UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549 |
|
FORM 8-K |
CURRENT REPORT |
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of Report (Date of earliest event reported): May 8, 2018 |
SHIRE PLC |
(Exact name of registrant as specified in its charter) |
Jersey, Channel Islands | 0-29630 | 98-0601486 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Block 2 Miesian Plaza 50-58 Baggot Street Lower Dublin 2 Republic of Ireland |
Registrant’s telephone number, including area code: +353 1 609 6000 |
(Former name or former address, if changed since last report) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.): |
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 1.01. Entry into a Material Definitive Agreement.
On May 8, 2018, Takeda Pharmaceutical Company Limited, a company incorporated under the laws of Japan (“Takeda”), issued an announcement (the “Rule 2.7 Announcement”) pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers disclosing that the boards of directors of Takeda and Shire plc (“Shire”), had agreed on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire (the “Acquisition”), by means of a court-sanctioned scheme of arrangement (the “Scheme”) between Shire and Shire shareholders under the Companies (Jersey) Law of 1991, as amended (the “Jersey Companies Law”). In connection with the Acquisition, Shire and Takeda entered into a Co-Operation Agreement dated as of May 8, 2018 (the “Co-Operation Agreement”).
Co-Operation Agreement
On May 8, 2018, Shire and Takeda entered into the Co-Operation Agreement in connection with the proposed Acquisition. Pursuant to the Co-Operation Agreement, Shire has agreed to provide Takeda with such information and assistance as Takeda may reasonably require for the purposes of obtaining all regulatory clearances and making any submission, filing or notification to any regulatory authority, and Takeda has given certain undertakings to implement the Acquisition. Each of Takeda and Shire have the right to terminate the Co-Operation Agreement if the Scheme is withdrawn or lapses. Takeda has the right to terminate the Co-Operation Agreement if the Shire board of directors withdraws its recommendation of the Scheme or if certain deadlines are not met, including the Scheme not being consummated by no later than May 8, 2019. The Co-Operation Agreement also, among other things, contains certain arrangements relating to Shire’s share incentive plans and provides for the payment of termination fees to Shire in certain circumstances in which the Acquisition is not consummated.
The foregoing summary of the Acquisition and the Co-Operation Agreement contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Co-Operation Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Dr. Ornskov, Shire’s Chief Executive Officer, and Mr. Dittrich, Shire’s Chief Financial Officer, are each eligible to receive a contract termination payment in an amount equal to the sum of two times his base salary payable for the 2018 financial year and two times his target bonus for the 2018 financial year, payable, subject to the completion of the Acquisition, on the earlier of (i) the date that is six months from the effective date of the Scheme and (ii) June 30, 2019 (the “Relevant Date”), provided he remains employed with Shire until the Relevant Date or in the event he incurs a qualifying termination of employment prior to such date. In the event Dr. Ornskov’s or Mr. Dittrich’s executive employment agreement is terminated prior to the Relevant Date, then the contract termination payment amount will be reduced by the amount paid to the executive under his executive employment agreement. Shire will also cover the reasonable costs of Dr. Ornskov’s health and dental benefits for twelve months from the date of such termination and will cover the reasonable costs associated with his repatriation up to a maximum cost of $500,000 should he work in Switzerland as a result of visa considerations.
Item 7.01. Regulation FD Disclosure.
Rule 2.7 Announcement
On May 8, 2018, Takeda issued the Rule 2.7 Announcement disclosing that the boards of directors of Takeda and Shire had agreed on the terms of the proposed Acquisition. Under the terms of the Acquisition, Shire shareholders will be entitled to receive $30.33 in cash and either 0.839 new ordinary shares of Takeda (the “New Takeda Shares”) or 1.678 Takeda American Depositary Shares (the “Takeda ADSs”), by means of the Scheme. As a result of the Acquisition, Shire will become a wholly owned subsidiary of Takeda. At completion of the Acquisition, New Takeda Shares will be listed on the Tokyo Stock Exchange and certain local Japanese stock exchanges. In addition, the Takeda ADSs will be listed on the New York Stock Exchange effective upon or shortly following the completion of the Acquisition.
The Acquisition will be conditioned upon, among other things, the approval of the Scheme by the Shire shareholders, the passing of the necessary shareholder resolutions by the Takeda shareholders, the sanction of the Scheme by a Jersey court and the receipt of certain regulatory approvals. The conditions to the Acquisition are set out in full in Appendix I to the Rule 2.7 Announcement. It is expected that, subject to the satisfaction or waiver of all relevant conditions, the Acquisition will be completed in the first half of 2019.
Takeda reserves the right in certain circumstances set forth in the Co-Operation Agreement and, subject to the prior consent of the U.K. Panel on Takeovers and Mergers, to elect to implement the acquisition of shares of Shire by way of a takeover offer (as such term is defined in the Jersey Companies Law).
The foregoing summary of the Rule 2.7 Announcement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Rule 2.7 Announcement, which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Rule 2.7 Announcement includes last three months non GAAP EBITDA and last twelve months non GAAP EBITDA, which are non-GAAP financial measures.
An explanation and reconciliation of last three months non GAAP EBITDA and last twelve months non GAAP EBITDA to their most directly comparable measures under US GAAP (being last three months US GAAP Net Income and last twelve months US GAAP Net Income, respectively) is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished under this Item 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing. In addition, Exhibit 99.1 contains statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibit.
Although Shire, as a foreign private issuer, is not subject to Regulation FD, Shire has elected to furnish voluntarily the information herein under Item 7.01.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed herewith:
2.1 | Co-Operation Agreement, dated as of May 8, 2018, between Takeda and Shire |
99.1* | Rule 2.7 Announcement, dated May 8, 2018 |
99.2* | Non-GAAP Financial Measures |
* Furnished herewith
EXHIBIT INDEX
Exhibit No. |
Description | |
2.1 | Co-Operation Agreement, dated as of May 8, 2018, between Takeda and Shire | |
99.1* | Rule 2.7 Announcement, dated May 8, 2018 | |
99.2* | Non-GAAP Financial Measures |
* Furnished herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Shire plc | |||
By: | /s/ W R Mordan | ||
Name: | Bill Mordan | ||
Title: | Company Secretary |
Date: May 9, 2018
EXHIBIT 2.1
EXECUTION
VERSION
DATED 8 MAY 2018
TAKEDA PHARMACEUTICAL COMPANY LIMITED
and
SHIRE PLC
CO-OPERATION AGREEMENT
Slaughter and May
One Bunhill Row
London
EC1Y 8YY
(MEMH/CVKB/CLXJ)
552275533
CONTENTS
1. | Interpretation | 1 |
2. | Publication of the Announcement and the terms of the Acquisition | 15 |
3. | Undertakings in relation to Regulatory approvals and Conditions | 16 |
4. | Takeda Shareholder Approval | 19 |
5. | Scheme Document | 23 |
6. | Implementation of the Scheme | 23 |
7. | Switching to an Offer | 24 |
8. | Employee-related matters | 26 |
9. | Break fee | 27 |
10. | Conduct of business | 29 |
11. | Governance | 31 |
12. | Directors’ and officers’ insurance | 31 |
13. | Code and Listing Rules | 32 |
14. | Termination | 32 |
15. | Representations and warranties | 34 |
16. | Notices | 35 |
17. | Remedies and waivers | 37 |
18. | Variation | 37 |
19. | Invalidity | 37 |
20. | Entire agreement | 38 |
21. | Language | 38 |
22. | Contracts (Rights of Third Parties) Act 1999 | 38 |
23. | Assignment | 38 |
24. | Costs and expenses | 39 |
25. | Further assurance | 39 |
26. | Counterparts | 39 |
27. | Agent for service of process | 39 |
28. | Governing law and jurisdiction | 39 |
Schedule 1 Employee-related matters | 3 | |
Schedule 2 Form of Announcement | 14 |
THIS AGREEMENT is entered into on 8 May 2018
BETWEEN:
1. | TAKEDA PHARMACEUTICAL COMPANY LIMITED, a company incorporated in Japan with its registered address at 1-1 Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan (“Takeda”); and |
2. | SHIRE PLC, a company incorporated in Jersey (registered number 99854) with its registered address at 22 Grenville Street, Jersey, JE4 8PX (“Shire”), |
together referred to as the “parties” and each as a “party” to this Agreement.
