It’s no secret that Takeda is taking on a huge debt load to make the $62 billion Shire acquisition happen. Now, it’s looking to fill some of the financial gap by selling its old headquarters in Osaka, Japan.
The Japanese pharma plans to take bids through October and sell the former headquarters and surrounding buildings by the end of the year. It hopes to collect around 60 billion yen ($542 million), according to Nikkei Asian Review.
The Osaka site is exactly where Takeda was founded more than two centuries ago, and the company doesn't want to abandon it altogether, but will instead lease the buildings to continue its operations in them, Nikkei reported. A few days ago, Takeda officially replaced it with a new 24-story building in Tokyo as the company’s new global headquarters. The Tokyo headquarters is near compatriots Daiichi Sankyo and Astellas.
Takeda in May finalized the Shire offer and secured a bridge loan of up to $30.85 billion to help fund the cash proportion of the deal. At that announcement, credit rating service Moody’s downgraded Takeda’s rating, saying that together with Shire’s existing debt, Takeda’s debt will increase sixfold from 1 trillion yen to 6 trillion yen ($54 billion).
Takeda’s CEO Christophe Weber has been pitching the deal as part of Takeda’s ambitious global expansion. Based on 2017 numbers, the U.S. portion of Takeda’s sales will increase from about a third to about half once the acquisition goes through. But that huge debt load, together with competition in Shire’s therapeutic area of hemophilia, has made some investors nervous.
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To allay those concerns, Takeda has promised it would maintain a debt-to-EBITDA ratio of no more than 2x, and has rolled out a cost-saving plan that aims to save $1.4 billion in three years and cut up to 7% of the combined workforce. Those efforts appeared to have worked. An attempt by opponents to derail the Shire takeover was defeated at the annual meeting last Thursday.
As Takeda mobilized its M&A war chest to gain new products, it has also been cutting some operations. After its major R&D rejig announced in 2016, it has divested drug development activities for the U.S. and European markets to PRA Health Sciences, and the two then formed a joint venture for that function in Japan. As for its real estate properties, it sold two buildings in Tokyo last December, including its former Tokyo headquarters, for 49.5 billion yen ($448 million).