Takeda will present Shire takeover to shareholders

Japan’s Takeda Pharmaceutical Co. got backing from the European Union and two top shareholder advisory groups for its takeover of Shire, an Irish company with U.S. headquarters in Massachusetts. That will pave the way to an investor vote on the $62 billion acquisition.

While the deal has enjoyed smooth regulatory sailing, getting approval in major markets from China to the United States, Europe presented the biggest potential challenge. The European Commission signed off Tuesday after the Japanese drugmaker agreed to sell an experimental drug for inflammatory bowel disease from Shire to satisfy antitrust concerns.

“Takeda would be unlikely to continue developing Shire’s new anti-integrin treatment” that rivals Takeda’s Entyvio, the European Commission said Tuesday. “This would have meant a serious loss of innovation on a market where patients currently have few treatment options.”

The decision clears the legal path for Takeda’s largest deal ever, and the biggest overseas acquisition by a Japanese company. The combination would put it among the top 10 drugmakers by revenue, while giving it a major U.S. presence and a strong position in the lucrative business for the treatment of rare diseases.

Japan’s largest pharmaceutical company has been checking off a to-do list while putting financing in place. It’s considering selling some Shire assets and its own overthe-counter business in Europe to help pay for the deal. Advisory groups Glass Lewis and Institutional Shareholder Services on Tuesday recommended that investors back the acquisition.

Shares of both companies rose Tuesday.

Takeda sold $5.5 billion of bonds Monday, part of the biggest fundraising by an Asian company this year, to help pay for Shire.

The takeover now faces a decision from investors, with a shareholder vote scheduled for Dec. 5. The 237-year-old drugmaker has been aggressively pitching the deal to both domestic and overseas investors, emphasizing the company’s Japanese roots and global aspirations.

“After several months of constructive dialogue, we are optimistic that our shareholders recognize the significant long-term value creation potential of this powerful combination,” Takeda CEO Christophe Weber said in a statement.

A small but vocal dissident group has tried to raise opposition to the Shire takeover, concerned about financial risks, and the impact on earnings and Takeda’s dividend. But analysts don’t see the group having much influence over the vote.

Takeda was confident it would get the EU’s nod, going so far as to schedule the shareholder vote before the authority signed off, and also setting an expected closing date for early January.

The sale of the inflammatory bowel disease drug was a small concession to regulators and was expected, as Takeda said in October it was in discussions with the EU about divesting the medicine to gain regulatory clearance.

The companies’ pledge to sell the Shire treatment removes the commission’s concerns about the deal, the regulator said. The treatment, along with rights to its development, manufacturing and marketing, must be sold “to a purchaser that would have an incentive to develop the drug,” the commission said.