The £44bn takeover tug-of-war
Pioneering drug maker set to be at heart of global bid battle
PIONEERING drug firm Shire is braced for a fourth takeover bid from a Japanese rival, valuing it at more than £44bn.
The FTSE 100 firm, which is based in Ireland but has offices in the UK, yesterday said it had beaten off three proposals from Takeda.
In a dramatic day, it was revealed the firm could also be targeted by Botox-maker Allergan, which said it was ready to gatecrash the talks with a bumper offer.
The potential tug-of-war would have pitted two of the globe’s biggest names in medicine against each other for the maker of Adderall and global dominance in the lucrative rare diseases market.
But last night, just hours after their interest was revealed, Allergan said it would not table a bid, leaving the door open for Takeda’s fourth approach.
However, analysts now expect other global giants, such as Pfizer and Roche, to consider an offer.
The takeover is an incredible rise for Shire which started above an off-licence in Basingstoke, Hampshire, in 1986.
Takeda has been trying to expand abroad amid a shrinking home market and Japanese policies encouraging firms to buy foreign assets. It is keen to get its hands on Shire because the company makes drugs for rare blood, eye and neuromuscular diseases that are badly served by rivals.
The battle comes after Shire this week sold its key cancer drugs arm to French rival Servier for £1.7bn in what was interpreted as a defensive manoeuvre against Takeda. It could also strengthen its negotiating hand.
Shire, run by Flemming Ornskov, 59, said yesterday it had rejected share and cash proposals from Takeda worth £41bn and £43bn in late March and April, as well as a third £44bn proposal on April 14. His board said they ‘significantly undervalue the company and Shire’s growth prospects and pipeline.’
However, it added: ‘At the board’s request, Shire’s advisers entered into a dialogue with Takeda’s advisers to discuss whether a further, more attractive, proposal may be forthcoming and to understand the basis on which such a proposal would be made.’
Takeda, run by chief executive Christophe Weber, 51, said it would remain disciplined over its fourth bid, which would only be made with the backing of Shire’s board. It added: ‘The acquisition of Shire would accelerate [Takeda’s] transformation and result in a global, value-based, R&Ddriven biopharmaceutical leader headquartered in Japan.’
Allergan, which is based in Dublin, confirmed it was in ‘the early stages of considering a possible offer for Shire’. It added: ‘There can be no certainty an offer will be made.’ Later, CNBC was reporting last night that it would not follow through with a bid.
Analysts said Shire was correct to reject Takeda’s bids so far. Cantor Fitzgerald said: ‘We think this rejection was a reasonable move, given that shareholders we have talked to would want to see an offer of $200+ a share unless the offer is all cash.’ Investment bankers Jefferies said Takeda’s bid was not unreasonable, but there was an added risk because it was in shares.
Other analysts say Shire is undervalued, and others might also be interested in piling in. Exane has said Pfizer and Roche might be a good fit.
Shire’s first product was a calcium supplement, Calcichew, and it expanded massively, gobbling up a string of firms including the maker of an attention deficit deficiency drug, Adderall, which massively boosted its growth. By the year 2000 Adderall accounted for about three-quarters of its sales.
Shire was Britain’s third-largest pharmaceuticals company, behind Glaxosmithkline and Astrazeneca, until 2008 when it moved to Ireland for tax reasons. Takeda bought US oncology group Ariad Pharmaceuticals last year for £3.6bn and Swiss drugs firm Nycomed in 2011 for £9.7bn.
It now has until next Wednesday to make a bid for Shire.