Mount­ing dis­sen­sion in the ranks over Ja­panese takeover of Shire

The Sunday Telegraph - Money & Business - - Business - By Tom Rees

PHARMA gi­ant Takeda has be­come Ja­pan’s most shorted stock ahead of its £48bn takeover of FTSE 100 ri­val Shire as op­po­si­tion to the deal mounts.

Hedge funds have tar­geted Shire’s new owner as con­cerns grow over the im­pact that it will have on Takeda’s stretched bal­anced sheet. The Ja­panese gi­ant took on bil­lions of debt to fund the deal.

Around a fifth of Takeda’s shares are now in the hands of short-sell­ers at a mar­ket value of $6.6bn (£5bn), ac­cord­ing to S3 Part­ners data.

A group of in­vestors has voiced its op­po­si­tion to the swoop ahead of a share­holder vote on Oct 19.

Since Shire re­vealed Takeda’s in­ter­est in March, the Os­aka-based com­pany’s shares have slumped 19pc, wip­ing off al­most £5bn from its mar­ket cap­i­tal­i­sa­tion. Shorts against Takeda are now over dou­ble that of Toy­ota, the sec­ond most shorted stock in Ja­pan.

This week, the dis­sent­ing stake­hold­ers, which in­clude found­ing fam­ily mem­bers, sent French boss Christophe We­ber an open let­ter urg­ing him to re­veal his plans to re­duce the debt pile and to jus­tify the 60pc pre­mium paid for Shire. They have lam­basted the deal as “the height of mad­ness”.

Hedge funds are ex­pected to cash in if the ac­qui­si­tion is pushed through af­ter ramp­ing up their bets against Takeda in the last month. The value of shorts against the com­pany has surged by $2.2bn in the last month.

Takeda in­vestors are con­cerned about the “top dol­lar” paid for the deal and the debt left from Shire’s trou­bled swoop for Bax­alta, Andy Smith, an an­a­lyst at Edi­son In­vest­ment Re­search, ex­plained. Shire raised $12bn of debt to fund the deal for its ri­val in 2016.

He said: “In Ja­pan, Takeda’s na­tive share­hold­ers were look­ing at the two years of hor­ror that Shire had [with Bax­alta] and are think­ing ‘are we go­ing to buy what is still a build­ing site of a com­pany?’”

“Why bite off more than you can chew when Shire bit off more than they could?”

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