WHEREAS:
(A) | Takeda intends to announce a firm intention to make a recommended offer to acquire the entire issued and to be issued ordinary share capital of Shire (the “Acquisition”), on the terms and subject to the conditions set out in the Announcement (as defined below). |
(B) | It is intended that the Acquisition will be effected by way of a scheme of arrangement of Shire pursuant to Article 125 of the Jersey Companies Law (as defined below) (the “Scheme”), but Takeda reserves the right, as set out in (and subject to the terms and conditions of) the Announcement and this Agreement, to elect to implement the Acquisition by way of a takeover offer (the “Offer”). |
(C) | The parties have agreed to take certain steps to effect the completion of the Acquisition and wish to enter into this Agreement to record their respective obligations relating to such matters. |
IT IS AGREED AS FOLLOWS:
1. | Interpretation |
1.1 | In this Agreement, the following words and expressions have the meanings given below: |
“Acceptance Condition” | means the acceptance condition to any Offer, as specified in Clause 7.2; |
“Acquisition” | has the meaning given in Recital (A); |
“Adverse Takeda Shareholder Vote” | means the failure to obtain the Takeda Shareholder Approval at the Takeda Shareholder Meeting (or any adjournment or postponement thereof); |
“Agreed Switch” | has the meaning given in Clause 7.1(i); |
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“Announcement” | means the announcement detailing the terms and conditions of the Acquisition to be made pursuant to Rule 2.7 of the Code, substantially in the form set out in Schedule 2 (Form of Announcement); |
“Board Appointment Resolutions” | has the meaning given in Clause 11.1; |
“Break Fee” | has the meaning given in Clause 9.4; |
“Break Fee Payment Event” | has the meaning given in Clause 9.2; |
“Business Day” | means a day (other than a Saturday, Sunday or public holiday in London, Jersey, New York or Tokyo) when banks are open in London, Jersey, New York and Tokyo for general banking business; |
“Clearances” | means any approvals, consents, clearances, permissions, confirmations, comfort letters and waivers that may need to be obtained and waiting periods that may need to have expired or been terminated early, from or under any of the laws, regulations or practices applied by any Relevant Authority (or under any agreements or arrangements to which any Relevant Authority is a party), in each case that are necessary and/or expedient to satisfy one or more of the Regulatory Conditions; |
“CMA” | means the Competition and Markets Authority; |
“Code” | means the City Code on Takeovers and Mergers as issued from time to time by or on behalf of the Panel; |
“Competing Proposal” |
means:
(i) an offer (including a partial, exchange or tender offer), merger, acquisition, dual-listed structure, scheme of arrangement, reverse takeover and/or business merger (or the announcement of a firm intention to do the same), the purpose of which is to acquire, directly or |
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indirectly, 30 per cent. or more of the issued or to be issued ordinary share capital of Shire (when aggregated with the shares already held by the acquiror and any person acting or deemed to be acting in concert with the acquiror) or any arrangement or series of arrangements which results in any person acquiring, consolidating or increasing “control” (as defined in the Code) of Shire;
(ii) the acquisition or disposal, directly or indirectly, of all or a significant proportion (being 25 per cent. or more) of the business, assets and/or undertakings of Shire Group calculated by reference to any of its revenue, profits or value taken as a whole;
(iii) a demerger, or any material reorganisation and/or liquidation, involving all or a significant proportion (being 25 per cent. or more) of Shire Group calculated by reference to any of its revenue, profits or value taken as a whole; or
(iv) any other transaction which would be alternative to, or inconsistent with, or would be reasonably likely materially to preclude, impede or delay or prejudice the implementation of the Acquisition (including, for the avoidance of doubt, any transaction or arrangement which would constitute a Class 1 transaction for the purposes of the Listing Rules undertaken by a member of Shire Group),
in each case which is not effected by Takeda (or a person acting in concert with |
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Takeda) or at Takeda’s direction or with Takeda’s written agreement, whether implemented in a single transaction or a series of transactions and whether conditional or otherwise; | |
“Conditions” | means: |
(i) for so long as the Acquisition is being implemented by means of the Scheme, the terms and conditions to the implementation of the Scheme as set out in Appendix I to the Announcement, as may be amended by Takeda with the consent of the Panel (and, for so long as the Scheme is unanimously and unconditionally recommended by the board of Shire Directors, with the consent of Shire); or | |
(ii) for so long as the Acquisition is being implemented by means of the Offer, the terms and conditions referred to in (i) above, as amended by replacing the Scheme Conditions with the Acceptance Condition and as may be further amended by Takeda with the consent of the Panel (and, in the case of an Agreed Switch or a Recommended Switch, with the consent of Shire),
and “Condition” shall be construed accordingly; | |
“Consideration” | means the consideration payable to holders of Shire Shares pursuant to the terms of the Acquisition and as set out in the Announcement; |
“Court” | means the Royal Court of Jersey; |
“Court Meeting” | means the meeting or meetings of Shire Shareholders or any class or classes thereof to be convened by order of the Court pursuant to Article 125(1) of the |
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Jersey Companies Law for the purpose of considering, and, if thought fit, approving the Scheme, including any adjournment thereof; | |
“Effective Date” | means the date upon which either: |
(i) the Scheme becomes effective in accordance with its terms; or | |
(ii) if Takeda elects, in accordance with the provisions of Clause 7.1, to implement the Acquisition by means of the Offer, the date on which the Offer becomes or is declared unconditional in all respects; | |
“EU Merger Regulation” | means Council Regulation (EC) No. 139/2004; |
“EU Regulatory Condition” | means the Condition set out in paragraph 4(c) of Appendix I to the Announcement; |
“Exchange Act” | means the United States Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder; |
“Extended Date” | has the meaning given in Clause 4.1; |
“External Anti-Trust/Regulatory Clean Team Arrangements” | means the arrangements established pursuant to the confidentiality and joint defence agreement between Takeda and Shire dated 30 April 2018; |
“FIEA” | means the Japanese Financial Instruments and Exchange Act (Act No. 25 1948); |
“Group” | means, in the case of Takeda, the Takeda Group and, in the case of Shire, the Shire Group; |
“ICEA” | means the Japanese Enhancement Act (Act No. 98 of 2013); |
“Japanese Stock Exchanges” | means the Tokyo Stock Exchange, the Nagoya Stock Exchange, the Fukuoka Stock Exchange and the Sapporo Stock |
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Exchange; | |
“JCA” | means the Japanese Companies Act (Act No. 86 2005); |
“Jersey Companies Law” | means the Companies (Jersey) Law 1991; |
“Law” | means any applicable statutes, common law, rules, ordinances, regulations, codes, orders, judgments, injunctions, writs, decrees, directives, governmental guidelines or interpretations having the force of law or bylaws, in each case, of a Relevant Authority; |
“Listing Rules” | means the rules and regulations made by the Financial Conduct Authority pursuant to Part 6 of the Financial Services and Markets Act 2000, and contained in the Financial Conduct Authority’s publication of the same name; |
“Long Stop Date” | means 8 May 2019 (or such later date as may be agreed in writing by Shire and Takeda (with the Panel’s consent and as the Court may approve (if such approval(s) are required))); |
“Material Conditions Satisfaction Date” | means the later in time of: (i) the date on which all of the Material Regulatory Conditions have been satisfied (or, where applicable, waived) and (ii) the date on which both (a) the Shire Resolutions have been passed by the requisite majorities at the Court Meeting and the Shire General Meeting and (b) the Takeda Resolutions have been passed by the requisite majorities at the Takeda Shareholder Meeting; |
“Material Regulatory Conditions” | means the Conditions set out in paragraphs 4(c) to 4(g) (inclusive) of Appendix I to the Announcement; |
“New Takeda Shares” | means the new Takeda Shares to be issued pursuant to the Scheme (or the Offer, as the context requires) or in consideration for the transfer to Takeda of Shire Shares in accordance with the |
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articles of association of Shire as amended in accordance with the Shire Resolutions; | |
“Offer” | has the meaning given in Recital (B); |
“Offer Document” | means an offer document published by or on behalf of Takeda in connection with any Offer, including (as the context requires) any revised offer document; |
“Panel” | means the UK Panel on Takeovers and Mergers; |
“Phase 2 CMA Reference” | means a reference pursuant to Section 22 or 33 of the Enterprise Act 2002 of the Acquisition to the chair of the CMA for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013; |
“Phase 2 European Commission Proceedings” | means proceedings initiated by the European Commission under Article 6(1)(c) of the EU Merger Regulation in respect of the Acquisition; |
“Prospectus Rules” | means the “prospectus rules” made by the Financial Conduct Authority pursuant to Part 6 of the Financial Services and Markets Act 2000, and contained in the Financial Conduct Authority’s publication of the same name; |
“Recommendation Change Break Fee” | means an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 2 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in the Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of Shire, as set out in the Announcement) and converted using an exchange rate of £:$ of 1:1.3546; |
“Recommended Switch” | has the meaning given in Clause 7.1(ii); |
“Recused Takeda Directors” | means Mr. Jean-Luc Butel and Mr. James |
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Kehoe; | |
