Takeda Strikes $62B Deal to Acquire Rare Disease Drug Maker Shire

Flemming Ornskov chief executive of Shire said that the deal offered “an opportunity to improve the lives of even more patients globally with rare and highly specialised conditions”

Flemming Ornskov chief executive of Shire said that the deal offered “an opportunity to improve the lives of even more patients globally with rare and highly specialised conditions”

Takeda Pharmaceutical (4502.T) agreed to buy London-listed Shire (SHP.L) for 45.3 billion pounds on Tuesday, the biggest yet in a wave of deals sweeping the drugs industry.

Shire has faced pressures of its own.

Takeda, meanwhile, has like many Japanese companies been expanding overseas to compensate for slowing growth at home.

Takeda's takeover of Shire is the largest acquisition in the company's history, widely surpassing a near $14 billion acquisition of Nycomed in 2011.

Buying Shire didn't come easy, though.

After suffering several rebuffs, Takeda secured a recommendation from the Shire board by raising the amount of cash in its offer to $30.33 (£22.43).

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The combination merges Shire's portfolio of treatments for rare diseases with Takeda's for cancer, gastroenterology and neuroscience. In the offer that finally won over the target, Takeda agreed to pay £49.01, or just over $66, per share - $30.33 in cash and 0.839 Takeda shares for each Shire share. The company will continue to have its primary listing in Japan where the newly-combined company will the headquartered. That deal, Shire said today, is expected to close in the second quarter or third quarter, with the net proceeds meant to be used to repay debt. Even though Shire's headquarters are in Dublin, it earns more than two thirds of its revenue in the US on drugs like Adderall, which is used for ADHD.

On Tuesday, Takeda pledged to quickly reduce the debt and maintain the company's investment grade credit reading.

The deal is expected to result in $1.4bn annual cost savings and will prompt a "review of the functions to be undertaken" at Shire's headquarters in Dublin as well as possible "consolidation" of operations in the US, Singapore and Switzerland.

Jobs will go, with the group's combined 52,000 workforce likely to be reduced by 6-7 percent. In pounds, that is the same value as a preliminary agreement the companies reached last month. Its net profit is about three times more than Takeda's. Since then, it has grown rapidly through acquisitions to generate revenues of about $15.2 billion previous year. "Being aware means we are also very conservative in our forecasts", Weber said on the call.

Shire's Chief Executive Officer, Flemming Ornskov is quite positive and enthusiastic about the deal.

Patents covering Adderall XR (amphetamine/dextroamphetamine) and Lialda (mesalamine) are also set to expire this year and in 2020, respectively.