M&A

With mega merger season in full swing, Takeda officially swallows Shire

Amidst a flurry of multi-billion dollar mergers in 2019, the biggest-ever overseas acquisition by a Japanese drugmaker was consummated on Tuesday, as Takeda closed its $62 billion takeover of rare disease specialist Shire.

First discussed in March 2018, the deal that expands Takeda’s footprint in the world’s biggest market for drugs — the United States — and creates an entity with combined revenues of more than $30 billion was concluded despite an internal revolt by old timers in the Takeda shareholder base that cast doubt on the value of the transaction considering the size of the Dublin-based company’s debt.

Christophe Weber

Takeda — which will keep its primary listing on the Tokyo Stock Exchange, where it has traded since 1949 — publicly debuted under the symbol $TAK on the NYSE on Christmas Eve 2018. It is now one of top 10 pharma companies in the world, and will likely fall one rung lower in that list, if Bristol-Myers Squibb’s $BMY planned $74 billion takeover of Celgene $CELG is realized.

As pressure to stabilize drug prices heats up, and looming key patent expirations worry investors, drugmakers are scrambling to consolidate, especially as the December rout of the stock market allows for relatively down-to-earth valuations in an industry that has normalized high double digit premiums. On Monday, days after the Bristol-Myers/Celgene announcement, Eli Lilly $LLY made a $8 billion bet on Loxo Oncology’s $LOXO roster of cancer drugs.

For Takeda, its next headache will be integration. Chief Christophe Weber has reportedly signalled he is planning on making divestments in non-core businesses to relieve the hefty debt burden, which compelled rating agency Moody’s to downgrade the company in December, citing the nearly six-fold increase in debt.


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Biotech Investment Analyst
SV Health Investors Boston, MA
Director, Program Management
Contrafect Corporation New York, NY
Director, Translational Sciences
Cadent Therapeutics Cambridge, MA

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