“Reference Date” | has the meaning given in Clause 4.2(C); |
“Regulatory Break Fee” | means an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 1.5 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in the Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of Shire, as set out in the Announcement) and converted using an exchange rate of £:$ of 1:1.3546; |
“Regulatory Conditions” | means the Conditions set out in paragraphs 4(c)-4(i) (inclusive) and 4(l) of Appendix I to the Announcement (if and to the extent that, in the case of paragraphs 4(h), 4(i) and 4(l), the relevant “Third Party” under those Conditions is a Relevant Authority); |
“Regulatory Information Service” | means a regulatory information service as defined in the Listing Rules; |
“Regulatory Remedy” | means any condition, obligation, undertaking, commitment, measure or modification (including, but not limited to, those relating to divestments) proposed by Takeda to, or requested by any Relevant Authority, in connection with the satisfaction of any Regulatory Condition; |
“Relevant Authority” | means any central bank, ministry, governmental, quasi-governmental (including the European Union), supranational, statutory, regulatory or investigative body or authority (including any national or supranational anti-trust or merger control authority, any sectoral ministry or regulator and any foreign investment review body), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof), any entity owned or controlled by them, any private body exercising any |
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regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body in any jurisdiction; | |
“Sanction Date” | means the date on which the Scheme Order is granted; |
“Sanction Hearing” | means the hearing of the Court to sanction the Scheme pursuant to Article 125 of the Jersey Companies Law, at which the Scheme Order is expected to be granted, and any adjournment, postponement or reconvening thereof; |
“Scheme” | has the meaning given in Recital (B); |
“Scheme Conditions” | means those conditions set out in paragraph 2 of Appendix I to the Announcement; |
“Scheme Document” | means the circular relating to the Scheme to be despatched to the Shire Shareholders and persons with information rights, setting out, among other things, the details of the Acquisition, the explanatory statement required under Article 126 of the Jersey Companies Law, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and the Shire General Meeting (including any supplementary scheme document); |
“Scheme Order” | means the order of the Court sanctioning the Scheme pursuant to Article 125 of the Jersey Companies Law; |
“Securities Act” | means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder; |
“Shareholder Vote Break Fee” | means an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 1 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in the Announcement) multiplied by 937,925,528 (being the issued and to be |
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issued ordinary share capital of Shire, as set out in the Announcement) and converted using an exchange rate of £:$ of 1:1.3546; | |
“Shire ADSs” | means American Depositary Shares, each of which represents three Shire Shares; |
“Shire Board Recommendation” | means the unanimous and unconditional recommendation of the board of Shire Directors to the Shire Shareholders to vote in favour of the Shire Resolutions or to accept the Offer (as the case may be); |
“Shire Directors” | means the directors of Shire from time to time; |
“Shire General Meeting” | means the general meeting of the Shire Shareholders (and any adjournment thereof) to be convened in connection with the Scheme for the purpose of considering, and, if thought fit, approving, the Shire Resolutions; |
“Shire Group” | means Shire, its subsidiaries and its subsidiary undertakings from time to time and “member of the Shire Group” shall be construed accordingly; |
“Shire Resolutions” | means such shareholder resolutions of Shire as are necessary to enable Shire to approve, implement and effect the Scheme and the Acquisition, including (without limitation) a resolution to amend the articles of association of Shire by the adoption of a new article under which any Shire Shares issued or transferred after the Shire General Meeting shall either be subject to the Scheme or (after the Effective Date) shall be immediately transferred to Takeda (or as it may direct) in exchange for the same consideration as is due under the Scheme; |
“Shire Share Plans” | means the LTIP, the GESPP, the UK Sharesave, the Irish Sharesave, the DBP, the PSP, the Baxalta Options and the Baxalta RSUs (in each case, as defined in Schedule 1 (Employee-related |
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matters)); | |
“Shire Shareholders” | means the registered holders of Shire Shares from time to time; |
“Shire Shares” | means the ordinary shares in the capital of Shire from time to time; |
“Subscription Requirements” | means the matters to be determined in respect of the issuance of the New Takeda Shares, as set out in Article 199(1) of the JCA; |
“Switch” | has the meaning given in Clause 7.1; |
“Takeda ADSs” | means American Depository Shares, each of which represents 0.5 New Takeda Shares; |
“Takeda Adverse Recommendation Change” |
means:
(A) any withdrawal or adverse modification or adverse qualification of the Takeda Board Recommendation; or
(B) any failure to include the Takeda Board Recommendation in the Takeda Shareholder Circular when published, or any announcement by Takeda, whether prior to or following the dispatch of the Takeda Shareholder Circular, that (i) the board of Takeda Directors is no longer making (or is no longer intending to make) the Takeda Board Recommendation; (ii) the board of Takeda Directors will not convene the Takeda Shareholder Meeting; or (iii) the board of Takeda Directors intends not to send the Takeda Shareholder Circular; or
(C) any failure to convene the Takeda Shareholder Meeting (such that no vote has been held on the Takeda Resolutions) prior to the date falling one month prior to the |
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Long Stop Date; or
(D) any failure to publicly reaffirm or re-issue a statement of the intention of the board of Takeda Directors to make the Takeda Board Recommendation on an unmodified and unqualified basis before 5.00 p.m. on the 10th Business Day following Shire’s reasonable request to do so;
| |
“Takeda Board Recommendation” | has the meaning given in Clause 4.3; |
“Takeda Directors” | means the directors of Takeda from time to time; |
“Takeda Group” | means Takeda, its subsidiaries and its subsidiary undertakings from time to time and “member of the Takeda Group” shall be construed accordingly; |
“Takeda Prospectus” | means the UK prospectus required to be published by Takeda in respect of the New Takeda Shares to be issued in connection with any Offer, including any supplementary prospectus; |
“Takeda Public Documents” | has the meaning given in Clause 7.3(C); |
“Takeda Resolutions” | means such shareholder resolutions of Takeda as are necessary to enable Takeda to approve, implement and effect the Acquisition and the issue of the New Takeda Shares; |
“Takeda Shareholder Approval” | means the approval of the Takeda Resolutions by the requisite super-majority of Takeda Shareholders pursuant to the JCA and Takeda’s constitutional documents (in the case of Takeda’s constitutional documents, as at the date of this Agreement); |
“Takeda Shareholder Circular” | means the circular to be despatched to Takeda Shareholders in relation to the Acquisition and containing the notice of the Takeda Shareholder Meeting (including any supplementary circular); |
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“Takeda Shareholder Meeting” | means the extraordinary general meeting of Takeda Shareholders (including any adjournment thereof) to be convened in connection with the Acquisition for the purposes of considering and, if thought fit, approving, the Takeda Resolutions; |
“Takeda Shareholders” | means the holders of Takeda Shares from time to time; |
“Takeda Shares” | means the ordinary shares in the capital of Takeda from time to time; |
“Tokyo Stock Exchange” | means Tokyo Stock Exchange, Inc.; |
“UK Listing Authority” | means the Financial Conduct Authority, acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000; |
“Unconditional Date” | means, if Takeda elects, in accordance with the provisions of Clause 7.1, to implement the Acquisition by way of the Offer, the date on which the Offer becomes or is declared unconditional in all respects; |
“US Regulatory Condition” | means the Condition set out in paragraph 4(d) of Appendix I to the Announcement; and |
“Working Hours” | has the meaning given in Clause 16.5; |
1.2 | In this Agreement, except where the context otherwise requires: |
(A) | the expressions “subsidiary” and “subsidiary undertaking” shall have the meanings given in the UK Companies Act 2006; |
(B) | the expression “offer” shall have the meaning given in the Code and the expression “takeover offer” shall have the meaning given in Article 116 of the Jersey Companies Law; |
(C) | the expression “acting in concert” shall have the meaning given in the Code; |
(D) | a reference to an enactment or statutory provision shall include a reference to any subordinate legislation made under the relevant enactment or statutory provision and is a reference to that enactment, statutory provision or subordinate legislation as from time to time amended, consolidated, modified, re-enacted or replaced; |
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(E) | references to one gender shall include other genders; |
(F) | words in the singular shall include the plural and vice versa; |
(G) | a reference to a “person” shall include a reference to an individual, an individual’s executors or administrators, a partnership, a firm, a body corporate, a company, an unincorporated association, a government, state or agency of a state, a local or municipal authority or government body, and a joint venture or association (in any case, whether or not having separate legal personality); |
(H) | a reference to a “company” shall be construed so as to include any company, corporation or other body corporate, wherever and however incorporated or established; |
(I) | a reference to a Recital, Clause or Schedule (other than to a schedule to a statutory provision) shall be a reference to a recital, clause or schedule to (as the case may be) this Agreement; |
(J) | unless otherwise specified, references to times are to London time; |
