Takeda's $80 Billion Acquisition of Shire Hits Snag in Europe

Takeda logo on outside of office building

As the acquisition of Shire by Takeda Pharmaceutical inches forward, global regulatory agencies are signing off on the deal. To date, the deal has been approved in China, the U.S., Brazil and Japan. As the European Commission (EC) conducts a review of the deal, it hit a snag.

Takeda stated, “Takeda confirms that it is in discussions with the EC in relation to the future potential overlap in the area of inflammatory bowel disease between Takeda’s marketed product Entyvio (vedolizumab) and Shire’s pipeline compound SHP647, which is currently in Phase III clinical trials, and has proposed a remedy of a potential divestment of SHP647 and certain associated rights.”

Entyvio is approved in more than 60 countries for ulcerative colitis and Crohn’s disease, and as described by Takeda, is the cornerstone of its specialty gastrointestinal portfolio. In the fiscal year 2018, Entyvio made $1.82 billion in sales.

At this time there appear to be no other problems in the pipeline or portfolio of the two companies that the EC has expressed any issue with. Nor does Takeda believe that there will be delays related to selling or licensing SHP647.

SHP647 is a fully human IgG2 monoclonal antibody that targets the mucosal vascular addressing cell adhesion molecule-1 (MAdCAM-1), which is involved in leukocyte trafficking in the GI tract. It also is believed to help excessive lymphocyte infiltration in chronic GI inflammation. In February, the Food and Drug Administration (FDA) granted the drug Orphan Drug status for pediatric patients with moderately to severely active Crohn’s disease.

Takeda is buying Shire for $62.2 billion, although by including Shire’s debt, the figure is closer to $80 billion. There has been some controversy by a small group of Takeda shareholders and members of the Takeda family over the deal.

At June’s annual meeting, a group of 130 Takeda shareholders expressed their opposition and took action, advancing a proposal that would require advance shareholder approval for large acquisitions. The proposal received about 10 percent of votes in favor, failing to pick up wider opposition to the merger.

And in September, a member of the Takeda family, Kazu Takeda, aligned himself with the opposition group. He indicated in an interview with The Times that he felt the deal would undermine one of the primary principles of “Takeda-ism,” which is that the company makes money by making people happy. He told The Times,“we understand that scaling up is necessary, but Takeda management has to think about the traditional corporate culture and the health of the company.”

Another unidentified shareholder, one of the top 10 shareholders in the Japanese company, has also expressed skepticism over the value of the deal. This investor said he believes that the combined value of the two companies is less than their individual value.

Takeda and its chief executive officer, Christophe Weber, are reported to have a plan to deal with the debt. There are possible plans to sell Shire’s Xiidra eye treatment once the deal is completed, and possibly sell its Natpara, a drug used to control blood calcium levels. And it looks now like it will be selling SHP647.

The deal appears to be on track to wrap up in March 2019. The combined companies will have headquarters in Japan. Takeda shareholders will own approximately 50 percent of the merged companies. They will have a combined workforce of about 52,000 people worldwide. The merged companies have projected job cuts of 6 to 7 percent, or low to mid 3,000s. Takeda is also considering consolidating Shire’s operations into its own in Boston, Switzerland and Singapore.

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