Takeda closes $62 bn deal to buy rival drugmaker Shire

Takeda Pharmaceutical Co. on Tuesday reached an agreement to buy Shire PLC, capping a monthslong battle for control of the European drugmaker and marking the largest-ever overseas acquisition by a Japanese company.

Takeda said it would buy Shire at GBP49.01 or $66.53 a share–$30.33 in cash and 0.839 Takeda share for each Shire share–valuing the Dublin-based maker of rare treatments at $62 billion. Takeda had until Tuesday to formalize an offer, withdraw it or walk away.

Some shareholders are worried Japan’s largest drugmaker would pile on too much debt to fund the deal, straining itself after it borrowed money to buy an American cancer-drug maker for $5 billion last year.

To help fund the cash portion of the deal, Takeda said it has secured a bridge loan facility of $31 billion with JPMorgan Chase Bank NA, Sumitomo Mitsui Banking Corp. and MUFG Bank Ltd., among others. Shire shares rose as much as 5.7 percent early Tuesday in London, while Takeda rose 4 percent in Tokyo before the deal was announced.

Credit-ratings firm Moody’s warned last month the deal could invite a “multinotch downgrade” from Takeda’s current single-A rating.

Nevertheless, the deal would create the world’s eighth-largest drugmaker with combined sales of $30 billion. It also helps 237-year-old Takeda pivot away from its home base to more lucrative markets like the U.S. and Europe, and adds new drugs to its shrinking pool of patent-protected products.

Takeda’s unrelenting pursuit of Shire, despite the financial risks and some shareholder opposition, shows how ardently Japan’s legacy companies are chasing growth overseas, weighed down by a shrinking population and, in the case of drug companies, unfavorable government policy.

With few late-stage experimental drugs in its own pipeline, Takeda needs lucrative new therapies. A Shire takeover brings Takeda treatments for rare diseases such as hemophilia — a field that’s luring a growing number of drugmakers who can charge more for unique life-saving drugs than for routine treatment.

The deal increases Takeda’s exposure to the U.S., the world’s biggest pharmaceutical market. Shire, based in Lexington, Massachusetts, gets more than two-thirds of its revenue from North America. Takeda generates only 30 percent of its sales from the region.

The acquisition would be the largest ever for a Japanese company, and vault Takeda into the top 10 of global pharmaceutical giants. Chief Executive Officer Christophe Weber, the first foreigner to lead the 237-year-old Japanese company, is seeking growth in new markets amid patent expirations and drug pricing pressures at home.

Takeda’s announcement comes amid a flurry of transactions in the pharmaceutical sector, marked by GlaxoSmithKline Plc’s agreement in March to buy out Novartis AG’s stake in their consumer-health joint venture. Merck KGaA has agreed to sell its over-the-counter unit to Procter & Gamble Co., while Sanofi plans to sell its European generic-drug business to buyout firm Advent International Corp.

Takeda said it will maintain its headquarters in Japan and will evaluate consolidating Shire’s operations into Takeda’s in the Boston area, Switzerland and Singapore.