Shire and Takeda break the deadlock with deal that was worth £46bn – but is now worth billions less

 
Oliver Gill
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Takeda shares fell over seven per cent overnight (Source: Getty)

Shire shareholders are witnessing billions of pounds being wiped off the value of a takeover by Japanese pharmaceutical giant Takeda.

Takeda’s fifth approach for Shire was conditionally agreed by the FTSE 100 firm’s board in the early hours of Wednesday. At the time, the shares and cash deal valued Shire at £46bn.

Because more than half of the proceeds paid to Shire shareholders would be in the form of Takeda shares, more than £2bn was wiped off the deal value as the Japanese firm’s stock dived more than seven per cent.

Takeda’s offer remains conditional. But the agreement has paved the way for Shire’s board to exercise its right to extend a deadline previous scheduled for 5pm today. The two parties now have until 8 May to thrash out a deal to put to shareholders.

Read more: Takeda makes last ditch pitch to Shire board

Paul Major, a fund manager at investment trust BB Healthcare whose third largest investment is in Shire, said Takeda’s the offer was as good as Shire investors could expect. However, if the deal ultimately goes through, some institutional backers may be forced to dump Takeda shares as holding them would be at odds with investment mandates.

CMC Markets chief analyst Michael Hewson highlighted Shire shares were trading significantly lower than the current offer value. Nevertheless, the Takeda shares have fallen 17 per cent since it started its pursuit of Shire. He also flagged the deal would require the Japanese firm to take on to buy Shire.

He said: “With the best will in the world, irrespective of how good Shire’s product pipeline is, it is hard to make the case that there is the amount of value in this deal that the additional debt would justify, at a time when pharmaceutical margins are likely to come under further pressure.”

Read more: Debt could be a problem in Shire takeover

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