Takeda finally acquires Shire in a $62 billion deal

Perseverance finally paid off. After four snubs, Japan’s pharma company Takeda succeeded in notching the biggest deal ever in the pharma history by purchasing its Irish peer Shire (SHPG) that specializes in rare diseases. Takeda is eager to expand its presence in the U.S. and hence is paying a whopping $62 billion to get a hold of Shire’s drug portfolio.

Based on the final $62 billion deal, Takeda would pay $66.56 for a Shire share. The deal includes $30.33 in cash, and the rest in the form of 0.839 of a new Takeda share.

Despite the doubts on whether Takeda could afford to buy Shire that has a market value of $46.4 billion, the Japanese company pushed the price tag to over $60 billion, despite the shares going south. Initially, the prospects of the deal looked dim, because Takeda would have to pick a hefty debt and cut spending to finance the deal.

Takeda is eager to expand its presence in the U.S. and hence is paying a whopping $62 billion to get a hold of Shire’s drug portfolio.

But now that Takeda has purchased the London-listed company, it is relying on the cash flow from the merged entities to pay down the acquisition-related debt. If the deal goes through the scrutiny of the antitrust watchdogs, Takeda shareholders would then own 50% of the merged firms.

After the deal, Takeda, the maker of the blood cancer drug Velcade, will be recognized as the only pharma company with a dual listing, as Takeda’s shares would be listed on the Tokyo stock exchange as well as local Japanese financial exchanges. Reports suggest that Takeda also plans to list its shares on the New York Stock Exchange.

Shire, which had recently sold its cancer business to French company Servier, generates a majority of its sales from the U.S. And besides the neuroscience and gastroenterology businesses, Takeda wants to benefit from Shire’s lucrative oncology division.

Takeda currently struggles with a shrinking domestic market, hence it plans to expand its presence globally and is looking for more deals and partnerships that will help it achieve the goal.  Takeda also lacks a strong pipeline and hopes this deal will help the company push its products to advance stages of development. This deal will help boost Takeda’s earnings from the U.S.

Both Takeda and Shire’s share prices rose 3.99% and 4.63%, respectively, on the takeover news. The company expects to seal the deal early next year.