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Published: Wed, May 09, 2018
Economy | By Melissa Porter

Takeda and Shire finally agree takeover terms after months of negotiations

Takeda and Shire finally agree takeover terms after months of negotiations

Its agreed $62 billion takeover of much larger Shire Plc would push combined revenue above $31 billion as the Japanese firm seeks growth in new markets amid patent expirations and drug pricing pressures at home. Once complete, the merged firm will leapfrog AstraZeneca and Eli Lilly to become one of the largest pharmaceutical companies by sales.

That's a 60 percent premium to the price before Takeda first said it wanted to take over Shire, on March 28.

The deal comes after Takeda lifted its offer for a 100 percent stake in Shire for the fourth time to around 49.01 pounds per share from 47 pounds on April 25.

A few weeks ago, Takeda confirmed that it was trying to buy out Shire, a specialist in treating rare diseases, by noting that its most recent proposal had been spurned. Past year it bought Ariad Pharmaceuticals of Cambridge, Massachusetts.

The share price in both companies rose on the news - Shire's by 3.6 percent to 39.96 pounds, and Takeda's by the same rate to 4,638 yen.

Shire shareholders will own about half of the combined group after the deal. The transaction - approved by the boards of both companies - is expected to close in the first half of 2019.

The acquisition would "strengthen Takeda's core therapeutic areas, bringing together complementary positions in gastroenterology and neuroscience, and provide leading positions in rare diseases and plasma-derived therapies", it added.

Enhancing Takeda's cash flow profile.

The two companies now have more than 50,000 employees between them worldwide and more than 5,000 in MA, making it potentially the biggest pharmaceutical employer in the state.

Takeda could face a multiple-step credit downgrade due to a "spike in leverage" if its proposed acquisition of Shire goes ahead, Moody's Investors Service said last month.

But some of the expected savings will also come from job cuts. The agreement comes more than three years after U.S. drugmaker AbbVie scrapped its agreed takeover of the London-listed rare disease specialist, following a clampdown on tax inversion deals by the Obama administration.

Takeda had previously said that expanding its oncology business was a significant reason why it was considering a bid for Shire, along with the desire to expand in along with gastrointestinal medicine and neuroscience. "That's where you could have some portfolio assessment and potentially some disposals", Weber said.

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