Takeda Shareholders Group Opposed to Shire Merger Lose Bid
On May 8, Shire agreed to be acquired by Japan-based Takeda Pharmaceutical, with both boards approving the deal. Overall, Takeda made five public bids for the company. Under the terms of the deal, Takeda will buy Shire for about 46 billion pounds, or $62.2 billion (U.S.). That comes to about $66.22 per share, made up of $30.33 per share in cash and 0.839 shares of Takeda stock. The deal is expected to close in the first half of 2019.
The $62.2 billion figure doesn’t include Shire’s debt. Including that debt, the acquisition is closer to $80 billion, according to Dealogic.
A group of 130 Takeda shareholders was opposed to the deal, feeling that Takeda would have to take on too much debt to pull it off and that it wasn’t worth it. At today’s annual general meeting, the group put their proposal to a vote. The group’s proposal asked that advance shareholder approval be required for large acquisitions. The proposal received about 10 percent of votes in favor, unlikely to provide any support for stopping the Shire acquisition.
The group told Reuters earlier this month that it didn’t expect the proposal to pass, but is working to convince a third of shareholders to vote against a company proposal later this year or at the beginning of 2019. The proposal would be to approve an issue of new stock to partially fund the Shire deal, which would essentially be an approval of the deal.
Atsushi Seki, an analyst with UBS, wrote a note to clients last week, pointing out shareholder uncertainty and concern over the size of the deal. “Investors are taking a wait-and-see stance” toward the company stock. Seki upgraded Takeda stock to “buy” from “neutral” and raised its price target to 5,700 yen. It is currently trading at 4,524 yen. Seki also reported that a survey of 60 Japanese investors showed 31 percent viewed the Shire deal negatively. That probably means 19 out of 60 did not approve, which likely gives the opposing group some hope for scuttling the deal still.
Institutional Shareholder Services (ISS), a proxy advisor, recommended voting down the proposal, saying that while its “proponents raise legitimate concerns about the planned acquisition of Shire,” there was an “absence of apparent grounds to cast doubt over the board’s objectivity or competence.”
The combined companies will have headquarters in Japan. It will give Takeda more access to the U.S. market, while Shire will gain more exposure in Japan and emerging markets. The deal would require a positive vote of 75 percent of Shire’s voting shareholders.
Shire’s three core interests are cancer, gastrointestinal and neurology, which could be boosted by the Shire acquisition. Takeda stated early on in the deal process that it would “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.”