After five offers from the outward-looking Japanese firm in the past month, the Shire board decided to recommend the latest cash and shares bid, which values the London-listed group at about £49 a share.

Pharmaceutical expansion plans

The Financial Times speculated that the deal “could spark a renewed wave of 'big pharma' deals”. The report added, “The takeover of Shire – the largest foreign acquisition by a Japanese company – would be the culmination of Takeda’s efforts to become a truly global pharma company, able to compete with US rivals such as AbbVie and Pfizer.”In a statement on Wednesday, Shire said, “The board has indicated to Takeda that it would be willing to recommend the revised proposal to Shire shareholders subject to satisfactory resolution of the other terms of the possible offer, including completion of reciprocal due diligence by Shire on Takeda.”Headed by its French chief executive Christophe Weber, Takeda is believed to have become interested in Shire because its strength in producing cancer, stomach and brain drugs.Takeda is also regarded as one of the few Japanese pharmaceutical companies with truly global ambitions. Already, only 30 per cent of the company’s drug sales come from Japan, and 70 per cent of its workforce is based overseas.“Takeda has been, is and will continue to be the truly international pharmaceutical company of Japanese origin,” said Philippe Auvaro, president of rare disease specialists OrphanPacific, based in Tokyo.

Benefits of the takeover

Paul Major, fund manager at BB Healthcare Trust, which has 5.7 per cent of its £280 million fund invested in Shire, told the Financial Times that the potential tie-up between the two companies involved “multi-factorial foreign exchange risks: the cash component [of the offer] is paid in dollars, the share component in yen and Shire is quoted in pounds”.The offer was originally worth £49 a share, he said, but the value had since fallen to £46.55 as Takeda shares traded lower following Shire's announcement of preliminary acceptance of the offer. “It is for the market to decide whether it believes in the deal more widely,” added Mr Major.Bloomberg commented, “Shire brings a bench of rare-disease drugs, including for haemophilia and hereditary angiodema, that will catapult Takeda into a higher league. The acquisition would also boost its earnings from the US, where Shire's Adderall treatment for attention deficit hyperactivity disorder is popular.“The American drugmaker, which is largely run from Lexington, Massachusetts but has a legal address in Dublin, sold its oncology business recently, but that accounted for a mere 1.8 per cent of revenue.”

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