* Takeda's bid for Shire is deemed "satisfactory" subject to conditions
On the 24th of April, Shire received a proposal from Takeda to acquire Shire for $30.33 in cash and 0.839 Takeda shares per Shire share. As we write this note, this corresponded to ~£46.50 per Shire share (dependent, of course, on Takeda's share price). Shire's Board said that it was willing to recommend this proposal to shareholders provided certain conditions were met (e.g., due diligence by Shire on Takeda).
* The process from here
If all goes as Takeda hopes, there will agreement by the Takeda Board and a binding offer to acquire Shire by the 8th of May (29th April to 6th May is the Golden Week holiday in Japan, and 7th May is UK bank holiday). Shire will make a Rule 27 announcement immediately after, recommending the offer to its shareholders. At this point timing becomes less certain (but see Figure 1 for provisional timetable thoughts) given interdependencies between the Shire and Takeda processes. Shire will issue a shareholder circular setting out the offer, and three or more weeks later, Shire's shareholders will vote on the offer at an Extraordinary General Meeting (EGM, with 75% of votes required for acceptance). But the Shire shareholder vote will likely depend on a vote by Takeda shareholders to issue new shares (requiring a 2/3 majority). Takeda’s AGM is scheduled for late June, but a separate, and later, EGM could be required, which would likely delay the Shire shareholder vote. After the votes, there remains regulatory and anti-trust clearance before the deal can close. The timing here is again uncertain, but it seems reasonable to assume 6 months.
* We see four main categories of risk to the deal
First, there could be another bidder (see here). For practical purposes, any bid would have to precede the Shire shareholder vote. Second, Takeda could fail to secure shareholder approval. It seems the deal is unpopular (e.g., 18% fall in Takeda's share price since 28th March) and the more Takeda falls, the worse the offer is for Shire. Third, less likely in our view, Shire could find its conditions are not met or its shareholders could vote down the deal if Takeda's price falls too far. Fourth are delays from regulatory and competition agencies. However, we doubt material competitionrelated problem as few (no?) Shire drugs have therapeutic substitutes from Takeda.