UPDATE: April 19, 2018: Several hours after the original publication of this article, Allergan released a statement saying it now does not intend to make an offer for Shire.
Dive Brief:
- After reports suggested Takeda Pharmaceutical Co. Ltd. had made an official takeover bid for Shire plc, the Irish pharma confirmed that it has gotten three proposals and rejected each one.
- Shire revealed Thursday morning that Takeda made an offer worth £41 billion on March 29, upped that offer again to £43 billion on April 11, and then came in with an offer of £44 billion (approximately $62.5 billion) on April 13.
- All of the offers constituted a mix of both shares and cash. The most recent offer was for £28.75 in Takeda shares to be traded on the Japanese stock exchange, and £17.75 in cash, which would have given Shire shareholders a 51% stake in the combined company.
Dive Insight:
Shire management believes the offer from Takeda undervalues the pipeline of the company — even after the Irish pharma announced earlier this month it will unload its oncology assets to French pharma Servier Laboratories for $2.4 billion.
"Following the Board meeting on 14 April 2018 which rejected the Third Proposal, at the Board's request Shire's advisers entered into a dialogue with Takeda's advisers to discuss whether a further, more attractive, proposal may be forthcoming and to understand the basis on which such a proposal would be made," said Shire in a statement on Thursday.
According to U.K. takeover laws, Takeda has until 5pm GMT on April 25 to come back with another offer.
Analysts believe the offer from Takeda has been largely fair, but Jefferies analyst Peter Welford pointed out in a note to clients that the mix of stock and cash could be considered a drawback.
"The rejected bid is not unreasonable, in our view, at a +12% premium to [net present value], but the Board may feel it is opportunistic and undervalues synergies plus potential growth. Furthermore, 62% of the consideration is as new Takeda shares, with U.S. and Japan listings, raising the value risk," he wrote.
But Shire just may be able to squeeze more out of a suitor. After speculation in the press, Allergan confirmed it is "in the early stages of considering a possible offer for Shire" among the strategic options it is evaluating.
For Takeda, the deal would mean a expanded presence in the U.S. — Shire collected about 66% of its revenue from the U.S. last year. There are also complementary assets in the neuroscience space.
For Allergan, an acquisition of Shire has a little more obvious strategic fit. The company's neuro focus and Shire's recent entrance into the eye care business are major areas of overlap, but there are also some synergies in gastroenterology.
"Assuming a $200 per share Shire take-out price, the financials of such a combination would place Allergan/Shire at $31B+ in combined sales (or roughly the 9th largest global pharmaceutical company)," wrote Cowen analyst Ken Cacciatore, who recently broke down potential strategic options for Allergan.