Takeda Heads to Shire Vote With Backing from EU, Advisory Groups

(Bloomberg) -- The fate of Takeda Pharmaceutical Co.’s $62 billion acquisition of Shire Plc now rests with shareholders after Japan’s biggest overseas deal successfully cleared all the regulatory hurdles.

The European Commission signed off on the deal Tuesday after the Japanese drugmaker agreed to sell an experimental treatment for inflammatory bowel disease from Shire to satisfy antitrust concerns. Europe was the final step after the takeover gained approval by other major markets from China to the U.S. The deal also got a boost as advisory groups Glass Lewis and Institutional Shareholder Services recommended that investors back the acquisition.

“We are another step closer to creating a global, values-based, R&D-driven biopharmaceutical leader,” Chief Executive Officer Christophe Weber said in a statement. “After several months of constructive dialogue, we are optimistic that our shareholders recognize the significant long-term value creation potential of this powerful combination.”

Takeda shares slumped as much as 3.7 percent in early Tokyo trading on Wednesday, while the benchmark Topix index dropped as much as 1.7 percent. Shares of Shire rose 0.7 percent in London on Tuesday.

The takeover now faces a decision from investors, with a shareholder vote scheduled for Dec. 5. The deal, which is expected to close in early January, would launch Takeda into the top 10 drugmakers by revenue, while giving it a major presence in the U.S. and a strong position in the lucrative business for the treatment of rare diseases.

Shareholder Vote

The 237-year-old drugmaker has been aggressively pitching the deal to both domestic and overseas investors, emphasizing the company’s Japanese roots and global aspirations. A small but vocal dissident group has raised opposition to the Shire takeover, concerned about the increased debt, and the impact on earnings and Takeda’s dividend. The group is holding a series of meetings with shareholders beginning Wednesday to drum up opposition to the deal.

Glass Lewis, in backing the deal, said key elements of the dissidents’ arguments “may overreach,” and that the group “offers very little in the way of alternative strategies for the firm.” Weber has said he is confident the vote will result in more than the two-thirds required for approval.

The Road to a Deal
March 28Takeda confirms it’s considering approach to Shire
May 8Company reaches agreement to buy Shire for $62 billion
July 10U.S. Federal Trade Commission clears Shire deal
Sept 14Shire deal gets regulatory approval from China
Oct 18Japan regulators give approval for Shire deal
Nov 20Deal gets EC nod, while Glass Lewis and ISS recommend deal
Dec 5Takeda and Shire shareholders to vote on the deal
Jan 8Deal is expected to close

Japan’s largest pharmaceutical company has been checking off a to-do list while putting financing in place. It’s considering selling some Shire assets and its own over-the-counter business in Europe to help pay for the deal. Takeda sold $5.5 billion of dollar bonds on Monday after pricing euro-denominated notes last week, completing the biggest debt fundraising by an Asian company this year to help pay for Shire.

Takeda was confident it would get the EU’s nod, going so far as to schedule the shareholder vote before the authority signed off. The sale of the inflammatory bowel disease drug was a small concession to regulators and was expected, as Takeda said in October it was in discussions with the EU about divesting the medicine to gain regulatory clearance.

Drug Sale

“Takeda would be unlikely to continue developing Shire’s new anti-integrin treatment” that rivals Takeda’s Entyvio, the EC said. “This would have meant a serious loss of innovation on a market where patients currently have few treatment options.”

The companies’ pledge to sell the Shire treatment removes the EU’s concerns about the deal, the Brussels-based regulator said. The treatment, along with rights to its development, manufacturing and marketing, must be sold “to a purchaser that would have an incentive to develop the drug,” the EU said.

Takeda said it expects the asset to attract interest from a number of potential buyers.

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