Shire shares rock­et up af­ter Take­da says it's pon­der­ing a takeover bid

Take­da said ear­ly Wednes­day that it is con­sid­er­ing mak­ing an of­fer to buy Shire $SH­PG, and it has a clear­ly thought out a set of rea­sons why.

As of now, Take­da said in a state­ment that it has made no for­mal of­fer for Shire, but is ex­plor­ing the pos­si­bil­i­ty. That’s ex­act­ly in line with takeover rules to sat­is­fy UK reg­u­la­tors. And Shire’s shares im­me­di­ate­ly blast­ed up­ward, jump­ing 17%. The com­pa­ny start­ed the day with a mar­ket cap of $38 bil­lion.

Christophe We­ber

For Take­da CEO Christophe We­ber, a Shire ac­qui­si­tion would dri­ve a big ex­pan­sion in the Boston area, where the Japan­ese com­pa­ny has been con­cen­trat­ing much of its R&D op­er­a­tions. R&D chief Andy Plump is based in the Boston area, and Shire has been ready­ing new fa­cil­i­ties for it­self in Cam­bridge, near its main in­ter­na­tion­al head­quar­ters in Lex­ing­ton, MA.

A buy­out would al­so come af­ter Take­da had shak­en up its R&D struc­ture glob­al­ly, cut­ting back on staff while do­ing more deals with part­ners like De­nali.

In a state­ment out this morn­ing, Take­da spelled out why it’s prep­ping a bid. A deal, the com­pa­ny said, would:

  • strength­en Take­da’s core ther­a­peu­tic ar­eas of on­col­o­gy, GI and neu­ro­science
  • ac­cel­er­ate Take­da’s vi­sion to be a leader in spe­cial­ized med­i­cines that are trans­for­ma­tive to pa­tients through the ad­di­tion of Shire’s lead­ing glob­al rare dis­ease fran­chise
  • fur­ther en­hance Take­da’s ro­bust R&D strat­e­gy, con­cen­trat­ing on key ther­a­peu­tic ar­eas
  • re­in­force a strong and large-mol­e­cule fo­cused late-stage pipeline with­in Take­da’s core ther­a­peu­tic ar­eas to com­ple­ment Take­da’s own pipeline and dis­cov­ery ca­pa­bil­i­ties
  • bal­ance Take­da’s ge­o­graph­ic fo­cus to align with the mar­ket op­por­tu­ni­ty in the US
  • dri­ve fi­nan­cial val­ue from a strong com­bined fi­nan­cial pro­file
Flem­ming Orn­skov

Shire is still in the midst of a com­plete makeover of its own en­gi­neered by CEO Flem­ming Orn­skov, who has steered the com­pa­ny in­to the rare dis­ease busi­ness while con­sid­er­ing op­tions for pos­si­bly spin­ning out its AD­HD di­vi­sion. Orn­skov lined up  the $32 bil­lion buy­out of Bax­al­ta, but an­a­lysts have been skep­ti­cal about Shire’s fu­ture in light of the big changes it faces as Roche rolls out Hem­li­bra, grab­bing mar­ket share in the he­mo­phil­ia mar­ket.

Shire has fre­quent­ly been raised as a po­ten­tial takeover tar­get, and came close to merg­ing in­to Ab­b­Vie four years ago. That deal fell through with the in­tro­duc­tion of new rules mak­ing cap­i­tal in­ver­sions dif­fi­cult, pre­vent­ing the tax ben­e­fits Ab­b­Vie sought in buy­ing a com­pa­ny which is of­fi­cial­ly based in Ire­land. But the com­pa­ny re­mained a fre­quent­ly cit­ed takeover tar­get, most re­cent­ly at the end of last year, with an­a­lysts won­der­ing if Pfiz­er would make a move.

Now you can ex­pect plen­ty of spec­u­la­tion to fol­low, as an­a­lysts won­der aloud whether Pfiz­er and oth­er po­ten­tial bid­ders will step up to make this an auc­tion.

By the rule book, Take­da now has un­til 5 pm (Lon­don time) on April 25th to make a bid.

Not every­one would con­clude that a buy­out is a good idea.

“While it is im­pos­si­ble to say nev­er on M&A, Shire does not strike us as an ob­vi­ous takeover can­di­date,” said UBS at the time, ac­cord­ing to a re­port from the Fi­nan­cial Times. “Shire’s spe­cial­ty fo­cus and mix of ther­a­peu­tic fo­ci means that most buy­ers would strug­gle to ex­tract sub­stan­tial op­er­a­tional syn­er­gies while es­cap­ing from com­pe­ti­tion prob­lems, in our view. Shire is based in Ire­land, which means a very low cor­po­rate tax rate, which would most prob­a­bly rise in most sce­nar­ios were the com­pa­ny ac­quired. It would al­so be a bold ac­qui­si­tion in our view giv­en the un­cer­tain tra­jec­to­ry of Shire’s haemophil­ia busi­ness.”

 

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In a stun­ning set­back, Amarin los­es big patent fight over Vas­cepa IP. And its high-fly­ing stock crash­es to earth

Amarin’s shares $AMRN were blitzed Monday evening, losing billions in value as reports spread that the company had lost its high-profile effort to keep its Vascepa patents protected from generic drugmakers.

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(A)ll the Asserted Claims are invalid as obvious under 35 U.S.C.§ 103. Thus, the Court finds in favor of Defendants on Plaintiff’s remaining infringementclaim, and in their favor on their counterclaims asserting the invalidity of the AssertedClaims under 35 U.S.C. § 103.

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Once fu­ri­ous over No­var­tis’ da­ta ma­nip­u­la­tion scan­dal, the FDA now says it’s noth­ing they need to take ac­tion on

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Arie Belldegrun, Endpoints @ JPM20 Breakfast Panel. Photography by Jeff Rumans.

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