Takeda woos Shire shareholders with increased bid

Takeda has sweetened its offer for Shire, increasing its bid slightly and improving its terms to win over the UK-listed firm’s shareholders after a string of rejections.

The Japanese pharma company wants to buy Shire to become one of the largest global pharma companies and has increased its offer by around £455 million, bringing the bid for Dublin-based Shire to around £42.8bn after debts.

Takeda’s fourth bid for Shire is at £47 per share, an increase from the £46.50 offer that Shire has previously rejected.

The Japanese pharma company has increased the cash component of the bid from £17.75 per share and around £16 billion, to £21 per share in cash - about £19 billion.

The new bid significantly decreases the proportion of the merged company that would be owned by Shire’s shareholders – reducing their exposure to the sizeable risks caused by the merger of two very large and complicated companies.

Under the previous bid, UK-listed Shire’s shareholders would have held 51% of the company, but under the latest offer the figure has been reduced to around 46%.

Allergan announced late last week that it was considering bidding for Shire under the rules of the UK’s takeover code, only to pull out hours after the announcement.

But Paul Major, fund manager at BB Healthcare Trust, which has 5.7% of its £280m fund invested in Shire, told the Financial Times that the increased bid may still not be enough to win over Shire’s shareholders.

Major said: “Our sense of it is [the markets] would probably have preferred Takeda to have increased the cash component more, rather than increased the price. Clearly the issue for UK and US investors is the significant element that is in Japanese shares.”

But he added that this would likely be Takeda’s final bid, speculating that it had now maxed out its borrowing to get the final bid on the table. “It is relatively clear that this is it,” said Major.

There had been speculation that big US pharma companies were also interested in buying Shire, but as time goes on the likelihood of further bids emerging is receding.

Bristol-Myers Squibb is considered to be another big pharma takeover target, as its shares have been hit by several shock trial failures involving its blockbuster cancer immunotherapy drug, Opdivo (nivolumab).

Jonathan Richards, corporate trading analyst at Saga Nagoya Securities said that the market for M&A in pharma is buoyant as big firms are seeking to replenish their pipelines with the latest science and technology.

Richards said: "There have been a lot of mergers and acquisitions in recent years within the pharmaceutical industry not only in the United States but worldwide and it doesn't seem to be slowing down."