We have a deal\u2014a preliminary one, at least.<\/p>\n
Late Tuesday, after a fifth buyout offer from Takeda, Shire said the Japanese drugmaker had finally landed on a proposal worth recommending to shareholders. It’s a cash-and-stock bid now worth $64 billion or so, about $4 billion more than its first offer.<\/p>\n
The deal still has to be approved by both boards and is subject to due diligence. The U.K.’s takeover board, which has strict rules for the timing and disclosure of bids, extended a deadline to give Takeda and Shire until May 8 to wrap it up.<\/p>\n
In per-share terms, Takeda would fork over 0.839 new Takeda shares and $30.33 in cash for each Shire share. Based on Takeda’s share price at Monday’s close, that’s \u00a349 per share, Shire said in a statement\u2014and \u00a35 per share more than its first bid.<\/p>\n
That share price is a moving target, though; Takeda’s stock plummeted by 7% on the news Wednesday morning.<\/p>\n
Structured this way, the deal \u201cseems to be much more of a merger,\u201d Bernstein analyst Ronny Gal pointed out in a note to clients. Shire shareholders will receive 50% of the value of the combined company, and the companies will do reciprocal due diligence before any deal closes.<\/p>\n
At least one analyst isn\u2019t so sure Shire shareholders will be interested.<\/p>\n
\u201cAre SHPG shareholders willing to accept an offer that is in effect 44% cash and 56% equity?\u201d Jefferies’ David Steinberg wrote in a note to clients. While the latest bid is much more heavily weighted toward cash than Takeda’s third bid\u2014just 38% cash\u2014\u201cwe still wonder if it is enough to satisfy SHPG shareholders, who would still bear some not insignificant risk going forward as ~50% owners of NewCo,\u201d he wrote.<\/p>\n
Gal, on the other hand, figures the deal will go through.<\/p>\n
\u201cThe risk to the deal is unlikely in our view to come from Shire shareholders or anti-trust authorities,\u201d he wrote, noting that its Takeda\u2019s shareholders, not Shire\u2019s., that have sent the stock downward throughout the bidding process. Still, he pegged the probability of the deal going through at between 80% and 90%.<\/p>\n
\u201cShort of Takeda stock price imploding a deal is likely,\u201d he added.<\/p>\n
Both analysts agree on one thing, though: Another bidder, which some industry watchers previously expected, probably won\u2019t come out of the woodwork at this point.<\/p>\n
\u201cWe expect Shire bankers to have left no stone unturned looking for other bidders,\u201d Gal wrote, with Steinberg adding that \u201cwe continue to think any potential group of buyers to be very limited \u2026 it\u2019s arguably less than a 50% chance that another suitor emerges.\u201d<\/p>\n