Economy

Takeda reaches takeover deal that values Shire at £46 billion

Takeda reaches takeover deal that values Shire at £46 billion

The takeover would give Takeda a foothold in the market for rare-disease drugs.

The combined firm would be the eighth-biggest drug maker in the world.

Japan share market finished session higher on Tuesday, 08 May 2018, with investors encouraged by Wall Street overnight rallies and Japan's Takeda surging on reports that the drugmaker would make a formal offer to buy Ireland's Shire.

It also intends to put in place an NYSE-listed American Depositary Receipt programme at the point of completion to allow Shire shareholders to continue to hold stock in the combined company.

The two companies announced the pact overnight, with Shire's board accepting Weber's offer of £49 a share, which values the company at £46 billion. In addition, Takeda will apply for its ADSs (each representing 0.5 Takeda Shares) to be listed on the NYSE. The firm expects to general annual pretax cost synergies of $1.4 billion by the end of the third year. Takeda made four other bids over the past five weeks, all of which were rejected outright by Shire.

The combined company will have annual revenues of $31 billion, and market cap of $84 billion.

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Those savings, coupled with increased cash flows, will be important to help Takeda achieve its goal of quickly paying down some of the large debt burden it will take on to pay for the deal.

In its announcement Tuesday, Takeda noted that the combined company would have a significantly increased presence in the US, the largest pharmaceuticals market in the world. Takeda also would get increased exposure to the US, the world's biggest pharmaceutical market and where Shire generates most of its revenue. It is one of the greatest deals which has ever happened happened in the pharmaceuticals company.

Additionally, the combined company will gain increased exposure in the United States and anticipates expansion of its R&D presence in the Boston area.

"We firmly believe that this combination recognizes the strong growth potential of our leading products and innovative pipeline and is in the best interests of our shareholders, our patients and the communities we serve", Shire Chairman Susan Kilsby said in the statement.

Under CEO Flemming Ornskov, Shire bought out Baxalta for $32 billion, and has been combining its drugs into a pipeline heavily focused on rare diseases, giving Takeda what it likes to call a complementary organization to its own concentration on oncology, gastroenterology and central nervous system therapeutic areas plus vaccines.

Founded in 1781 in Osaka, Japan, Takeda is a global, R&D-driven pharmaceutical with around 30,000 employees globally and operating in 70 countries and regions.