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Japan's Takeda eyes Shire in bid to expand drug portfolio, U.S. reach

Takeda Pharmaceutical Co. Ltd.'s interest in Shire PLC is the latest development in the Irish drugmaker's long history of deal-making.

Takeda, Japan's largest biopharmaceutical company, said the consideration is at a "preliminary and exploratory stage," and the company has not reached out to Shire's board. Shire confirmed in a separate statement that it had not been approached by Takeda.

Dublin-based Shire saw its shares surge upward on the news, rising 14.01% to 3,500 pence at market close on the London Stock Exchange, giving the company a market value of £31.64 billion.

Shire is still in the midst of absorbing its $32 billion acquisition of Baxalta, a U.S. biotechnology company focused on treatments for hemophilia, immune-system disorders and cancer.

The drugmaker has been an active acquirer over the years and has also been a target, most recently in 2014 when AbbVie Inc. tried to acquire it for £32 billion. Both companies later agreed to terminate the proposed merger.

Takeda said in a statement that Shire's acquisition would strengthen the company as global biopharmaceutical leader and bolster its key therapeutic areas of gastroenterology, cancer and neuroscience plus vaccines. The Japanese company is also seeking to further refine its research and development strategy and reinforce a strong late-stage pipeline concentrating on key therapeutic areas and focused on biologic medicines derived from living cells.

In addition, an acquisition of Shire's rare-disease franchise would expedite Takeda's plan to become a front-runner in specialized medicines.

Osaka, Japan-based Takeda also said the takeover would balance its geographic focus to better align with the market opportunity in the U.S.

David Cox, an analyst at Panmure Gordon & Co., expressed pessimism on the potential bid, saying: "All positive noises but Takeda is one of the most conservative companies out there in the space when it comes to M&A, and personally I do not think Takeda will go through with this."

Meanwhile, Peter Welford, an analyst at Jefferies, saw the deal as a "possible strategic fit" owing to Takeda's key therapeutic areas of cancer, gastrointestinal and neuroscience being bolstered by Shire's franchises. However, Welford expressed concern on the acquisition carrying incremental risks since Shire is undergoing its "complex integration" of Baxalta.

Takeda has been in a deal-making frenzy during the first three months of 2018. The company signed a alliance to develop central nervous system disorder therapies with Wave Life Sciences Ltd., a partnership in stem cell research with FUJIFILM Holdings Corp. and acquisition Belgian stem cell therapy company TiGenix NV.

Takeda now has until April 25 to make an offer for Shire or declare it will not make one, according to the rules of the U.K. Takeover Code.

Evercore Partners International LLP, J.P. Morgan and Nomura are Takeda's financial advisers on the potential transaction.