Takeda's $64 Billion Offer Bolstered by Shire's Results

(Bloomberg) -- Shire Plc’s results topped expectations for its latest quarter, bolstering Takeda Pharmaceutical Co.’s case in selling its $64 billion takeover offer to investors.

Revenue at Shire totaled about $3.8 billion in the first three months of the year, more than the $3.7 billion analysts expected, driven by growth in the company’s immunology drugs. About 72 percent of Shire’s sales came from its rare-disease division, a business coveted by Takeda.

While the results shouldn’t change the outlook for Takeda’s acquisition, they do highlight that Shire has growth potential, said Credit Suisse Group AG analyst Fumiyoshi Sakai.

“That became clear with the earnings," Sakai said. “The earnings could be used as part of the evidence for Takeda to persuade their shareholders about the acquisition.”

The results show why the Japanese company is willing to take on tens of billions of dollars in debt to gain Shire’s lucrative therapies. While such drugs are used by only small numbers of patients, they are often life-saving medications for which pharmaceutical companies charge hundreds of thousands of dollars a year.

On Wednesday, Takeda reached a preliminary agreement to buy Shire after increasing its offer to about 46 billion pounds, or $64 billion. If the deal closes, Takeda, which remains smaller than Shire in terms of market value, could face a multistep downgrade by Moody’s Investors Service, the credit-ratings firm has said.

When Tokyo trading resumed after the preliminary agreement was announced, the Japanese drugmaker’s shares fell the most in five years. The stock was little changed in early trading Friday. Shire’s stock, which has climbed 25 percent since Takeda disclosed its interest in a deal, rose 0.2 percent in London trading on Thursday.

©2018 Bloomberg L.P.

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