Takeda clears ma­jor hur­dle as in­vestors back $59bn Shire deal

Gulf Times Business - - BUSINESS -

Takeda Phar­ma­ceu­ti­cal has won share­holder ap­proval for its $59bn takeover of Lon­don-listed Shire, cre­at­ing a global pow­er­house that has a stronger drugs pipe­line but is also sad­dled with mas­sive debt.

Takeda will be join­ing the ranks of the world’s top 10 drug­mak­ers and gain­ing ex­per­tise in rare dis­eases through the deal, the big­gest over­seas ac­qui­si­tion by a Ja­panese com­pany. It will also be­come one of the most in­debted.

In ad­di­tion to is­su­ing new shares, the com­pany has se­cured $30.9bn in bank loans. The com­pany’s high debt lev­els were a top con­cern for Takeda share­hold­ers who gath­ered at an ex­traor­di­nary meet­ing in Osaka, western Ja­pan, although al­most 90% of them voted to ap­prove the deal as ex­pected.

“I want to keep my Takeda shares into the fu­ture, but now I am wor­ried about fur­ther de­clines in the share price,” said Satoshi Ito, a 75-year-old share­holder. He ab­stained from vot­ing. Sep­a­rate meet­ings of Shire share­hold­ers later yes­ter­day also se­cured over­whelm­ing sup­port for the trans­ac­tion. Takeda shares have fallen around 25% since the drug­maker re­vealed its in­ter­est in the ac­qui­si­tion in March.

They closed up 1% at ¥4,240 yes­ter­day. Shire shares gained 3.2% to £46.95 on re­lief Takeda’s board had won its nine-month bat­tle to per­suade share­hold­ers of the mer­its of the tie-up.

The ac­qui­si­tion is ex­pected to close on Jan­uary 8. It now only re­quires sanc­tion­ing at a court hear­ing ex­pected to be held on Jan­uary 3.

A small group of Takeda in­vestors, in­clud­ing descen­dants of the com­pany’s founder, had ac­tively op­posed the deal.

“We are def­i­nitely against this be­cause the fi­nan­cial risks are too great and the ex­pected ben­e­fits are quite lim­ited,” said Kazuhisa Takeda, a for­mer di­rec­tor of the drug­maker and a mem­ber of the found­ing fam­ily, ahead of the meet­ing. “I think M&A is quite nec­es­sary for Takeda’s fu­ture but Shire is not the an­swer.” Chief ex­ec­u­tive Christophe We­ber has promised to turn the deal prof­itable by slash­ing costs.

It pre­dicts an­nual sav­ings of at least $1.4bn three years af­ter com­ple­tion, and ex­pects to boost un­der­ly­ing earn­ings sig­nif­i­cantly from the first full year af­ter clos­ing. Takeda also has a plan to sell up to $10bn worth of non-core as­sets to pay back debt.

Andy Plump, Takeda’s global head of R&D, told Reuters that ac­cel­er­ated delever­ag­ing was needed to keep its credit rat­ing at a safe level. “We have a plan for di­vesti­ture that gets us to a place in three to five years that our credit agen­cies are OK with.

Our credit rat­ing is likely to tick down a notch, but still above junk bond sta­tus, which is crit­i­cal for us,” he said in an in­ter­view.

An­a­lysts have said it may be dif­fi­cult to in­te­grate the two com­pa­nies.

Toshiba’s ac­qui­si­tion of West­ing­house over a decade ago and Ja­pan Post Hold­ings’ $4.9bn bet on Toll Hold­ings are widely seen as ex­am­ples of many Ja­panese com­pa­nies hav­ing paid high val­u­a­tions in cross-bor­der deals only to face mas­sive write-downs later. But they also said Takeda has lit­tle choice but to seek growth abroad, with in­dus­try pres­sure to gain ac­cess to cut­tingedge treat­ments amid de­clin­ing rev­enue from older drugs that must com­pete with cheaper gener­ics.

Even with the ac­qui­si­tion of Shire, some said Takeda will need to bol­ster its lineup of ex­per­i­men­tal ther­a­pies to com­pete in the longer term.

Shire’s haemophilia busi­ness, for ex­am­ple, is al­ready start­ing to face strong pres­sure from a com­pet­ing drug be­ing mar­keted by Roche as well as new gene ther­a­pies now in devel­op­ment.

Share­hold­ers of Takeda Phar­ma­ceu­ti­cal en­ter the venue of their meet­ing in Osaka yes­ter­day. Takeda has won share­holder ap­proval for its $59bn takeover of Lon­don-listed Shire, cre­at­ing a global pow­er­house that has a stronger drugs pipe­line but is also sad­dled with mas­sive debt.

Newspapers in English

Newspapers from Qatar

© PressReader. All rights reserved.