(K) | any reference to a “day” (including within the phrase “Business Day”) shall mean a period of 24 hours running from midnight to midnight; |
(L) | references to any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates the English legal term in that jurisdiction; |
(M) | references to “writing” shall include any modes of reproducing words in any legible form and shall include email except where otherwise expressly stated; |
(N) | a reference to “includes” or “including” shall mean “includes without limitation” or “including without limitation” respectively; |
(O) | references to “$”, “US$” and “US Dollar” are to the lawful currency of the United States; |
(P) | the rule known as the ejusdem generis rule shall not apply and accordingly general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; |
(Q) | general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words; |
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(R) | a reference to any other document referred to in this Agreement is a reference to that other document as amended, varied, novated or supplemented at any time; and |
(S) | references to this Agreement include this Agreement as amended or supplemented in accordance with its terms. |
1.3 | The headings in this Agreement are for convenience only and shall not affect the interpretation of this Agreement. |
1.4 | The Schedules form part of this Agreement and shall have the same force and effect as if set out in the body of this Agreement and any reference to this Agreement shall include the Schedules. |
2. | Publication of the Announcement and the terms of the Acquisition |
2.1 | The obligations of the parties under this Agreement, other than this Clause 2.1 and Clauses 15 to 28 (inclusive), shall be conditional on the release of the Announcement via a Regulatory Information Service at or before 8:30 a.m. on the date of this Agreement, or such later time and date as the parties may agree (and, where required by the Code, approved by the Panel). This Clause 2.1 and Clauses 15 to 28 (inclusive) shall take effect upon execution of this Agreement. |
2.2 | The principal terms of the Acquisition shall be as set out in the Announcement, together with such other terms as may be agreed by the parties in writing (save in the case improvements to the terms of the Acquisition, which will be at the absolute discretion of Takeda) and, where required by the Code, approved by the Panel. The terms of the Acquisition at the date of posting of the Scheme Document shall be set out in the Scheme Document. Should Takeda elect to implement the Acquisition by way of an Offer in accordance with Clause 7.1, the terms of the Acquisition shall be set out in the Offer Document. |
2.3 | Takeda acknowledges and agrees that Shire Shareholders will be entitled to receive and retain any dividends announced, declared, made or paid by Shire, in each case in the ordinary course (including as to amount and on usual biannual declaration, record and payment dates) in respect of any completed six-month period ending 30 June and 31 December prior to the Effective Date, without any reduction to the Consideration, provided that such dividends shall not exceed: |
(A) | 5.60 US$ cents per Shire Share for the six-month period ending 30 June 2018 and a further 34.51 US$ cents per Shire Share for the six-month period ending 31 December 2018 (totalling 40.11 US$ cents per Shire Share); |
(B) | in respect of any subsequent six-month period ending 30 June, an amount representing not more than 110 per cent. of the dividend per Shire Share paid in respect of the six-month period ending 30 June 2018; and |
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(C) | in respect of any subsequent six-month period ending 31 December, an amount, when taken in aggregate with any amount paid for the six-month period ending 30 June in the same financial year, representing not more than 115 per cent. of the total dividend per Shire Share paid in respect of the year ending 31 December 2018. |
3. | Undertakings in relation to Regulatory approvals and Conditions |
3.1 | The obligation of Takeda to complete the Acquisition is subject to satisfaction (or, where permitted, waiver) of the Conditions. |
3.2 | Takeda undertakes to use all reasonable endeavours to implement the Acquisition and to ensure the satisfaction of the Regulatory Conditions as soon as reasonably practicable following the date of this Agreement (and, in any event, in sufficient time so as to enable the Effective Date to occur prior to the Long Stop Date), including by accepting, offering, and using all reasonable endeavours to implement, any Regulatory Remedy that is on terms reasonably satisfactory to Takeda, provided that Takeda shall be under no obligation to implement any Regulatory Remedy relating to any asset (or assets taken together) of the Takeda Group or the Shire Group which in the financial year ended 31 March 2018 or 31 December 2017, respectively, generated revenues of $500 million or more and that Takeda shall not be liable for any breach of this Clause 3.2 caused by any act or omission of any member of the Shire Group in relation to any such Regulatory Remedy. |
3.3 | Takeda and Shire shall co-operate with each other and, subject always to the provisions of Clause 3.5: |
(A) | Takeda shall consult with Shire in good faith and take into account the reasonable views of Shire in order to determine the strategy for obtaining the Clearances; |
(B) | Takeda and Shire shall use reasonable endeavours to provide each other, in a timely manner, with such assistance and access as may reasonably be required in order to allow Takeda or Shire (as may be required) to make any filings, notifications or submissions to the Relevant Authorities as are necessary for the purposes of implementing the Acquisition and/or in connection with the Clearances (taking into account all applicable waiting periods); and |
(C) | Takeda and Shire shall use reasonable endeavours to ensure that all information necessary or desirable for the making of (or responding to any requests for further information consequent upon) any such filings, notifications or submissions (including draft versions), or for determining which Clearances are required to be obtained, is supplied promptly and accurately to the other party, provided that the co-operation will be conducted in a manner reasonably designed to preserve applicable lawyer/client and lawyer work product privileges and to limit the exchange of any competitively sensitive information to outside counsel |
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or otherwise pursuant to the External Anti-Trust/Regulatory Clean Team Arrangements.
3.4 | Takeda shall be responsible for contacting and corresponding with Relevant Authorities in relation to the obtaining of the Clearances, other than any Clearances for which Shire alone is required by Law or a Relevant Authority to apply (in which case Shire shall be responsible for contacting and corresponding with the Relevant Authorities in respect of such Clearances), and for these purposes: |
(A) | Takeda or Shire, as may be required, will submit a filing, notification or submission (as required) to each Relevant Authority as soon as is reasonably practicable after the signing of this Agreement and, in any event, within any applicable mandatory time periods where it is necessary or expedient to do so to obtain the Clearances; |
(B) | Takeda and Shire shall co-operate in the preparation of all such filings, notifications or submissions (as applicable) referred to in this Clause 3 and in relation to the preparation of any other submissions, material correspondence or material communications to any Relevant Authority in connection with the Clearances; |
(C) | each of Shire and Takeda shall, to the extent reasonably practicable, provide, or procure the provision of, draft copies of all filings, submissions and material correspondence intended to be sent to any Relevant Authority in relation to obtaining any Clearances to the other and its legal advisers at such time as will allow the receiving party a reasonable opportunity to provide comments on such filings, submissions and correspondence before they are submitted, sent or made and each party shall provide the other with copies of all such filings, submissions and material correspondence in the form finally submitted or sent. In circumstances where either Shire or Takeda has not provided, or procured the provision of, draft copies of filings, submissions or material correspondence to the other prior to their being submitted, sent or made, the party who has failed to make such provision shall, save as otherwise provided in this Agreement, send such filing, submission or correspondence (as applicable) and, in the case of non-written communication, a reasonably detailed summary, to the other as soon as possible thereafter; |
(D) | each of Shire and Takeda shall consult with the other to the extent practicable and have regard in good faith to comments reasonably proposed in a timely manner by the other (and/or its advisers) on draft copies of filings, submissions and material correspondence provided pursuant to Clause 3.4(C); |
(E) | each of Shire and Takeda shall notify the other, and provide copies (including, in the case of non-written communications, reasonably detailed summaries of material non-written communications), in a timely manner, of any material communication or material correspondence |
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from any Relevant Authority in relation to obtaining any Clearance. Each of Shire and Takeda further agrees to keep the other reasonably informed as to the progress of any notification, filing or submission made pursuant to Clause 3.4(A) and shall reasonably consider requests by the other or its advisers to attend all meetings or material calls with any Relevant Authority or other persons or bodies (unless prohibited by the Relevant Authority, applicable Law or other person or body or where commercially sensitive information is reasonably likely to be discussed at such meetings or on such calls) relating to obtaining any Clearance and requests to make oral submissions at such meetings or calls; and
(F) | where reasonably requested by Shire or Takeda, and insofar as permitted by the Relevant Authority, the other shall make available appropriate representatives for meetings and calls with any Relevant Authority in connection with the obtaining of any Clearances, |
provided that the requirements of this Clause 3.4 shall be subject always to the provisions of Clause 3.5.
