Takeda's Dissident Holders Keep Trying to Kill Shire Deal

(Bloomberg) -- They have little chance of success, but the shareholder group trying to derail Takeda Pharmaceutical Co.’s $62 billion purchase of U.K.-listed Shire Plc is making last-minute attempts to win over investors.

The dissident holders account for only about 1 percent of Takeda’s shares outstanding, but the group is raising its profile as the Japanese drugmaker inches toward completing its largest deal ever. The group has put out invitations to shareholders for emergency meetings this week after the deal is expected to be approved by Europe on Tuesday in its final major regulatory hurdle.

Here is a guide to understanding the dissidents and their position:

Who Are They?

The group, called “Thinking About Takeda’s Future” and formed after the announcement of Takeda’s takeover of Shire, comprises more than 100 former employees and shareholders of the Japanese drugmaker. Some members are part of the founding Takeda family. The group has sent open letters to the company with a list of objections to the takeover, and reportedly has managed to win over the support of Kunio Takeda, the last member of the founding family to run the company.

The dissident group didn’t respond to requests for a comment.

Although it has some members in common, the group is separate from previous organizations that have been vocal against Takeda’s globalization efforts through acquisitions in the past. Chief Executive Officer Christophe Weber, the first non-Japanese to lead the 237-year-old company, has wrestled with factions unhappy with Takeda’s strategy since taking over in 2015.

What Do They Want?

The dissident group is primarily concerned with the financial risk Takeda will take on -- more than $30 billion in additional debt -- the dilution of shares, and the impact on earnings and the company’s dividend. They are also concerned about the outlook for Shire’s hemophilia drug, one of the biggest moneymakers in the company’s rare-disease portfolio, as it faces challenges from a competing treatment offered by Roche Holding AG.

Further, the group argues that Takeda’s disclosure of information to investors is too opaque, and is seeking to obtain the minutes of board meetings leading up to the Shire deal. They also object to the scheduling of a Dec. 5 shareholder vote on the deal, saying Takeda is breaking good governance practices by announcing the date with little time for shareholders to prepare.

Takeda’s Reaction

Weber has said the dissident group has a different vision for Takeda in wanting it to remain a local company instead of becoming more international. He has been careful to stress that Takeda will keep its Japanese roots even as it becomes a global pharma powerhouse.

The CEO said he will not release the board minutes unless prompted by a court order, saying directors were regularly briefed on takeover talks. At the same time, Takeda has become more forthcoming on details of the deal, unveiling a potential debt repayment plan and disclosing progress on integrating the two companies.

What Are Their Chances?

Weber is confident the vote will result in more than the two-thirds required for approval, and analysts say there is only a slim chance the dissidents will have any impact. A proposal brought forth by the dissident group at Takeda’s annual meeting in June that would require prior approval for major acquisitions was shot down by shareholders, signaling widespread support for the Shire transaction.

The dissident group has conceded it would be an uphill climb to block the deal, acknowledging it has been difficult to meet with investors to argue their case. It may be getting some traction now -- the group has scheduled additional meetings with shareholders next week after this week’s gatherings filled up, according to an updated posting on its website.

Takeda shares fell as much as 2 percent in early Tokyo trading on Tuesday, compared to a 1.2 percent drop in the benchmark Topix index.

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