TOKYO -- The shroud of secrecy was thick, but the Takeda Pharmaceutical director saw and heard enough to make him shudder.
The director was attending a board meeting at the drugmaker's Tokyo headquarters in February. On the table was a document detailing another, anonymous drug company. Takeda President and CEO Christophe Weber said he was looking at acquiring a peer roughly the same size as Takeda.
The price was expected to easily surpass Takeda's market capitalization of 4 trillion yen ($36.8 billion). The first thing that came to the director's mind was a question.
"Are we really going to do this?"
The answer was yes. The company in May sealed a deal to acquire Irish drugmaker Shire for 46 billion pounds ($62 billion), a record sum for an overseas acquisition by a Japanese corporation. The arrangement has cast doubt on Takeda's very identity as a Japanese company, while some shareholders and investors are balking at the eye-popping price tag.
For Weber, who has been under mounting pressure, it is the gamble of a lifetime.
The agreement was struck after confidential negotiations that borrowed code names from well-known brands of Japanese whiskey -- Yamazaki and Hibiki. Even the director did not know that Shire was the target until Takeda announced the talks on March 28.
While Weber was secretly mulling the Shire acquisition in February, he quietly made another move that now seems connected. He stepped down as vice chairman of the Japan Pharmaceutical Manufacturers Association on Feb. 15 and -- breaking with the industry practice of choosing a top executive for the role -- appointed Masato Iwasaki, a Takeda director, to replace him.
"Weber probably had no time to associate with fellow executives of Japanese drugmakers ahead of a big game involving a foreign company," said a source.
A Japanese executive of a foreign-affiliated drug company observed, "Weber is not interested in Japan after all."
This was not the only sign that Weber, who grew up in Strasbourg near the French Alps, was focused on greener pastures overseas.
He had moved from GlaxoSmithKline to Takeda in 2014 at the invitation of former Takeda President Yasuchika Hasegawa, who promoted the company's globalization. On Weber's watch, Takeda sold its off-patent drug business, which generated big sales numbers only in Japan.
The company also cut the number of new undergraduate and graduate students recruited for this spring to about 30 -- one-third of the usual total. And Takeda has transferred numerous Japanese researchers to the U.S.
Weber has repeatedly said Takeda will remain based in Japan. But as Japanese drug prices fall amid a government drive to reduce social welfare costs, the CEO has given every indication that his heart lies elsewhere.
The Shire takeover clearly stems from the notion that Takeda cannot survive unless it becomes more competitive on the global stage. The deal will further decrease the ratio of Takeda's Japanese sales, which is already down to 30%.
The move can also be seen as Weber's last-ditch attempt to ease growing frustration among Takeda employees and shareholders.
The company has been in something of a rut. It booked an operating loss for fiscal 2014, and its operating profit margins were in the single digits the next two fiscal years. The margin improved to 13.7% in fiscal 2017, but that is still well shy of rival Astellas Pharma's average margin of over 17% for the past four years.
Reforms prompted departures of talented researchers. At the company's annual shareholders meeting last year, Weber's 1 billion yen pay package came under fire from the founding family and former employees.
Insiders say the culture has changed under Weber. The president's right-hand men include Andrew Plump, the chief medical and scientific officer, and Costa Saroukos, the chief financial officer. Twelve out of Takeda's 14 executive officers, including Plump and Saroukos, were headhunted from other companies.
"Takeda used to have a family atmosphere, with things like barber shops for workers at its plants and head office," said a former employee who joined the company with Kunio Takeda, a scion of the founding family. But times have changed, and Takeda is no longer a traditional Japanese company, where employees come aboard as new graduates and stay until retirement.
The rocky Shire talks brought still more frustration, and have actually increased the heat on Weber.
On the morning of April 5, Weber invited seven analysts to Takeda's head office, and stressed that the drugmaker would do its best to maintain its credit rating and dividends.
Three weeks after the acquisition talks came to light, on the night of April 19, a Takeda employee was caught off guard by a statement from Shire. The Irish company had gone ahead and revealed, unilaterally, that it had rejected all three takeover proposals from Takeda.
"At the Board's request Shire's advisers entered into a dialogue with Takeda's advisers to discuss whether a further, more attractive, proposal may be forthcoming and to understand the basis on which such a proposal would be made," the statement said.
"We are completely in the palm of their hands," the Takeda employee shouted.
Indeed, in the span of a month, Takeda's share price dropped by 20%. Weber grew exasperated, since the falling stock could affect the equity-based acquisition plan.
Cornered by Shire's management and rumblings about a credit rating downgrade, Weber continued discussions with Nomura Holdings -- a key adviser on the deal -- and a handful of Takeda insiders, most of them non-Japanese.
Weber was up against a shrewd negotiator in Susan Kilsby, Shire's chairman. A veteran of First Boston, the predecessor of Credit Suisse, and other investment banks, Kilsby is well-versed in dealing with shareholders and acquisitions. Back when Shire received a buyout offer from U.S. peer AbbVie in 2014, she managed to boost the price by 20% before the deal collapsed, due to U.S. authorities' determination that it was primarily about saving money on taxes. "Kilsby was the architect of those talks," said a representative of a Japanese brokerage.
She did it again with Takeda: The Japanese company was forced to make five proposals and ended up agreeing to pay 15% more than its initial offer.
On May 8, the day the companies announced the agreement, S&P Global put Takeda on credit watch. The designation will be lifted as soon as Takeda raises funds, but the agency warned it may lower the company's rating by up to two notches depending on the financing scheme.
Weber is still working to persuade the founding family, which owns a significant stake, and other shareholders to go ahead with the acquisition proceedings.
On the afternoon of May 21, the president was seen visiting the Takeda family in a high-class residential area of Kobe, in western Japan. He declined to offer details of the 90-minute meeting but said they had a good discussion.
Weber is all in. His next big test will come at Takeda's annual shareholders meeting on June 28.