Just a week ahead of the final shareholder votes on Takeda’s $62 billion acquisition of Shire, a former Takeda chairman and the last member of the founding family to have run the Japanese pharma has come forward against the deal.
“After performing various analyses on my own and making a thorough assessment, I came to the conclusion that I cannot offer my support,” Kunio Takeda said via a representative quoted by Nikkei Asian Review.
The former Takeda chairman and CEO conceded that M&A is necessary in the pharma world, “but the Shire deal’s risk is high,” Nikkei reported. Kunio has previously opposed the Shire deal privately, the Financial Times said earlier this month, but he hadn't commented publicly in the past.
Kunio isn’t the only Takeda family member who has voiced concerns, though. Kazu Takeda warned that “[h]asty decisions on big deals should be avoided,” London's The Times reported in September. The Takeda family descendant also cited traditional corporate culture as one argument.
Kunio led the drugmaker from 1993 to 2003 before moving up to chairman and naming Yasuchika Hasegawa as his successor. In 2015, Hasegawa officially handed the baton to Christophe Weber, the mastermind behind the Shire deal. Kunio has not publicly commented on the company’s operations since he stepped down as chairman in 2009, according to Nikkei.
During Kunio’s tenure, the company enjoyed fast growth thanks in part to diabetes drug Actos. But the drug also caused Takeda trouble, as the drugmaker paid $2.4 billion in 2015 to settle suits over its alleged bladder cancer risk.
A small group of former Takeda employees and shareholders have opposed the acquisition as well. Rallied under the campaign “Thinking about Takeda’s Bright Future,” these dissidents pointed to several potential risks, including the huge debt Takeda is taking on to carry out the deal and to Shire’s portfolio.
Takeda has taken a $30.85 billion bridge loan to fund the buyout. The rebels argued that combined with Takeda’s and Shire’s existing debt, “the risk that it becomes impossible to repay becomes large.”
Hemophilia is a key component of Shire’s offerings, making up about 20% of its total sales in the first nine months of 2018. But Roche’s Hemlibra, which just in October nabbed an additional FDA nod to get into the much larger group of hemophilia A patients without factor VIII inhibitors, is expected to steal share from Shire.
Despite the criticism, Weber has been pushing ahead with the deal, pointing to the need for more globalization and Shire’s “highly complementary product portfolio and pipeline” as rationale for the gigantic transaction.
The dissenters have made attempts to thwart the merger by asking that shareholder approval be required for large acquisitions. The Shire proposal only received about 10% support at the company’s general meeting in June.
And now, even with the public backing from prominent members from the founding family, their chance at derailing the deal remains slim. The transaction has already cleared antitrust regulators in China, the U.S., Japan and, most recently, the EU.
At the planned Dec. 5 meeting, shareholders will vote on management’s request to issue new stock to help fund the deal. The entire founding family reportedly owned about 10% of Takeda—and the anti-Shire group owned 1%—while management only need two-thirds of the vote to carry on.
“After several months of constructive dialogue, we are optimistic that our shareholders recognize the significant long-term value creation potential of this powerful combination,” Weber said in a statement last week.