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Takeda shareholders demand veto over Shire-size purchases

Board resists call of investors burned by dilution and falling share prices

Takeda's share prices have fallen around 20% since it began showing interest in acquiring Shire.

TOKYO -- Shareholders in Takeda Pharmaceutical are seeking the right of prior approval over major purchases, stung by the $62 billion bet on Irish peer Shire, but the board of directors appears unwilling to go along.

Takeda management would submit plans for purchases over 1 trillion yen ($9.19 billion) at shareholders meetings and report on the goal of the deal, its price ceiling and estimated resulting earnings per share under a plan proposed by a group of investors and former employees. A proposal to so amend the Japanese drugmaker's articles of incorporation was included in an invitation to the regular June 28 shareholders meeting.

But Takeda asserted in the same announcement that highly independent, external directors make up a majority of the board, and that it has strict rules for internal decision-making. Curtailing the board's authority and freedom of action would be irrational, it said, adding that the Shire deal would help shore up the company's financial health in the short and medium term.

Takeda will rack up huge debt to fund its purchase of Shire, which is aimed at boosting its critical overseas business as the Japanese home market shrinks.

The group of investors making the proposal takes a dim view of the Shire deal's financial risk, as well as the dilution of shareholder value that would follow a necessary stock float on the scale of 4 trillion yen. That issuance still requires two-thirds approval from shareholders, which Takeda plans to seek at an extraordinary meeting at the end of this year or in the first half of 2019.

Takeda shares have shed at least 20% of their value since the Shire plan emerged in March, and on Wednesday closed down 2% from the previous day at 4,384 yen, a year-to-date low. The conservative shareholders see further risk to investors' profits ahead. Some institutional investors have also criticized the company for not explaining its actions thoroughly enough.

In June 2017, the same team of stakeholders behind the current proposal opposed appointing then-Chairman Yasuchika Hasegawa to an advisory role, but the motion failed with less than 30% support.

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