Takeda confirms it's scoping out Shire for a GI-focused buyout bid of up to $52B

Takeda US facility
Takeda has until April 25 to submit an offer for Shire or walk. (Takeda)

Shire has long been a popular buyout target, and it’s the latest to catch Takeda’s eye.

Wednesday, the Japanese drugmaker confirmed that it was considering approaching Shire about a potential offer but hadn’t yet gotten in touch with the company’s board.

The reasoning behind its interest? A Shire buy would help Takeda bulk up in oncology, GI and neuroscience, it figures, and it would “accelerate Takeda’s vision to be a leader in specialized medicines that are transformative to patients through the addition of Shire’s leading global rare disease franchise,” too.

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The way Bernstein’s Ronny Gal and Wimal Kapadia see it, “shareholders will be interested” as well, despite the analysts’ opinion that “the strategic logic is not apparent.”

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“Most Shire shareholders will sell for a 20%-25% premium, given the unclear horizon for stock recovery,” they wrote of Shire’s shares, which have been battered for months. Around noon Wednesday, they had skyrocketed by nearly 15% to about $148, pushing the company's market cap past $44 billion.

Still, outside of “modest overlap” in GI, they don’t see much in the way of cost-cutting opportunities. And according to their calculations, if Takeda can pull off a deal, it’ll have to cough up more than its market cap and fork over 40% ownership to Shire’s shareholders.

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It’s not the first time Takeda has attempted to pin down one of its fellow GI drugmakers. Back in 2016, it reportedly teamed up with TPG on a takeout offer for Valeant that the troubled company turned down, and after that, it pursued a buy of Valeant’s GI unit, Salix, before $10 billion talks broke down.

On the other side of the coin, it’s far from the first time a company has thought about nabbing Shire. Most notably, the Irish company agreed to be picked up by AbbVie back in the days of tax inversion before new, stricter U.S. Treasury rules convinced AbbVie to nix the pact in October 2014.

Next up: Per U.K. rules, Takeda will have to produce an offer or walk away by April 25. And in the meantime, other suitors could come out of the woodwork.

“We expect most large pharma companies have a takeout model of Shire,” the Bernstein analyst wrote, adding that “Takeda’s announcement will force them to make a decision whether they want to step up.”

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