Finding a takeover price that suits both Shire (SHP) and its potential new owner, Takeda, has been an arduous task. In the space of six days, the Japanese pharma group made five different offers for its UK peer, three of which were instantly batted aside. At £49 a share, comprising the equivalent of £27.26 in new Takeda shares and £21.75 in cash, Shire’s management has finally given in to Takeda’s advances. The latest bid values Shire at £46bn, a 60 per cent premium to the group’s closing price on the day before news of the offer first broke.
But as we went to press, Shire was still being vague: “the board has indicated to Takeda that it would be willing to recommend the revised proposal to shareholders”, Shire said in a statement, subject to the required due diligence. That due diligence is likely to be a particularly painstaking task considering the current complexity of Shire’s portfolio. The group is still in the process of integrating its $32bn (£23bn) acquisition of Baxalta (which completed in 2016) and has recently sold its oncology business to French peer Servier. (Indeed, some analysts expressed surprise that Takeda had made a bid for the whole of Shire, particularly considering its tendency for restraint in M&A).
Investors are also erring on the side of caution and the share price is currently trailing the offer price by £10 – perhaps a sign that they are not too enthusiastic about owning 50 per cent of the enlarged Takeda. The new company would have a sizeable integration task and estimated net debt of £39bn, according to Moody’s credit rating agency. There are also concerns that the deal may yet fall through, particularly now US peer Allergan has ruled itself out of making a rival offer, and Takeda’s shares have been falling steadily since news of the potential takeover first broke.
