Takeda Adds More Cash in Boosting Shire Bid Over $60 Billion

Updated on
  • New offer worth 47 pounds per share in cash and stock
  • Cash portion of Takeda’s latest offer rises to 45 percent
Les Funtleyder, portfolio manager at E Squared Capital Management, says Takeda is close to a final bid on Shire.

Takeda Pharmaceutical Co. sweetened its offer for drugmaker Shire Plc to more than $60 billion after three prior bids were rejected, wooing investors in the U.S. company with a higher cash component.

The Japanese company boosted its offer to 47 pounds ($65.84) a share from 46.50 pounds a share, confirming a Bloomberg News report that it was considering a higher bid for Lexington, Massachusetts-based Shire. The new proposal includes 21 pounds a share in cash and 26 pounds a share in new stock.

Shire said in a statement that its board of directors “is considering its position with respect to the fourth proposal and will issue a further announcement in due course.”

The new bid lifts the cash component to about 45 percent from 38 percent, in an effort to win over shareholders who might be reluctant to receive stock in Takeda, a smaller company than Shire. Takeda said it would enable current Shire investors to continue to hold shares in the combined company via American depositary receipts on the New York Stock Exchange.

“Takeda believes that the improved proposal represents a highly compelling opportunity for Shire shareholders, which reflects a further increase in value and a material increase in the cash component of the consideration mix,” Takeda said in a statement Friday.

Shire Rebuff May Not Dim Takeda’s Appetite for a Takeover

Shire on Thursday rejected Takeda’s previous proposal, saying the terms “significantly undervalue the company and Shire’s growth prospects and pipeline,” but left the door open for further negotiations. A completed deal would be the biggest by a Japanese company of an overseas target, and the combined revenue would place Takeda among the top 10 global pharmaceutical giants.

Overall, the new offer represents a premium of 7 percent to an initial bid made in March, worth 44 pounds a share, Takeda said. It’s also 53 percent above Shire’s share price before Takeda officially disclosed its interest in a deal.

Analysts had said Takeda would need to raise the cash element of its offer. On Thursday, Shire disclosed that Takeda had made three offers of cash and stock for the company in the past two weeks, each time raising the cash portion. The newest offer represents an 18 percent bump compared to the previous cash amount, the highest increase yet.

Shares of London-listed Shire closed down 3.9 percent to 38.21 pounds.

Takeda, which is based in Osaka, said it will maintain its headquarters in Japan and a primary listing on the Tokyo Stock Exchange.

(Updates with data on the cash portion of the deal beginning in seventh paragraph.)
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