Takeda unlikely to sell OTC unit to pay Shire merger debts

Takeda’s $59 billion takeover of Shire is due to close tomorrow (Tuesday) and the company’s CEO Christophe Weber has already given some strong clues about the company’s strategy once the deal completes.

Last week Takeda announced three new research collaborations in immuno-oncology, and Weber gave more details about the company’s strategy after the deal closes.

According to Reuters, one thing Takeda will not be doing is selling its over-the-counter (OTC) business as a quick fix way of paying back some of the $32 billion bank loans it took out to finance the merger.

Reuters said that Takeda plans to sell up to $10 billion worth of unwanted assets – but Weber reportedly told a news conference that selling off the OTC unit will not be the company’s first priority.

Christophe Weber

Without elaborating further, he said: “We have some businesses outside of Japan where we are not really performing.”

Takeda’s shares rose nearly 10% in morning trading after the company announced it would issue around 770 million shares worth 5.85 trillion yen ($54.11 billion), outperforming the benchmark index, which was up around 2.7%.

The Japan Times reported that Weber said that the merged company’s annual consolidated sales are forecast to nearly double to $31.3 billion.

And Bloomberg reported that Weber believes that pharma mega-mergers have come back into vogue after years where smaller “bolt-on” acquisitions became the norm.

He cited Bristol-Myers Squibb’s $74 billion acquisition of Celgene as evidence that large mergers were becoming necessary to fund the risky R&D process to develop new drugs.

A key reason behind the Shire acquisition is to boost Takeda’s cash flow, in order to support its R&D efforts.

These R&D efforts will be vital as revenues from a new generation of medicines will be essential to pay off the huge debt needed to finance the merger.

“If you look at the top 10 pharmaceutical companies today, not a single one didn’t come from an M&A,” he said.

“M&A is always a key part of the industry. Why? Because we are in an industry which invests enormously in R&D, at risk.”

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