Suitors Like Carlyle Group, Hitachi and Permira Line Up for Takeda's $1 Billion Unit

Suitors Like Carlyle Group, Hitachi and Permira Line Up for Takeda's $1 Billion Unit August 17, 2016
By Mark Terry, Breaking News Staff

Takeda Pharmaceutical Co had the first round of an auction to sell its 70 percent stake in Wako Pure Chemical Industries on Tuesday. Interested bidders included Hitachi Ltd (6501.T), Carlyle Group (CG) and Permira (PERM), as well as others.

Takeda, working with advisers at Nomura Holdings, is planning to sell non-core assets in order to raise cash and streamline its operations. In 2015, it divested its respiratory business to AstraZeneca for $575 million, and made a plan to partner with Israel’s Teva Pharmaceutical Industries to market generic drugs in Japan.

“It seems like they can sell at a premium,” Kazuyoshi Saito, a senior analyst with Iwai Cosmo Securities Co. in Tokyo, told Bloomberg in July. “They will be able to divert funds to businesses they prioritize, such as oncology and gastrointestinal areas.”

Apparently, Hitachi made its bid through Hitachi Chemical Co (4217.T). Reuters indicates that, “The winning bidder would likely buy out the remaining shareholders, taking the deal size to more than 100 billion yen ($991.67 million).”

Earlier, it was reported that Fujifilm Holdings Corp (4901.T) was possibly bidding as well. Fujifilm holds 9.5 percent of Wako Pure. It’s not clear at the moment if Fujifilm participated in Monday’s bidding process, although Nikkei Asian Review claims they have.

Wako Pure Chemicals manufactures laboratory chemicals, specialty chemicals and clinical diagnostic reagents. It employs 1,534 people, according to its website, and had total sales in 2015 of 75,735 million yen.

Hitachi’s interest would be in driving its group healthcare-related sales toward 440 billion yen by 2018, which would be about a 30 percent increase from 2015’s sales. The acquisition would give it access to Wako’s expertise and clients, including drugmakers and healthcare institutions.

Nikkei Asian Review writes, “Mergers and acquisitions have become a key strategy for businesses looking to expand their health care operations swiftly. This can be seen in the interest generated by the sale of Toshiba Medical Systems this past spring. With Fujifilm, Konica Minolta and others trying to outbid each other, Canon ended up paying 665.5 billion yen for the Toshiba subsidiary, far surpassing expectations of 400 billion yen to 500 billion yen.”

Bloomberg reported in July that Japanese buyers have made or plan to make $84.9 billion in acquisitions this year. That’s a 32 percent increase from the same period in 2015. Bloomberg writes, “That’s largely thanks to SoftBank Group Corp.’s $32 billion agreement earlier this month (July) to buy U.K. chip designer ARM Holdings Plc.”

Takeda also has plans to revamp its research-and-development operations. It has five primary points to its $725 million overhaul. First, it plans to develop a new drug pipeline with research-and-development focused in Japan and the U.S. Second, it will focus on oncology, gastroenterology and the central nervous system (CNS). Third, it is evaluating whether to close down some of its operations in the U.K. Fourth, the company has indicated it expects job cuts. And finally, those job cut numbers will likely depend on how the restructuring progresses.

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