Allergan moves in as Shire rebuffs $63 billion Takeda bid: sources

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NEW YORK/LONDON (Reuters) – Drugmaker Shire (SHP.L) has rejected a third takeover bid worth nearly $63 billion from Japan’s Takeda Pharmaceutical (4502.T), although talks are continuing, while sources said Allergan (AGN.N) was also in competing negotiations.

FILE PHOTO: Takeda Pharmaceutical’s signboard is seen on its headquarters building in Tokyo, Japan January 30, 2018. REUTERS/Kim Kyung-Hoon/File Photo

It is not clear whether Botox maker Allergan has submitted an offer, and there is no certainty of a bid from the U.S. group, people familiar with the matter said on Thursday.

Reuters first reported that Takeda had made a cash-and-stock takeover offer of 46.50 pounds ($66.20) a share, prompting Takeda to issue a statement confirming the move.

Buying London-listed Shire would be the largest ever overseas acquisition by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top ranks of global drugmakers.

It would be Weber’s boldest move by far, significantly expanding the company’s U.S. presence while boosting its position in rare diseases, gastrointestinal disorders and neuroscience, where Shire is a leader in drugs to treat hyperactivity.

But it would be a big financial stretch, since Shire is worth a lot more than Japan’s biggest drugmaker.

FILE PHOTO: Vitamins made by Shire are displayed at a chemist’s in northwest London, Britain, July 11, 2014. REUTERS/Suzanne Plunkett/File Photo

Takeda said on Thursday it would remain disciplined in its approach and intended to maintain its dividend policy and investment grade credit rating, adding that: “Discussions between the parties regarding a potential offer are ongoing.”

The drugs industry has seen a surge in deal-making this year as large players look for promising assets to improve their pipelines, but a Takeda-Shire transaction would be by far the biggest yet.

MORE CASH WANTED

Shire confirmed that it had received three conditional proposals from Takeda but said they significantly undervalued the company’s growth prospects and its new drug pipeline.

The latest 46.50 pounds offer was made on April 12 and comprised 17.75 pounds in cash, which would be paid in U.S. dollars, and 28.75 pounds worth of new Takeda shares. Shire said that valued it at approximately 44 billion pounds ($62.6 billion), based on total issued and to be issued share capital.

The two earlier cash-and share offers were worth 44 and 45.50 pounds per share respectively.

Under UK takeover rules, Takeda has until April 25 to make a firm offer or walk away from the FTSE 100 company, after it said last month it was considering a bid.

Shares in Shire were up 8.5 percent at 40.70 pounds at 1405 GMT in London – still below the price suggested by Takeda, reflecting investor uncertainty about the deal and the amount of paper involved.

Based on Takeda’s market capitalization, Shire shareholders would end up owning approximately 51 percent of the enlarged group, Shire noted.

Bernstein analyst Wimal Kapadia said Shire was likely to be pushing for a larger cash component in current talks but Takeda was already stretched, suggesting the chances of a deal being consummated were still “reasonably risky”.

Shire has been under pressure in the last 12 months, with its shares down by a third before Takeda’s interest was made public, due to greater competition from generic drugs and debts from its $32 billion acquisition of Baxalta in 2016.

Shire said in January that it would run its attention deficit hyperactivity disorder (ADHD) business, which consists mainly of its blockbuster drug Vyvanse, separately and possibly seek a separate listing.

Earlier this week it struck a deal to sell unlisted French group Servier its cancer drugs for $2.4 billion.

Additional reporting by Paul Sandle; Editing by Susan Fenton/Keith Weir



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