April 12, 2018 / 4:58 AM / 5 months ago

Takeda sounds out banks for loans as it moves towards Shire bid: sources

TOKYO (Reuters) - Takeda Pharmaceutical (4502.T) has sounded out its major creditors for loans, two sources with direct knowledge of the matter said, as it moves closer to a bid for London-listed rare disease specialist Shire (SHP.L) that could hit $50 billion.

FILE PHOTO: Takeda Pharmaceutical's signboard is seen on its headquarters building in Tokyo, Japan January 30, 2018. REUTERS/Kim Kyung-Hoon/File Photo

Expectations that Japan’s largest drugmaker by sales will bid for Shire before an April 25 deadline have mounted since its chief executive Christophe Weber discussed the strategic case for the deal at a briefing with analysts last week.

Buying Shire would be transformational for Takeda but would be a huge financial stretch, since the company is worth around $10 billion more than the Japanese group.

Weber said at the briefing, which was closed to the media, that Takeda was weighing a deal for all of Shire and there was scope to increase debt, according to analysts.

Takeda has sounded out creditors including its main bank Sumitomo Mitsui Banking Corp, the two sources said on Thursday, declining to be identified as the matter was confidential.

Japan’s Kyodo News reported earlier that Takeda was looking for loans of several trillion yen (tens of billions of dollars) in total from multiple banks.

Shares in Shire rose another 2 percent on Thursday. They have now gained 19 percent - valuing the company at more than $47 billion - since the Japanese firm said on March 28 that it was considering an offer.

Takeda shares ended down 1.2 percent in Tokyo on Thursday, valuing it at around $37 billion.

A successful bid for Shire would be the largest ever overseas acquisition by a Japanese company and propel Takeda, helmed by Frenchman Weber, into the top ranks of global drugmakers.

Under UK takeover rules, Takeda has until April 25 to decide whether to make a bid.

Representatives for Takeda, Shire and Sumitomo Mitsui Banking Corp, the core banking unit of Sumitomo Mitsui Financial Group Inc (8316.T), were not immediately available for comment.

Takeda’s shares have fallen more than 9 percent since it was first reported it was considering bidding.

Takeda investors have been skeptical about the merits of a Shire deal, given the size of the potential purchase and the likely need for a large share issue, which could be highly dilutive.

Weber told analysts at last week’s briefing that size was no obstacle for any “mindful” acquisition and Shire could accelerate his company’s transformation.

The drugs industry has seen a surge in deal-making this year as large players look for promising assets to improve their pipelines, but a Takeda-Shire transaction would be by far the biggest yet.

Well priced and high-margin treatments for rare diseases have been a particular focus for several multi-billion-dollar acquisitions.

On Monday, Swiss drugmaker Novartis (NOVN.S) agreed to acquire gene therapy specialist AveXis AVXS.O for $8.7 billion, following similar purchases by the likes of France’s Sanofi (SASY.PA) and U.S.-based Celgene (CELG.O).

Additional reporting by Sam Nussey in Tokyo and Ben Hirschler in London; writing by Miyoung Kim; Editing by Edwina Gibbs/ Muralikumar Anantharaman/Susan Fenton

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