Photo Credit: Shire

Finally, we have a deal!

After what can only be described as a tug of war, Shire has agreed to a deal with Takeda Pharmaceutical. The preliminary deal is a cash-and-stock bid worth $64 billion, that’s $4 billion more than its first offer, making it the biggest deal in pharma for years, reports Fierce Pharma

However, the deal still has to be approved by both boards and is subject to due diligence. The U.K.’s takeover board has extended the deadline for the pair to wrap things up, making 8 May the final date. 

Allergan Pulls Out of Shire Deal, But Takeda Push Forward

In pre-share terms, Takeda would fork over 0.839 new Takeda shares and $30.33 in cash for each Shire share. Based on Takeda’s share price at Monday’s close, that’s £49 per share, Shire said in a statement – and £5 per share more than its first bid. 

The share price is a moving target though; with Takeda’s stock plummeting by 7% on the news Wednesday morning. Structured in this way, the deal “seems to be much more of a merger,” Bernstein analyst Ronny Gal pointed out in a note to clients. Shire shareholders will receive 50% of the value of the combined company, and the companies will do reciprocal due diligence before any deal closes. 

Despite this, one analyst isn’t so sure that Shire shareholders will be interested. “Are SHPG shareholders willing to accept an offer that is in effect 44% cash and 56% equity?” explained Jefferies’ David Steinberg. Although the latest big is much more heavily weighted toward cash than Takeda’s third bid – just 38% cash – “we still wonder if it is enough to satisfy SHPG shareholders, who would still bear some not insignificant risk going forward as #50% owners of NewCo,” he added. 

But then again, Gal believes that the deal will go through. “The risk to the deal is unlikely in our view to come from Shire shareholders or anti-trust authorities,” he noted. This suggests that Takeda’s shareholders have sent the stock downward throughout the bidding process. Still, he reckons the probability of the deal going through at between 80% and 90%. 

“Short of Takeda stock price imploding a deal is likely,” he said.

There is however, one thing that both analysts agree on: and that’s another bidder, which some industry watchers previously expected, probably wouldn’t now come out of the woodwork. 

“We expect Shire bankers to have left no stone unturned looking for other bidders,” said Gal, with Steinberg adding that, “we continue to think any potential group of buyers to be very limited…it’s arguably less than a 50% chance that another suitor emerges.”

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