Shareholders of Takeda Pharmaceuticals have approved on Wednesday its $59 billion acquisition of London-based Shire, Reuters news reported. Strengthening the drug pipelines, the deal will create a global powerhouse but one that is saddled with debt loads.
Taking over Shire is the biggest overseas acquisition by aJapanese company which will put Takeda in the ranks of the world’s top 10drugmakers and will be gaining expertise in rare diseases. As reported in Reuters, Takeda will also become one of the most indebted companies which has already secured $30.9 billion in bank loans.
High debt levels of the company was a top concern among investors who gathered at a meeting held in Osaka, Japan, although majority of them voted to give a nod to the deal as expected. Few shareholders abstained from voting due to concerns about further plunges in the share price.
Takeda shares have dropped nearly 25 percent since thecompany revealed its interest in acquiring Shire in March this year. The sharesrose 1 percent to 4,240 yen on Wednesday. Shire shares climbed 2.6 percent to 46.69 pounds in favor of Takeda’sboard that won nine-month long battle to persuade shareholders of the merits ofthe new venture. The acquisition is expected to close on Jan. 8. It remains subject to due approval of Shire shareholders and sanctioning at the court hearing expected to be held on Jan. 3.
Although the approval of Takeda shareholders was expected, a small group of the investors, including the descendants of Takeda’s founder actively oppose the deal.
According to Kazuhisa Takeda, former director of the company, the financial risks are very high while expected benefits are quite limited, keeping them against the deal. M&A is necessary for the company’s future but acquisition of Shire is not the answer, he added.
On the other hand, Christophe Weber, Takeda’s current CEO has promised to turn the deal profitable by cutting costs. It estimates annual savings of around $1.4 billion three years after closing, and expects to increase the underlying earnings remarkably from the first full year after completion of the deal. Further, the company is planning to sell its non-core assets worth up to $10 billion to pay back the debts.