Shire rejects "undervalued" Takeda bid

Shire rejects

Shire rejects "undervalued" Takeda bid

In 2017, Takeda acquired Ariad Pharmaceuticals for $4.7 billion.

In another related news, Botox maker Allergan Plc has also jumped in the race and is reportedly in talks to acquire the drugmaker, two sources familiar with the matter stold Reuters.

But a statement released on Thursday evening confirmed that the company had backtracked on its interest for shire. The business subsequently provided an update saying it does not intend to make an offer.

Flemming Ornskov, Shire's chief executive officer, said in a statement at the time, "This transaction is a key milestone for Shire, demonstrating the clear value embedded in our portfolio".

Shire was founded in Basingstoke, Hampshire, in 1986, but the company has scaled back its presence in the United Kingdom and most of its operations are in the US.

Takeda, led by Frenchman Christophe Weber, has been actively looking overseas for acquisitions.

"The rejected bid is not unreasonable, in our view, at a +12% premium to [net present value], but the Board may feel it is opportunistic and undervalues synergies plus potential growth".

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If it follows through, Allergan would be a late entrant to the table for Shire.

Research analysts at Main First Bank assumed coverage on shares of Shire (LON:SHP) in a research note issued on Wednesday, March 28th.

If there was to be a big share component to a deal it would have to come before a vote of shareholders, he noted.

Takeda said it would remain disciplined in its approach and meant to maintain its dividend policy and investment grade credit rating, adding that: "Discussions between the parties regarding a potential offer are ongoing".

Shire rejected an offer of that amount from Japan's Takeda. Updating the market on Thursday, the Japanese firm revealed Shire's board had rejected its offer, which was equivalent to £46.50 a share. Shore Capital reiterated a "buy" rating on shares of Shire in a report on Friday, February 23rd. It also lifted the cash component by 3.25 pounds to 21 pounds a share, a shift that analysts said was needed to appeal to Shire's shareholders.

Under takeover rules, Allergan has until 5pm on 17 May to either make a firm offer or walk away. Although it represents a sizeable premium to Shire's current share price - it closed at £37.54 in London Wednesday and was back at £30.07 on March 27, immediately before Takeda expressed its interest in a deal - most of what it is offering is its own paper. Shire's top drug was Vyvanse, for attention deficit hyperactivity disorder (ADHD) and for moderate-to-severe Binge Eating Disorder.

The news comes after Shire announced on Monday the sale of its oncology division to French peer Servier for $2.4 billion as it unloads non-core assets.

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