Shire recommends takeover by Takeda

Shire recommends takeover by Takeda

A completed deal would dwarf SoftBank Group's $40bn purchase of Sprint in 2013, which ranked as the biggest takeover by a Japanese company.

The Japanese company has said the tie-up will help realise the Japanese company's R&D strategy, drive financial value and allow it to exploit further opportunities in the US. Takeda's existing shareholders are facing a hard time as their stake will be reduced to half.

In its announcement Tuesday, Takeda noted that the combined company would have a significantly increased presence in the US, the largest pharmaceuticals market in the world. Buying Shire bolsters its offerings in gastroenterology and neuroscience, while adding a slate of rare disease drugs that include the Irish biotech's seven hemophilia medicines.

Takeda will fund the cash portion of the proposed acquisition, through a $31-billion bridge loan facility secured from JPMorgan Chase Bank, Sumitomo Mitsui Banking Corp and MUFG Bank, among others.

The offer is worth £49.01 a share, about £5 more than Takeda's initial bid in late March.

The transaction gives Takeda, a maker of cancer and gastroenterology drugs, greater access to the U.S. market, while Shire will get greater exposure in Japan and emerging markets.

Although based in Ireland, Shire has most of its operations in Lexington and Cambridge and more than 3,000 workers in MA.

CYBG Plc, the parent company of Clydesdale Bank and Yorkshire Bank, has made a preliminary approach for Virgin Money Holdings which values the lender supported by Richard Branson at £1.6 billion. Takeda has revealed it expects pre-tax cost synergies to reach $1.4bn after three years, mostly stemming from the integration of redundant infrastructure within the two companies. However, this bid for Ireland-based Shire is significantly larger than its previous acquisitions and if finalised would become the largest takeover by a Japanese company.

The CEO of Takeda, Christophe Weber cites that jointly with the Shire, a stronger Takeda will emerge. It's also expected to provide a return on interest above Takeda's cost of capital over the same time period.

Under the cash and stock agreement, Osaka, Japan-based Takeda will pay $30.33 in cash for each share of Shire (NASDAQ: SHPG).

In 2011 it took over Swiss rival Nycomed for 9.6 billion euros ($13.6 billion at the time). A year ago it bought Ariad Pharmaceuticals of Cambridge, Massachusetts.