3.5 | Nothing in this Agreement shall oblige either Takeda or Shire (for the purposes of this Clause 3.5, the “disclosing party”) to disclose any information to the other: |
(A) | which the disclosing party reasonably considers to be competitively sensitive; |
(B) | which the disclosing party is prohibited from disclosing by Law; or |
(C) | where such disclosure would result in the loss of privilege that subsists in relation to such information (including legal advice privilege). |
3.6 | Where the circumstances referred to in Clause 3.5(A) or 3.5(B) apply, the disclosing party shall disclose the relevant information to the other: |
(A) | on an “external counsel only” basis, pursuant to the External Anti-Trust/Regulatory Clean Team Arrangements or as the disclosing party and the other party may otherwise agree; or |
(B) | where disclosure in a manner contemplated by Clause 3.6(A) would reasonably be expected to have a material adverse effect on the disclosing party’s legitimate business interest, directly to a Relevant Authority (and in such circumstances, where possible the disclosing party shall provide to the other a non-confidential version of such information). |
3.7 | Each of Shire and Takeda undertakes to keep the other informed of progress towards the satisfaction (or otherwise) of the Conditions and, if the other is, or becomes, aware of any matter which might reasonably be considered to be material in the context of the satisfaction or waiver of any of the Conditions, Shire or Takeda (as applicable) will, as soon as reasonably practicable, make |
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the substance of any such matter known to the other and, so far as it is aware of the same and subject always to the provisions of Clause 3.5, provide such details and further information as the other party may reasonably request.
4. | Takeda Shareholder Approval |
Takeda Shareholder Meeting
4.1 | The parties intend that the Takeda Shareholder Circular will be published and despatched to Takeda Shareholders on the same date as the Scheme Document. The parties acknowledge that the Panel has consented, under paragraph 3 of Appendix 7 to the Code, to an extension of the date by which the Scheme Document must be sent to those persons entitled to receive it (the “Extended Date” being 31 December 2018). It is further acknowledged that, notwithstanding the foregoing provision in this Clause 4.1, there is no intention that Takeda shall publish and despatch the Takeda Shareholder Circular on the same date as the Scheme Document if the Scheme Document is posted before the Extended Date without Takeda’s prior written consent, and Takeda shall be under no obligation to do so, in each case unless the EU Condition and the US Condition are both satisfied (or, where applicable, waived) on a date prior to the Extended Date (in which case Takeda shall publish and despatch the Takeda Shareholder Circular on the same date as the Scheme Document). |
4.2 | Takeda shall (without prejudice to Clause 4.5 but subject to Clause 4.1): |
(A) | use all reasonable endeavours to ensure that the Takeda Shareholder Circular is prepared in accordance with the timetable agreed in writing between the parties from time to time; |
(B) | provide, or procure the provision of, draft copies of the Takeda Shareholder Circular to Shire and/or its advisers at such time(s) as will allow Shire and/or its advisers reasonable notice of and reasonable opportunity to review and provide comments on such drafts, and Takeda and/or its advisers shall have regard in good faith to all comments reasonably proposed by Shire and/or its advisers in a timely manner, in each case before the Takeda Shareholder Circular is published in final form and despatched to Takeda Shareholders; |
(C) | set the reference date for the Takeda Shareholder Meeting (the “Reference Date”) in accordance with the timetable agreed in writing between the parties from time to time and in any event for such date as will enable the Takeda Shareholder Circular to be despatched on or before the Extended Date (or such earlier date as may be determined in accordance with Clause 4.1). By no later than the date that is two weeks prior to the Reference Date, Takeda shall make a public notice of the Reference Date on the Takeda website in accordance with applicable Law and Takeda’s constitutional documents (as at the date of this Agreement). Once the Reference Date has been set, Takeda shall not change the Reference Date or set a different reference date for the Takeda Shareholder Meeting without the prior written consent of Shire, |
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unless required to do so by applicable Law or by Takeda’s constitutional documents (in which case, Takeda shall notify Shire of such requirement promptly following its becoming aware of the same);
(D) | use all reasonable endeavours to publish and despatch the Takeda Shareholder Circular to Takeda Shareholders entitled to receive it as soon as reasonably practicable following the Reference Date and in any event by no later than the Extended Date and at the same time as the Scheme Document; |
(E) | cause the Takeda Shareholder Meeting to be duly convened and held by no later than 7:00 a.m. on the later of: (i) the date falling 21 clear days after the publication of the Takeda Shareholder Circular; and (ii) the intended date of the Court Meeting and the Shire General Meeting as set out in the Scheme Document (or as subsequently announced); |
(F) | not, without the prior written consent of Shire, adjourn or postpone the Takeda Shareholder Meeting, provided that Takeda may, without the prior consent of Shire (but having, to the extent reasonably practicable in the circumstances, notified Shire a reasonable period in advance), adjourn or postpone the Takeda Shareholder Meeting: |
(i) | if, as of the time for which the Takeda Shareholder Meeting is originally scheduled (as set out in the Takeda Shareholder Circular), there are insufficient Takeda Shares represented (either in person or by proxy) to constitute the quorum necessary to conduct the business of the Takeda Shareholder Meeting; |
(ii) | if the failure to adjourn or postpone the Takeda Shareholder Meeting would be reasonably expected to be a violation of applicable Law; or |
(iii) | to allow reasonable additional time for the distribution to Takeda Shareholders prior to the Takeda Shareholder Meeting of any supplement or amendment to the Takeda Shareholder Circular which the board of Takeda Directors has determined, in good faith based on the advice of external legal counsel, is required by applicable Law (and/or in the case of the Takeda Directors, their fiduciary duties as directors under applicable Law) and for any applicable notice period in respect of such supplement or amendment to expire; or |
(iv) | if necessary, due to an adjournment or prospective adjournment of the Court Meeting or the Shire General Meeting but without prejudice to the Condition set out in paragraph 2.2 of Appendix I to the Announcement, to ensure that the Takeda Shareholder Meeting is held on the same date as (but by no later than 7:00 a.m. on) the date of the Court Meeting and the Shire General Meeting; |
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(G) | subject to Clause 11.1, ensure that the approval of the Takeda Resolutions shall be the only matter (other than: (i) matters of procedure or (ii) matters required by applicable Law and/or regulation to be voted on by the Takeda Shareholders in connection with the approval of the Acquisition) that, without the prior written consent of Shire (not to be unreasonably withheld), Takeda shall propose to be considered by Takeda Shareholders at the Takeda Shareholder Meeting; and |
(H) | use all reasonable endeavours to solicit proxies or encourage votes in writing or via electronic means from the Takeda Shareholders in favour of the Takeda Resolutions in such manner as is permitted by the FIEA and other applicable Laws; |
(I) | after the publication of the Takeda Shareholder Circular and prior to the Takeda Shareholder Meeting, to the extent reasonably practicable, keep Shire reasonably informed and updated on a regular basis, or as soon as reasonably practicable following a request from Shire, of the respective numbers of affirmative votes, opposition votes and abandoned ballots received in writing, via electronic means or by proxy, in respect of the Takeda Resolutions; and |
(J) | permit up to 4 representatives of Shire and/or its financial and legal advisers to attend and observe the Takeda Shareholder Meeting. |
Takeda Board Recommendation
4.3 | Subject to Clause 4.5, the Takeda Shareholder Circular shall contain a unanimous and unconditional recommendation from the board of Takeda Directors (other than the Recused Takeda Directors), that the Takeda Shareholders vote in favour of the Takeda Resolutions (the “Takeda Board Recommendation”). |
4.4 | Except as permitted by Clause 4.5, Takeda shall not make a Takeda Adverse Recommendation Change. |
4.5 | Notwithstanding Clause 4.4, but subject to Clause 4.6, at any time prior to the Takeda Shareholder Approval, the board of Takeda Directors may make a Takeda Adverse Recommendation Change if the members of the board of Takeda Directors determine, in good faith based on the advice of external legal counsel, that failure to take such action would be inconsistent with their respective fiduciary duties as directors under applicable Law. |
4.6 | To the extent permitted by Law, the board of Takeda Directors shall not make a Takeda Adverse Recommendation Change unless Takeda has provided Shire at least five Business Days’ prior written notice of its intention to consider making a Takeda Adverse Recommendation Change, attaching a reasonably detailed explanation of the reasons for the potential Takeda Adverse Recommendation Change, and has provided Shire with a reasonable opportunity to make representations to the board of Takeda Directors. |
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Issuance of the New Takeda Shares
4.7 | Takeda shall, subject to the Takeda Shareholder Approval being obtained: |
(A) | procure that, unless otherwise agreed in writing by Shire, the board of Takeda Directors shall, at a duly convened meeting of the board of Takeda Directors to be held no earlier than the day immediately before the Effective Date, exercise the authority delegated to it by the Takeda Resolutions in order to formally determine the Subscription Requirements and cause the New Takeda Shares to be issued upon the Scheme becoming effective. In particular, Takeda shall procure that (unless otherwise agreed in writing by Shire) the Takeda Directors shall: |
(i) | set the issue price of each New Takeda Share at an amount equal to or lower than the amount obtained by multiplying: |
(x) the number of Shire Shares to be contributed in exchange for one Takeda Share pursuant to the share exchange ratio provided in the Announcement; by
(y) the last trading price of a Shire Share prior to the Shire Shares being suspended from trading in advance of the Effective Date (or, if later, the look-through price per Shire Share derived from the last trading price of a Shire ADS prior to the Shire ADSs being suspended from trading in advance of the Effective Date) (the “Relevant Shire Share Price”); and
(ii) | set the “value” of the Shire Shares to be contributed in exchange (pursuant to the Scheme) at an amount equal to or lower than the Relevant Shire Share Price; |
(B) | procure that the New Takeda Shares to be issued to Shire Shareholders pursuant to the Scheme (or the Offer, as the case may be) shall be credited as fully paid and rank pari passu with the other Takeda Shares then in issue; |
(C) | use all reasonable endeavours to procure (i) the New Takeda Shares to be issued to Shire Shareholders pursuant to the Scheme (or the Offer, as the case may be) to be approved for listing on the Japanese Stock Exchanges; and (ii) the Takeda ADSs to be approved for listing on the New York Stock Exchange and a registration statement related to the Takeda ADSs on Form F-6 to be filed with the United States Securities and Exchange Commission; |
(D) | cause the depository agreement related to the Takeda ADSs in effect at the Effective Date to be in a customary form reasonably acceptable to Shire; and |
(E) | provided the Acquisition is being implemented by way of the Scheme, use all reasonable endeavours to procure all New Takeda Shares to be |
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issued to Shire Shareholders upon the Scheme becoming effective to be issued in reliance on the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) of the Securities Act and in reliance on exemptions from registration under state “blue sky” or securities laws.
