

Investors have not reacted well to the prospect of another Takeda megadeal.

Big Takeda drugs generate around 100 billion yen at most, nowhere near the roughly 4 trillion yen reportedly raked in by the Opdivo cancer treatment marketed by Bristol-Myers Squibb and Japan's Ono Pharmaceutical. U.S. drugmaker Merck and British competitor AstraZeneca are developing similar cancer immunotherapy products, leaving Takeda in the dust in that field.

Takeda said it has yet to make a formal offer for Shire. U.K. regulations require the drugmaker to announce by Wednesday evening whether it will commit to a bid. Botox maker Allergan, a pharmaceutical group based in Ireland, had been looking at Shire but said Thursday it does not intend to make an offer for the company.

The decision on whether to revise Takeda's bid now falls with its board, more than half of whom are outside directors.

Additional reporting provided by Nikkei staff writers in Tokyo.

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