Takeda seals the deal for Shire in face of con­cerns over £40bn debt

The Daily Telegraph - Business - - Business - By Ju­lia Bradshaw

THE £46bn merger be­tween Shire and Takeda has won ap­proval from share­hold­ers, paving the way for the deal to be com­pleted as early as Jan­uary and cre­at­ing one of the big­gest phar­ma­ceu­ti­cal com­pa­nies in the world.

More than 88pc of share­hold­ers in Ja­panese com­pany Takeda voted in favour of the ac­qui­si­tion, de­fy­ing spec­u­la­tion that in­vestors would re­ject the con­tro­ver­sial deal. An­glo-Ir­ish Shire, mean­while, re­ceived the back­ing of more than 99pc of its share­hold­ers.

The deal will be the largest ever for­eign takeover by a Ja­panese firm and will rank among the 10 big­gest ac­qui­si­tions ever in the phar­ma­ceu­ti­cal sec­tor.

The tie-up will cre­ate a drugs pow­er­house with close to £22bn of an­nual sales, roughly equiv­a­lent in size to As­traZeneca.

Ja­panese in­vestors have been wary of the deal, not least be­cause of the huge amount of debt Takeda has to take on to fund the ac­qui­si­tion. Adding Takeda and Shire’s debt to­gether, along with the ex­tra cap­i­tal that will be needed to fund the cash el­e­ment of the pur­chase, will leave the com­pany with a debt pile of more than £40bn, nearly five times the pro­jected an­nual prof­its of the merged group.

But Takeda’s boss, French­man Christophe We­ber, the first non-Ja­panese chief ex­ec­u­tive in its 237-year his­tory, said it would cre­ate bil­lions of dol­lars in cost sav­ings and a di­verse pipe­line of po­ten­tially lu­cra­tive drugs.

Mr We­ber, who was hired by Takeda in 2014 to ex­pand the typ­i­cally con­ser­va­tive com­pany be­yond its do­mes­tic mar­ket, said he ex­pected to cut the debt pile over the next five years, in part by sell­ing off $10bn (£7.83bn) worth of “non core” as­sets.

He said: “With share­holder ap­proval se­cured, we are look­ing for­ward to clos­ing the ac­qui­si­tion in the com­ing weeks to cre­ate a more com­pet­i­tive, ag­ile, prof­itable, and there­fore more re­silient com­pany, poised to de­liver in­no­va­tive medicines and trans­for­ma­tive care to pa­tients around the world.”

The en­larged group will de­rive three-quar­ters of its in­come from five ar­eas: gas­troin­testi­nal, on­col­ogy, neu­ro­science, rare dis­eases and plasma-de­rived ther­a­pies.

Mr We­ber said Takeda would ben­e­fit from Shire’s pres­ence in the US, while Shire would gain ac­cess to Takeda’s mar­kets in Rus­sia, Brazil and Ja­pan. The com­pany will have a dual listing in New York and Tokyo.

Takeda’s shares have fallen around 25pc since the start of the year amid un­cer­tainty around the deal. Some an­a­lysts have pre­vi­ously said its rea­sons for ac­quir­ing Shire are “be­yond con­fu­sion”.

A group of around 130 for­mer as­so­ci­ates of Takeda and other pri­vate share­hold­ers even formed a cam­paign called “Think­ing about Takeda’s Bright Fu­ture” to con­vince share­hold­ers not to back the move.

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