Takeda ups bid to $65 billion in negotiations to buy Shire

Takeda has increased its offer to buy Shire $SHPG for a mix of stock and cash worth close to $65 billion. Lexington have extended the deadline on their talks to May 8 after determining they were close to finalising a pact.

Takeda has upped its bid to £27.26 in new Takeda shares and £21.75 in cash, coming to £49 a share. That rings up at 0.839 new Takeda shares and $30.33 for each Shire share — or close to $65 billion, with Takeda tacking about $2.5 billion on its previous offer.

In a statement, Shire noted that its board said they would recommend the offer, provided they can get through some remaining hurdles.

However, there are doubts whether it’s in Takeda’s best interest, or Shire’s to complete the process. Those doubts were heightened after investors drove Takeda’s shares down 7% in the wake of the agreement, leaving the stock down about 20% since talks were disclosed.

Jefferies analyst David Steinberg noted: “While this offer represents a solid improvement over Takeda’s third bid (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.”

Bernstein’s Ronny Gal looked at the risks to the deal and still estimated a likely completion at 80% to 90%, given a willing buyer and a willing seller at the table. But he’s not so sure that Takeda’s investors are on board.

Neither Gal nor Steinberg think a hostile bidder is likely to come along at the last minute, given all the attention to this deal as it brewed, though the possibility remains. Anybody who has thought of doing it has probably decided to stay out of it.

This is what Takeda CEO Christophe Weber has been working towards since he was named to the top job and investors are concerned about the reality of it. With a little more than $4 billion in cash on hand, the idea of the smaller Takeda buying up Shire and leaving Shire investors with half of the stock in the post-merger biopharma company is not sitting well with everyone.