Takeda bumps up proposed offer for Shire

Takeda on Friday made a proposal to acquire FTSE 100-listed Shire for £47 per share, comprised of £21 cash paid in dollars and £26 of new Takeda shares.

This compared to the most recent proposal Shire rejected of £46.50 per share, comprised of £17.75 in cash and £28.75 shares.

The Japanese company said it believes that the newest proposal "represents a highly compelling opportunity for Shire shareholders" being a slight increase in total value and a "material increase" in the cash component.

Takeda said it intended to maintain its headquarters in Japan and primary listing on the Tokyo Stock Exchange and intends to put in place a NYSE listed ADR program on completion of any takeover to allow current Shire shareholders to continue to hold shares in the combined company.

The improved offer came a day after Dublin-headquartered US company Allergan said it was mulling a bid and then quickly decided, after an unimpressed shareholder reaction, that it wasn't.

As news of the improved offer broker on Friday, Shire shares essentially shrugged. Having earlier fallen more than 4% to below 3,800p after the Allergan interest faded, the price perked up 3,847.5p but could not hold that level for long.

Earlier on Friday, analysts at Societe Generale suggested that, based on recent takeover multiples in the sector, Takeda could raise its cash component by another £9 per Shire share from its £46.50 bid.

SocGen dissmised other potential suitors, saying neither Novartis nor AbbVie "strategically need" to buy Shire and that Pfizer is "no longer interested in transformational M&A", while Celgene and Allergan would have to raise so much new equity as to "excessively dilute" their earnings.

UBS also earlier pointed out that the deal is a "real financial stretch" for Takeda, which is likely to be "price sensitive".

The Swiss bank said it feels a deal "more likely than not a deal gets done, but who precisely does the deal remains murky", with the possibility that other bidders could still emerge and that Shire investors are likely to be "keen to avoid the regret they might feel if they don't sell and then the stock does badly" as regret avoidance "can be a powerful motivator".