Takeda Pharmaceutical Co. plans to acquire its much larger rival Shire for $62 billion in cash and stock by Jan. 8 — a deal that would catapult the Japanese company into a new league of drug industry giants, according to a Reuters report.
If the $62 billion transaction wins approval, it will give Takeda a wider reach into the global drug market and strengthen its global pipeline for rare disease drugs. The combined company would have $31 billion in revenue, which places it among the top 10 within the global pharmaceutical industry, behind industry leaders including Johnson & Johnson and Pfizer.
"The two combined create a rich pipeline in all stages — early and late stage, which is very important," Takeda CEO Christophe Weber said on a call after the deal was announced, according to Bloomberg. "We are in a good momentum and in a strong position."
While the deal would add profitable drugs, such as Shire's Adderall for attention deficit hyperactivity disorder and rare disease therapies, to Takeda's pipeline, it would also make Takeda one of the most indebted drugmakers.
To quickly pay off its debts, the drugmaker would reduce its workforce by 6 or 7 percent and cut back on duplicated drug research after the takeover, according to Reuters.
The deal, which was Takeda's fifth proposal to Shire, is around 46 percent cash and 54 percent stock, which would leave Shire shareholders owning about half of the combined company. To help fund the cash portion of the deal, Takeda secured a $31 billion bank loan with JPMorgan Chase.
Shire previously rejected four offers from Takeda over price concerns and because the Takeda was paying for much of the acquisition in stock.
Takeda is expected to gain European Union antitrust approval for its $62 billion acquisition, according to Reuters.
After the European Commission voiced concerns about the deal, Takeda offered to sell off Shire's compound SHP647, a treatment for inflammatory bowel disease. EU officials thought Shire's compound may overlap with Takeda's best-selling drug Entyvio, a treatment for ulcerative colitis and Crohn's disease.
The EU antitrust division is scheduled to rule on the deal by Nov. 20. The deal has already won approval from U.S. regulators.
The deal also needs to be approved by shareholders. Takeda investors will vote on the transaction Dec. 5.