5. | Scheme Document |
5.1 | Where the Acquisition is being implemented by way of the Scheme, Takeda undertakes: |
(A) | to provide promptly to Shire all such information about itself, the Takeda Directors and the Takeda Group (including any information required under applicable Law or the Code regarding the intentions of Takeda) as may be reasonably requested and which is required for the purpose of inclusion in the Scheme Document and to provide all other assistance and access which may be reasonably required for the preparation of the Scheme Document and any other document required by applicable Law or under the Code to be published in connection with the Scheme, including access to, and ensuring that reasonable assistance is provided by, its professional advisers; and |
(B) | to procure that the Takeda Directors accept responsibility, in the terms required by the Code, for all of the information in the Scheme Document relating to themselves (and members of their immediate families, related trusts and persons connected with them), the Takeda Group, the financing of the Acquisition, any statements of the opinion, belief or expectation of the Takeda Directors in relation to the Acquisition or the enlarged Takeda Group following the completion of the Acquisition and any other information in the Scheme Document for which a bidder is required to accept responsibility under applicable Law or the Code. |
6. | Implementation of the Scheme |
6.1 | Where the Acquisition is being implemented by way of the Scheme, and provided that the date set for the Sanction Hearing has been agreed to by Takeda in writing (acting reasonably) or otherwise set for a date no earlier than the earlier in time to occur of: (i) the Material Conditions Satisfaction Date; and (ii) the date that is one month prior to the Long Stop Date, Takeda undertakes that before the Sanction Hearing, it shall deliver a notice in writing to Shire either: |
(A) | confirming the satisfaction or waiver of all Conditions (other than the Scheme Conditions); or |
(B) | confirming its intention to invoke a Condition (if permitted by the Panel) and providing reasonable details of the event which has occurred, or circumstances which have arisen, which Takeda reasonably considers entitles it to invoke the Condition (and, in the case of any Condition to which Rule 13.5 of the Code applies, setting out why Takeda considers |
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such event or circumstances to be of material significance to Takeda in the context of the offer for the purposes of Rule 13.5),
and, in circumstances where Takeda confirms the satisfaction or waiver of all Conditions (other than the Scheme Conditions), Takeda agrees that Shire shall be permitted to take all necessary steps to procure that the Sanction Hearing is duly held as soon as reasonably practicable thereafter.
6.2 | If the Acquisition is being implemented by way of the Scheme, and to the extent that all Conditions (other than the Scheme Conditions) have been satisfied or waived prior to or on the date of the Sanction Hearing), Takeda shall instruct counsel to appear on its behalf at the Sanction Hearing and undertake to the Court to be bound by the terms of the Scheme in so far as it relates to Takeda. |
7. | Switching to an Offer |
7.1 | The parties currently intend that the Acquisition will be implemented by way of the Scheme. However, Takeda shall be entitled, with the consent of the Panel, to implement the Acquisition by way of the Offer rather than the Scheme (such election being a “Switch”) if: |
(A) | Shire provides its prior written consent; |
(B) | a third party announces a firm intention to make an offer for the issued and to be issued ordinary share capital of Shire; |
(C) | the board of Shire Directors: (i) withdraws or adversely modifies or adversely qualifies the Shire Board Recommendation; (ii) does not include the Shire Board Recommendation in the Scheme Document; or (iii) prior to publication of the Scheme Document, withdraws or adversely modifies or adversely qualifies its intention to give the Shire Board Recommendation in the Scheme Document, including making any public statement to such effect, or failing to publicly affirm or re-issue a statement of its intention to make the Shire Board Recommendation on an unmodified and unqualified basis before 5.00 p.m. on the 10th Business Day following Takeda’s reasonable request to do so; or |
(D) | the Court Meeting and the Shire General Meeting are not held on or before the 22nd day after the expected date of such meetings as set out in the Scheme Document (or such later date as may be agreed in writing between the parties with the consent of the Panel and the approval of the Court (if such approval is required)) unless: |
(i) | a supplementary circular is required to be published in connection with the Scheme, and as a result the Court Meeting and the Shire General Meeting cannot be held by such date in compliance with the Code and any other applicable Law, provided that Shire has used all reasonable endeavours to publish the supplementary circular as soon as reasonably |
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practicable after the date on which the requirement to publish a supplementary circular arises;
(ii) | Takeda has committed a breach of Clause 3 or Clause 5 and such breach has caused the delay; or |
(iii) | Takeda has adjourned or postponed the Takeda Shareholder Meeting in accordance with Clause 4.2(F) and the delay to the Court Meeting and the Shire General Meeting is required in order to ensure the Takeda Shareholder Meeting is held on the same date as (but by no later than 7:00 a.m. on) the date of the Court Meeting and the Shire General Meeting; or |
and for the purposes of this Agreement, a Switch in circumstances where:
(i) | Clause 7.1(A) applies but neither Clause 7.1(B) nor Clause 7.1(C) nor Clause 7.1(D) applies shall be an “Agreed Switch”; and |
(ii) | Clause 7.1(B) applies but neither Clause 7.1(C) nor Clause 7.1(D) applies shall be a “Recommended Switch”. |
7.2 | The “Acceptance Condition” shall: |
(A) | in event of an Agreed Switch, be set at such percentage as Takeda and Shire (each acting reasonably) agree at the time of the Agreed Switch (being in any case more than 50 per cent. of the Shire Shares to which the Offer relates); and |
(B) | in the event of a Recommended Switch, be set at 90 per cent. (or such lesser percentage as Takeda may elect after, to the extent necessary, consultation with the Panel, being in any case more than 50 per cent.) of the Shire Shares to which the Offer relates. |
7.3 | In the event of either an Agreed Switch or a Recommended Switch: |
(A) | Takeda shall not take any action which would cause the Offer to lapse, to be withdrawn, or not to proceed, in each case for non-fulfilment of the Acceptance Condition, prior to the 60th day after publication of the Offer Document, and Takeda shall ensure that the Offer remains open for acceptances until such time; |
(B) | Takeda shall ensure that the Offer is made on substantially the same terms as those set out in the Announcement and that only conditions to the Offer shall be the Conditions (subject to replacing the Scheme Conditions with the relevant Acceptance Condition referred to in Clause 7.2 and, if the Offer is required to be registered under the Securities Act, to the inclusion of a condition that the applicable registration statement has been declared effective by the United States |
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Securities and Exchange Commission) (unless the parties agree otherwise in writing); and
(C) | Takeda shall prepare the Offer Document and, with Shire’s assistance, each of the Takeda Prospectus and, if the Offer is required to be registered under the Securities Act, the applicable registration statement, and if the Offer is required to be registered under the FIEA, the Shelf Registration Statement (including any amendment thereto) (together, the “Takeda Public Documents”) and shall publish and/or file each Takeda Public Document, in each case in accordance with a timetable agreed in writing between the parties from time to time. Takeda shall consult reasonably with Shire in relation thereto and shall allow Shire a reasonable opportunity to consider the draft Takeda Public Documents for review and comments, and shall consider comments reasonably and promptly proposed by Shire in good faith. Shire shall provide promptly to Takeda, all such information about itself, the Shire Directors and the Shire Group as is reasonably requested by Takeda and is required for the purpose of inclusion in the Takeda Public Documents in order for Takeda to meet its obligations under the Prospectus Rules, the Securities Act, the Exchange Act, the JCA, the FIEA and/or the ICEA, but, in each case, only to the extent such information is required to be included in the relevant Takeda Public Document in order to obtain any required approval of the document by a Regulatory Authority; and |
(D) | Takeda shall keep Shire informed, on a confidential basis and in any event within three Business Days following a written request from Shire, of the number of holders of Shire Shares that have validly returned their acceptance or withdrawal forms or incorrectly completed their withdrawal or acceptance forms, the identity of such shareholders and the number of Shire Shares to which such forms relate. |
7.4 | In the event of any Agreed Switch or Recommended Switch, the parties agree that all provisions of this Agreement relating to the Scheme and its implementation shall apply to the Offer mutatis mutandis. |
8. | Employee-related matters |
8.1 | The parties agree that the provisions of Schedule 1 (Employee-related matters) with respect to certain employee-related matters shall be implemented in accordance with that Schedule. |
8.2 | Shire and Takeda agree that if the Acquisition is implemented by way of the Scheme, the timetable for its implementation shall be fixed so as to enable options and awards under the relevant Shire Share Plans which provide for exercise and/or vesting upon the sanction of the Scheme by the Court to be exercised or vest in sufficient time to enable the resulting Shire Shares to be bound by the Scheme on the same terms as Shire Shares held by Shire Shareholders. |
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9. | Break fee |
9.1 | In the event that: |
(A) | a Break Fee Payment Event occurs under Clause 9.2(A) and either party has served written notice to terminate this Agreement pursuant to Clause 14.1(D), Takeda shall pay the Recommendation Change Break Fee to Shire; or |
(B) | a Break Fee Payment Event occurs under Clause 9.2(B) and either party has served written notice to terminate this Agreement pursuant to Clause 14.1(D), Takeda shall pay the Shareholder Vote Break Fee to Shire; or |
(C) | a Break Fee Payment Event occurs under Clause 9.2(C), Takeda shall, subject to Clause 9.3, pay the Regulatory Break Fee to Shire, |
in each case in accordance with Clause 9.4.
