London-listed Shire, the maker of treatments for ADHD and rare diseases, has agreed a £46bn bid from Japan's Takeda, in the biggest deal seen in the pharmaceutical sector since 2000. However, Takeda announced their intention to reduce the debt quickly.
Takeda will fund the cash portion of the proposed acquisition, through a $31-billion bridge loan facility secured from JPMorgan Chase Bank, Sumitomo Mitsui Banking Corp and MUFG Bank, among others.
However, Shire stock prices have rocketed more than 30 percent since late March.
The combination merges Shire's portfolio of treatments for rare diseases with Takeda's for cancer, gastroenterology and neuroscience.
Dr. Andrew Plump, Takeda's chief medical and scientific officer since 2015, said acquiring Shire will raise from three to 10 the number of late-stage clinical drugs that Takeda has in its pipeline.
The deal will provide Takeda more access to the USA market. Shareholders in the United Kingdom group will hold about 50 percent in the enlarged drugmaker following completion of the deal, which is slated for the first half of next year. The deal represents a 59.6 per cent premium to Shire's closing price before Takeda's interest emerged.
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As part of the merger agreement, Shire shareholders will be entitled to receive $30.33 in cash for each Shire share owned and 0.839 shares either 0.839 new Takeda shares or 1.678 new Takeda ADSs, according to Takeda.
Under CEO Flemming Ornskov, Shire bought out Baxalta for $32 billion, and has been combining its drugs into a pipeline heavily focused on rare diseases, giving Takeda what it likes to call a complementary organization to its own concentration on oncology, gastroenterology and central nervous system therapeutic areas plus vaccines.
The combined company will be headquartered in Japan, with an expanded presence in the US -where Shire and Takeda both maintain significant R&D operations that have grown in recent years-and "major" regional locations in Japan and the USA, as well as in Singapore and Switzerland.
The acquisition is expected to become effective in the first half of next year, it said.
CYBG Plc, the parent company of Clydesdale Bank and Yorkshire Bank, has made a preliminary approach for Virgin Money Holdings which values the lender supported by Richard Branson at £1.6 billion. Previous year it bought Ariad Pharmaceuticals of Cambridge, Mass. Takeda is valued at about $34 billion.