In one of the biggest deals in the pharmaceutical industry's history and the biggest global takeover by a Japanese company, Takeda Pharmaceutical today struck a deal to buy its larger Irish rival Shire Plc for $62 billion (£46 billion). According to the agreed deal, the Irish drugmaker investors will receive $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda American depositary receipts for each share. 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.
Executives of the two companies have reached a broad agreement on the value of the acquisition through past negotiations.
Takeda is counting on cash flow from the combined company to allow for a quick pay-down on the acquisition-related debt.
In its announcement Tuesday, Takeda noted that the combined company would have a significantly increased presence in the USA, the largest pharmaceuticals market in the world.
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.
Shire has a strong pipeline of potential drugs in development that complement's Takeda's work, she said.
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The successful £46bn bid is the fifth offer put forward by Takeda, and follows a £43bn bid which was rejected by Shire in April. Shire, based in Lexington, Massachusetts, gets more than two-thirds of its revenue from North America.
A completed deal would dwarf Softbank's US$40 billion purchase of Sprint in 2013, which ranked as the biggest takeover by a Japanese company.
A fair share of industry watchers initially expected that Takeda wouldn't make it to the finish line since snapping up Shire would mean taking on a hefty debt load. Shire, on the other hand, earns about two-thirds of its product revenue from the USA - a fact Takeda highlighted in its rationale for pursuing the biotech.
"The cost synergies seem to be much bigger than expected in the next three years", Credit Suisse analyst Fumiyoshi Sakai said.
In 2011 it took over Swiss rival Nycomed for 9.6 billion euros ($13.6 billion at the time). Last year, the company expanded its footprint in the U.S. oncology market with the US$4.7 billion purchase of Ariad Pharmaceuticals.