9.2 | A “Break Fee Payment Event” shall occur if, following the publication of the Announcement in accordance with Clause 2.1, at or prior to the termination of this Agreement: |
(A) | a Takeda Adverse Recommendation Change has occurred; or |
(B) | an Adverse Takeda Shareholder Vote has occurred; or |
(C) | either: |
(i) | on or prior to the Longstop Date, Takeda invokes (and is permitted by the Panel to invoke) any Regulatory Condition so as to cause the Acquisition to lapse, to be withdrawn, or not to proceed; or |
(ii) | a Regulatory Condition has not been satisfied or waived by Takeda at 11.59 p.m. on the Long Stop Date resulting in the Acquisition lapsing, terminating or being withdrawn; or |
(iii) | on or prior to the Longstop Date, the European Commission has initiated Phase 2 European Commission Proceedings under the EU Merger Regulation or has referred (or been deemed to have referred) any part of the Acquisition to the Merger Control Authority of one or more Member States of the European Union under Article 9 of the EU Merger Regulation and either (a) the Scheme or Offer, as the case may be, has lapsed because of the initiation of such Phase 2 European Commission Proceedings or, following an Article 9 reference to the CMA, because of a Phase 2 CMA Reference in respect of the Acquisition or (b) the Scheme or the Offer, as the case may be, has not so lapsed but Takeda has invoked the Condition in |
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paragraph 4(c)(iii) of Appendix I of the Announcement so as to cause the Acquisition not to proceed.
9.3 | Takeda shall not be liable to pay the Regulatory Break Fee to Shire if either: |
(A) | Takeda is not in breach of its obligations under Clauses 3.2 to 3.7 (inclusive) and either (i) Shire has failed to comply in a material respect with its obligations under Clauses 3.2 to 3.7 (inclusive) (provided that Takeda has given written notice to Shire of such breach and Shire has failed within 28 days to remedy such breach) or (ii) Shire has obstructed Takeda from being able to agree with a Relevant Authority, and implement, a Regulatory Remedy in sufficient time to avoid a Break Fee Payment Event under Clause 9.2(C) by withholding information reasonably requested of it or not co-operating with the reasonable requests made of it in connection with the implementation of such Regulatory Remedy, provided that the Regulatory Remedy is to be implemented conditional on the Effective Date occurring and provided that Takeda will bear all out-of-pocket third party expenses reasonably incurred by the Shire Group in connection with the implementation of any such Regulatory Remedy; or |
(B) | the Break Fee Payment Event under Clause 9.2(C) was caused to a material extent by Shire undertaking, or entering into an agreement to undertake or announcing, after the date of this Agreement, an acquisition of any interest in shares, businesses or assets (including pursuant to a licensing arrangement), in each case that would reasonably be expected to result in a Break Fee Payment Event and in respect of which Takeda has not provided its prior written consent. |
9.4 | Takeda shall pay the Recommendation Change Break Fee, the Shareholder Vote Break Fee or the Regulatory Break Fee (as applicable) (the “Break Fee”) to Shire within 10 Business Days of the date on which the Break Fee becomes payable in accordance with Clause 9.1. Payment shall be made in cash in immediately available funds to such bank account as may be notified in writing to Takeda by Shire for such purpose. The Break Fee shall not be reduced on account of any taxes unless required by applicable Law. Takeda shall deduct and withhold from the Break Fee any taxes that it is required by applicable Law to deduct or withhold. |
9.5 | Takeda warrants that, as at the date of this Agreement, it is not aware of any requirement to deduct or withhold any tax from a payment of a Break Fee. If Takeda subsequently becomes aware that it would be required to deduct or withhold tax from a payment of a Break Fee, it shall inform Shire of this, and shall provide Shire with reasonable details of the amount of such deduction or withholding, and the legal basis for it, as soon as reasonably practicable. |
9.6 | Notwithstanding the foregoing, if Shire is entitled under any applicable tax treaty to a reduction in the rate of, or the elimination of, or recovery of, any applicable withholding tax, it may deliver to Takeda or the appropriate governmental authority the prescribed forms necessary to reduce the applicable rate of |
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withholding or to relieve Takeda of its obligation to withhold tax altogether. In such case Takeda shall apply the reduced rate of withholding, or not withhold, as the case may be, provided that Takeda is in receipt of evidence, in a form reasonably satisfactory to Takeda, of Shire’s entitlement to the reduced rate, or elimination, or recovery, of the applicable withholding tax a reasonable period in advance of the date of payment of the Break Fee. If, in accordance with the foregoing, Takeda withholds any amount of tax, it shall make timely payment to the relevant tax authority of the withheld amount, and shall send Shire proof of such payment within 30 days thereof.
