- Takeda Pharmaceutical Co. Ltd. is not giving up on its pursuit of Shire plc, even after four rejections over the last several months.
- The Japanese pharma came back on April 24 with its fifth offer, improving the mix of cash vs. stock for a deal worth £46 billion ($64.1 billion). Takeda is now offering £27.26 per share in new Takeda shares and £21.75 per share in cash.
- Unlike the previous offers that Shire rejected outright, the Irish pharma has said it will consider this proposal and that the companies have until 5 p.m. Greenwich Mean Time on May 8 to conclude ongoing discussions.
While the deal terms haven't changed dramatically, the extra $2 billion and much higher cash offer could be what makes it finally happen. An earlier proposal had Takeda offering £28.75 per share in Takeda shares to be traded on the Japanese stock exchange, and £17.75 per share in cash. Analysts had speculated that the amount of the offer coming from stock was the problem that was holding Shire and its shareholders back.
Takeda trades on the Japanese stock exchange and has American Depositary Receipts in the U.S. market. Analysts also suggested that there could be some issues for some shareholders in owning the Japanese stock.
Shire seems amenable to the new proposal though. " The Board has indicated to Takeda that it would be willing to recommend the Revised Proposal to Shire shareholders subject to satisfactory resolution of the other terms of the possible offer, including completion of reciprocal due diligence by Shire on Takeda. Accordingly, the Board will engage in discussions with Takeda in relation to these terms," the Irish pharma said in a statement.
If Shire accepts the offer, its shareholders will become 50% owners of the new company.
"The most recent terms still have a relatively high equity component as [Shire] shareholders would receive $30.33 in cash and 0.839 new Takeda shares (via a listing in Japan and in the US via an ADR program) for each ordinary share — or 56% equity and 44% cash (similar to Takeda’s fourth offer of last Friday)," wrote Jefferies analyst David Steinberg in a note to clients on April 25.
Steinberg said that while the offer "represents a solid improvement over Takeda’s third bid (38% cash), we still wonder if it is enough to satisfy [Shire] shareholders, who would still bear some not insignificant risk going forward as ~50% owners of NewCo."
Previously, Allergan plc expressed interest in acquiring Shire as well, but quickly turned around and said it will not pursue an offer. Other media reports have speculated that there could be as many as two other bidders for Shire, yet no other suitors have come forward. Under U.K. takeover law, another interested suitor would have to disclose their intent publicly.
Jefferies' Steinberg speculates that there is only a 50% chance that another party will come forward.