Shares of Takeda Pharmaceutical fell the most in nine years after the company disclosed it was considering a bid for Irish pharmaceuticals group Shire that could approach $50 billion, which would be the Japanese company's biggest takeover ever.
The 7.5 per cent fall in the stock shaved more than $3 billion from Takeda’s market cap. Coupled with a 14 per cent rally in Shire’s stock on the news Wednesday, the valuation gap between the two companies widened by more than $6.5 billion, posing a bigger financial challenge for Takeda if it decides to go forward with an offer.
“Takeda is just desperate to beef up its pipeline, and they’ve been doing small bits of acquisitions on the biotech side,” said Fumiyoshi Sakai, a Tokyo-based analyst at Credit Suisse Securities. “But how they are going to finance $40-some billion? That’s another one.”
After Takeda’s announcement on Wednesday, Shire said in a statement that it had not received any formal approach or offer, and that the Japanese drugmaker had until April 25th to do so or walk away under UK takeover rules.
‘Overreach’
“The impression left by the news is that the acquisition would be an overreach,” said Mizuho Securities analyst Hiroshi Tanaka in a note to clients.
Any deal is expected to involve some form of equity, whether that be a share swap or a share issue, analysts also said, noting a share issue could be highly dilutive for Takeda shareholders.
The company did not explain how it would pay for a company whose $45 billion market value tops Takeda’s $38 billion.
Takeda’s announcement came amid a flurry of transactions in the pharmaceutical sector, including GlaxoSmithKline’s $13 billion agreement to buy out Novartis in their consumer-health joint venture earlier this week.
Pfizer and Merck are also seeking buyers for their over-the-counter units, and Sanofi has announced more than $16 billion worth of acquisitions this year.
Japan’s largest drugmaker said its interest was at a “preliminary and exploratory stage” and it had not formally approached Shire’s board. – Bloomberg
