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Business deals

Takeda to sell off China joint venture stake for $280m

Japanese drugmaker streamlines portfolio ahead of costly Shire deal

Takeda, already heavily in debt, is taking on more loans to acquire Irish drugmaker Shire.   © Reuters

TOKYO -- Takeda Pharmaceutical will divest its majority stake in a Chinese joint venture, seeking to secure its financial footing as it prepares to acquire Irish drugmaker Shire.

The deal, announced Monday, is estimated at $280 million.

Takeda will sell its entire 51.34% stake in Guangdong Techpool Bio-Pharma to venture partner Shanghai Pharmaceutical Holding and an investment fund. The all-cash transaction is expected to close once it receives approval from Chinese authorities within a few months.

Takeda intends to unload noncore assets to focus on a few key treatment areas, including cancer, gastrointestinal ailments and neurological diseases.

Techpool launched in 1993 as a developer of biopharmaceutical products derived from urinary proteins. Switzerland's Nycomed acquired a majority stake in 2010, and Takeda inherited the ownership when it took over Nycomed for about $14 billion in 2011.

Takeda's interest-bearing debts tallied around 985.7 billion yen ($8.87 billion) at the end of March, marking a roughly 70% increase over five years. Its $62 billion deal to buy out Shire is expected to cause the debt to balloon to 3 trillion yen. Takeda is also borrowing about 3 trillion yen to finance the purchase. Those factors are expected to heavily weigh on Takeda's financial standing.

Although expiring drug patents have dented Takeda's earning capabilities, the company still shells out generous dividend payments. Even after reaching the agreement on the Shire purchase, President Christophe Weber vowed to maintain the 180 yen-per-share annual dividend.

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