Takeda finally has approval to acquire another large firm, Ireland-based Shire, for $56 billion in the biggest-ever foreign takeover by a Japanese firm.

By any measure, this is a bold move. The agreement that Takeda and Shire initially reached, back in May, was the biggest acquisition announced this year worldwide, at $62 billion. Its value declined over the rocky months that followed. As dissident shareholders made repeated attempts to derail the deal, Takeda’s share price fell by 25%. The trepidation of investors was clear, but shares rose slightly after the approval came through on December 5. Ultimately 88% of Takeda shareholders voted in support of the acquisition.

The opposing group of shareholders, led by Kazuhisa Takeda, a descendant of the founding family, and former stock market analyst Shigeru Mishima, were dismayed by the outcome. They do not deny Takeda’s need to diversify. They also say they are not against acquisitions or globalisation. Resistance towards the Shire deal is due mainly to its size. In a word, Mishima cited “risk, risk, risk!”. Purchasing Shire will add over $30 billion to Takeda’s debt, raising its net debt to $48 billion.

The battle for the buyout was led by Takeda’s first foreign CEO, Frenchman Christophe Weber, who was appointed in 2014. According to The Economist, Weber has said that Japan’s drugs market is only 7% of the global pharmaceuticals market, and that “if we want to be successful, we have to be successful outside of Japan”.

Weber’s vision is to transform Takeda into a top 10 drug maker with lucrative therapies for rare diseases, Bloomberg reports. But competition is intensifying in the pharmaceuticals sector, and Takeda’s pipeline of late-stage drugs is dwindling. Shire has a portfolio of rare-disease drugs, which should boost Takeda’s revenues.

The biggest prize of all for Takeda is expansion in the U.S., the world’s largest pharmaceuticals market. Shire earns two-thirds of its revenues in America. Acquiring the UK-listed drug maker will give Takeda a bigger footprint in the U.S., growing the portion of its sales from the region from 34% to 48% of its revenue once the purchase is completed.

“The expansion of Takeda’s U.S. footprint is a big part of the rationale for this deal”, said Morningstar analyst Karen Andersen. UBS Group AG analyst Atsushi Seki agreed, adding, “In the U.S., innovation will still be rewarded even though price increases are probably difficult in this era,” he said. “After this deal, Takeda’s U.S. exposure will be nearly half of revenues – I think that’s the beauty of this deal.”

This website uses cookies to ensure you get the best experience on our website. Learn more