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Shire Soars On News Of Possible Takeda Takeover

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Japan’s Takeda Pharmaceutical said it is considering the acquisition of Shire PLC whose market cap of $40 billion (before the announcement) makes it one of the world's largest pharma companies. Takeda said a deal with Shire would create a global biopharmaceutical leader, strengthening the Japanese company’s core therapeutic areas of oncology, gastrointestinal disorders, and neuroscience.

The acquisition would leave Takeda with a portfolio of specialty drugs with a particular focus on gastrointestinal diseases and nervous system ailments, according to Bloomberg and WSJ. Takeda said it hasn’t approached Shire’s board yet and the proposal is at a “preliminary and exploratory” stage. The Japanese pharma didn’t disclose any financial details of a potential offer.

Japan’s biggest drugmaker has signaled it’s ready to take on more deals and partnerships as it seeks to build an identity beyond its home market, where a shrinking population limits growth opportunities. With a market value of about $42 billion, Takeda is smaller than the potential takeover target after Shire’s rally Wednesday, which has pushed Shire's market cap to approximately $50 billion.

Shire's shares soared more than 20% on the news before paring back some gains.

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Still, with today's move the stock price of Shire is only back to where it was at the beginning of the year.

Shire

The Massachusetts-based, London-listed Shire previously tried and failed to complete an "inversion" deal with AbbVie after the Obama administration introduced new rules to discourage inversions.

Shire

Takeda also said acquiring Shire would balance its geographic focus to align with the market opportunity in the US. The potential deal would unfold against a backdrop of other pharma mergers and buyouts - including GSK's $13 billion agreement to buy out its joint venture with Novartis.

This is just the latest transaction for Takeda which made a slew of deals in 2018: it announced an offer to acquire TiGenix NV, a Belgian maker of stem-cell therapies, for 520 million euros ($645 million) in January, as well as a $150 million initial payment to Denali Therapeutics Inc. for a partnership to develop drugs for neurodegenerative diseases. In February, Takeda promised another $230 million to Wave Life Sciences for a pact on treatments for disorders of the central nervous system.

According to Bloomberg, Takeda still has the scope for acquisitions after the $4.7 billion purchase of U.S. biotech Ariad Pharmaceuticals Inc. last year, Chief Executive Officer Christophe Weber said in a November interview. He said then that the company is mainly focused on forming more research partnerships and moving its pipeline products into later stages of development to help drive growth.  Shire would give Takeda a broader portfolio in the U.S. as well as an entree to the hemophilia market, which fits Weber’s stated goal of expanding in more expensive drugs targeted to small patient groups.

A deal for Shire would surpass Takeda’s 2011 acquisition of Nycomed for $13.7 billion including debt, according to data compiled by Bloomberg. Japanese companies have announced $26.5 billion of overseas acquisitions this year, up from $17.8 billion in the same period a year earlier.

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