Opponents to Takeda’s $62B buyout of Shire gain support but need much more

Takeda Grange Castle Ireland
Takeda, which has this manufacturing site at Grange Castle, Ireland, said that it expects to get $1.4 billion in cost savings over the next three years after its $62B buyout of Shire. (Takeda)

Takeda shareholders who oppose the company’s $62 billion buyout of Shire are gaining support for their effort to block the deal, which they say will shrink the value of Takeda shares.

What started out as a dozen dissenters has grown to 130 in opposition. It includes former employees and members of the founding Takeda family, which hold 10% of the company’s shares, Reuters reported, citing unnamed sources.

That is still a long way from the 33% of shareholders that is needed to derail the deal by Japan’s largest drugmaker. The dissenters are hoping to gain support from retail customers in Japan, which hold about 25% of shares, a source tells Reuters. That is an unusually large percentage for any large public company. They also are soliciting foreign institutional investors, the source said.

The opposition group, which has pointed out that Takeda would have to take on significant debt to pay for the deal, wants the company to vote on the Shire buyout at the annual shareholder meeting. But the Takeda board intends to hold a separate meeting to decide the outcome. It has said the acquisition was made “after repetitive and careful discussion” by board members.

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The Japanese pharma company has been selling the deal to shareholders as a way to create a global leader in gastroenterology and neuroscience, while simultaneously boosting the company’s presence in vaccines, rare diseases and oncology. It has said it expects to extract $1.4 billion in cost savings over the next three years by slashing the combined workforce by up to 7%, what amounts to 3,600 jobs. The cuts are expected to hit SG&A, R&D and manufacturing.

The opposing shareholders noted that Takeda intends to finance about 55% of the Shire takeover with newly issued shares. That “might significantly dilute the earnings per share, which is a dividend resource, and there is a danger of causing a great disadvantage to existing shareholders including institutional investors,” their proposal said. The shareholders also expressed concerns about the deal in light of Takeda’s “current financial situation.”