Takeda CEO Tells Select Group He Seeks Deal for All of Shire

(Bloomberg) -- Takeda Pharmaceutical Co. Chief Executive Officer Christophe Weber is contemplating a deal for all of Shire Plc, telling a select audience that size is not an obstacle to a “mindful” acquisition.

Takeda CEO Tells Select Group He Seeks Deal for All of Shire

Takeda confirmed the meeting took place on Thursday with analysts from UBS Group AG and Credit Suisse Group AG, among others. Investors and journalists weren’t invited, and the Osaka, Japan-based company declined to confirm what was said, raising questions about the disclosure of potentially market-moving information in a closed-door setting.

A spokeswoman for Takeda said no new information was released about a possible takeover or merger, but Shire’s shares gained as much as 6.1 percent on Thursday, closing up 3 percent at 3,707 pence in London. In Tokyo on Friday, Takeda had the largest drop on the Nikkei 225 Stock Average, falling 5 percent to the lowest level in more than a year.

Takeda is not considering purchasing only some businesses or assets, Credit Suisse analyst Fumiyoshi Sakai wrote. Shire hasn’t received any formal approach or offer, and Takeda has until April 25 to do so or walk away under U.K. takeover rules. Weber sees a deal, which could be worth as much as $50 billion, as an opportunity to accelerate Takeda’s growth, helping to transform Japan’s biggest drugmaker into a global leader, UBS Securities Japan Co. analyst Atsushi Seki wrote.

“In a meeting in Tokyo, Takeda stressed their interest in Shire,” Sanford C. Bernstein & Co. analysts wrote in a note. “We think the deal is likely because there is a willing buyer, willing sellers and room to meet both sides’ expectations.”

A survey showed Shire investors want 45 pounds a share to close the deal, according to the Bernstein team. Investors also want less than half the purchase price to be paid in the form of Takeda shares, according to the survey.

Takeda CEO Tells Select Group He Seeks Deal for All of Shire

Weber declined to comment on financing for a deal, UBS noted, but he reiterated his focus on maintaining Takeda’s dividend and investment grade. Concern has grown over how the Asian drugmaker would pay for a company whose $47 billion market value tops Takeda’s $37 billion. Shire’s stock has soared more than 20 percent since Takeda’s announcement, widening the gap between the two companies’ valuations and creating a bigger financing hurdle for the Japanese company.

Credit Suisse analysts said in a separate note Wednesday that Takeda should be able to absorb the higher interest costs and earnings per share dilution from a new share issue to raise funds for the purchase.

For investors wondering if Takeda will abandon its Japanese roots for the U.K., attracted by tax rates, former Chief Financial Officer James Kehoe said it would be a mistake to change domiciles, UBS said in its note.

The Asian drugmaker will be disciplined in its approach to the takeover including on finances and purchase price, according to Credit Suisse. The Shire deal is just one option being considered to achieve Takeda’s 2025 strategy for growth, it said.

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