9.7 | In the event that a Break Fee Payment Event has occurred, this Agreement has been terminated in accordance with Clause 14.1(D) and Takeda has paid the relevant Break Fee to Shire, then, except in the case of fraud, Shire shall not be entitled to claim any damages or other remedy or make any other claim or take any other action against Takeda for any losses and damages suffered in connection with this Agreement or the transactions or any other actions contemplated by this Agreement. |
9.8 | For the avoidance of doubt, in no event shall Takeda be required to pay a Break Fee more than once, but if more than one Break Fee Payment Event occurs, then Takeda shall pay the highest Break Fee applicable to such Break Fee Payment Events, as determined in accordance with Clause 9.1. |
9.9 | Takeda and Shire each acknowledge and agree that each of the Recommendation Change Break Fee, the Shareholder Vote Break Fee and the Regulatory Break Fee is proportionate to Shire’s legitimate interests in the circumstances that give rise to the obligation for Takeda to pay the relevant Break Fee in accordance with this Clause 9. |
10. | Conduct of business |
10.1 | Subject to Clauses 10.2 and 10.3 and except (i) as expressly contemplated by this Agreement, (ii) as consented to in writing by Shire (such consent not to be unreasonably withheld, conditioned or delayed) or (iii) as required by applicable Law or the terms of any contract with a third party which has been disclosed to Shire (in hard copy or electronic form) or publicly announced before the date of this Agreement, from the date hereof until the Effective Date: |
(A) | Takeda shall (and shall procure that each member of the Takeda Group shall) carry on the business of the Takeda Group in all material respects in the ordinary course as carried on immediately prior to the date of this Agreement; and |
(B) | without prejudice to the generality of Clause 10.1(A), Takeda shall not (and shall procure that no member of the Takeda Group shall): |
(i) | authorise, declare, pay or make any dividend or other distribution, or undertake any form of return of capital, with respect to the Takeda Shares (whether in cash or assets, shares, stock or other securities); |
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(ii) | amend its publicly stated dividend policy (as so stated at the date of this Agreement); |
(iii) | authorise or announce an intention to authorise, or enter into agreements with respect to, any acquisitions of an equity interest in or a substantial portion of the assets of any person or any business or division thereof, or any mergers, consolidations or business combinations or any acquisitions of equity assets, mergers, consolidations or business combinations that in any of the foregoing cases would reasonably be expected to prevent or materially delay or impede the completion of the Acquisition; |
(iv) | allot or issue (or authorise the allotment or issuance of) any Takeda shares or any securities convertible into Takeda Shares or grant any options over or right to subscribe for any Takeda Shares or any securities convertible into Takeda Shares; |
(v) | consolidate, sub-divide or reclassify any of its shares or securities in any manner that would or could reasonably be expected to have an adverse impact on the value of the New Takeda Shares; |
(vi) | undertake any other form of capital reorganisation not otherwise referred to in this Clause 10.1 which would or could reasonably be expected to have an adverse impact on the value of the New Takeda Shares; |
(vii) | amend its constitutional documents in any manner that would or could reasonably be expected to have an adverse impact on the value of the New Takeda Shares; or |
(viii) | agree, resolve, commit or announce publicly any agreement or intention to do any of the foregoing (as applicable), whether conditionally or unconditionally. |
10.2 | Notwithstanding Clause 10.1, Takeda may: |
(A) | continue to declare and pay dividends in the normal ordinary course consistent with past practice over the 24 months prior to the date of this Agreement (including as to amount, record date and payment date) and its publicly stated dividend policy; |
(B) | grant any options or awards in respect of Takeda Shares or sell Takeda Shares to directors, officers and employees, in the normal and ordinary course and in accordance with the Takeda Group’s employee incentive plans and allot and issue any Takeda Shares to the extent necessary to satisfy any such options or awards vesting or due to be settled under such plans; and/or |
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(C) | repurchase Takeda Shares from shareholders holding less than one unit of Takeda Shares, and/or sell Takeda Shares to any such shareholders, in each case in accordance with the JCA and Takeda’s articles of incorporation and share handling regulations. |
10.3 | Clause 10.1 shall not apply to any act, transaction or arrangement between Takeda or a wholly-owned member of the Takeda Group and another wholly-owned member of the Takeda Group. |
11. | Governance |
11.1 | Takeda shall ensure that the agenda for the Takeda Shareholder Meeting includes the approval of the shareholder resolutions required to appoint up to 3 representatives (who, as at the date of this Agreement, are Shire Directors) nominated by Shire to the board of Takeda Directors conditional upon, and with effect from, the Effective Date (the “Board Appointment Resolutions”). |
11.2 | The Takeda Shareholder Circular shall contain a unanimous and unconditional recommendation from the board of Takeda Directors (other than the Recused Directors) that the Takeda Shareholders vote in favour of the Board Appointment Resolutions, and the provisions of Clause 4.2(H) and 4.2(I) shall apply mutatis mutandis to the Board Appointment Resolutions. |
11.3 | Takeda’s obligations under this Clause 11 are subject to the individuals nominated by Shire for appointment to the board of Takeda Directors being approved by the nominations committee of the board of Takeda Directors (acting reasonably and in good faith). |
12. | Directors’ and officers’ insurance |
12.1 | If and to the extent such obligations are permitted by Law, for six years after the Effective Date, Takeda shall procure that the members of the Shire Group honour and fulfil their respective obligations (if any) existing as at the date of this Agreement to indemnify their respective directors and officers and to advance expenses, in each case with respect to matters existing or occurring at or prior to the Effective Date. |
12.2 | With effect from completion of the Acquisition, Takeda shall procure the provision of directors’ and officers’ liability insurance cover for both current and former directors and officers of the Shire Group, including directors and officers who retire or whose employment is terminated (directly or indirectly) in connection with the Acquisition, for acts and omissions up to and including the Effective Date, in the form of run-off cover for a period of six years following the Effective Date. Such insurance cover shall be with reputable insurers and provide cover, in terms of amount and breadth, that is substantially the same as that provided under the Shire Group’s directors’ and officers’ liability insurance as at the date of this Agreement (as disclosed to Takeda prior to the date of this Agreement). |
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12.3 | Each of the directors and officers of the Shire Group to which Clauses 12.1 and 12.2 apply will have the right, pursuant to the Contracts (Rights of Third Parties) Act 1999, to enforce his or her rights against Takeda under Clauses 12.1 and 12.2. |
13. | Code and Listing Rules |
13.1 | Nothing in this Agreement shall in any way limit the parties’ obligations under the Code, and any uncontested rulings of the Panel as to the application of the Code in conflict with the terms of this Agreement shall take precedence over such terms. |
13.2 | Nothing in this Agreement shall oblige: |
(A) | Shire to take any action which the Panel determines would not be permitted by Rule 21.2 of the Code; or |
(B) | Shire or the Shire Directors to recommend an Offer or a Scheme proposed by Takeda or any member of the Takeda Group. |
13.3 | Without prejudice to the representations and warranties given by Shire pursuant to Clause 15, nothing in this Agreement shall be taken to restrict the directors of any member of the Shire Group from complying with all applicable legislation, orders of court or regulations, including the Code, the Listing Rules, and the rules and regulations of the Panel and the UK Listing Authority. |
14. | Termination |
14.1 | Subject to Clauses 14.2 and 14.3, this Agreement may be terminated with immediate effect and all rights and obligations of the parties under the Agreement shall cease forthwith if one or more of the following occurs: |
(A) | if such termination is agreed in writing between the parties; |
(B) | if the Announcement is not released at or before the time specified in Clause 2.1 (unless prior to that time the parties have agreed another date and time in accordance with that Clause); |
(C) | upon service of written notice by Takeda on Shire, if: |
(i) | the Scheme Document is not posted by the Extended Date agreed between the parties and consented to by the Panel (other than in circumstances where the same is caused by a breach by Takeda of Clause 5 or the parties have, with the consent of the Panel, agreed a later date for despatch of the Scheme Document); |
(ii) | the Court Meeting or Shire General Meeting is not held by the 22nd day after the expected date of such meetings as set out in the Scheme Document (or such later date as may, with the |
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consent of the Panel, be agreed between the parties and the Court may allow), other than where the circumstances set out in Clause 7.1(D) (i),(ii) or (iii) arise or subsist;
(iii) | the Scheme is not approved by the requisite majority of the Shire Shareholders at the Court Meeting or the Shire Resolutions are not passed by the requisite majority of the Shire Shareholders at the Shire General Meeting; |
(iv) | the Court refuses to sanction the Scheme or grant the Scheme Order; |
(v) | the board of Shire Directors: (i) withdraws or adversely modifies or adversely qualifies the Shire Board Recommendation; (ii) does not include the Shire Board Recommendation in the Scheme Document; or (iii) prior to publication of the Scheme Document, withdraws or adversely modifies or adversely qualifies its intention to give the Shire Board Recommendation in the Scheme Document, including making any public statement to such effect, or failing to publicly affirm or re-issue a statement of its intention to make the Shire Board Recommendation on an unmodified and unqualified basis before the earlier of: (a) 5.00 p.m. on the 10th Business Day following Takeda’s reasonable request to do so; and (b) the time of the start of the Court Meeting; or |
(vi) | a Competing Proposal: (a) is recommended by the board of Shire Directors; or (b) completes, becomes effective or is declared or becomes unconditional in all respects; |
(D) | immediately following service of written notice by either party on the other following a Break Fee Payment Event; |
(E) | upon service of written notice by Takeda on Shire on or prior to the Long Stop Date stating that: |
(i) | any Condition which has not been waived is (or has become) incapable of satisfaction by the Long Stop Date and, notwithstanding that it has the right to waive such Condition, Takeda will not do so; or |
(ii) | any Condition which is incapable of waiver has become incapable of satisfaction by the Long Stop Date, |
in each case in circumstances where the invocation of the relevant Condition (or confirmation that the Condition is incapable of satisfaction, as appropriate) is permitted by the Panel;
(F) | the Acquisition (whether implemented by way of the Scheme or the Offer) lapses, terminates or is withdrawn in accordance with its terms on |
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or prior to the Long Stop Date and, where required, with the permission of the Panel (other than where such lapse or withdrawal is as a result of the exercise of Takeda’s right to effect a Switch);
(G) | on the Effective Date. |
14.2 | Termination of this Agreement shall be without prejudice to the rights of any of the parties which have arisen at or prior to termination. For the avoidance of doubt, if this Agreement is terminated pursuant to Clause 14.1, Takeda will remain obliged to pay the Break Fee to the extent that it had become payable at or prior to any such termination (subject to the provisions of this Agreement then in force). |
14.3 | The whole of this Clause 14, Clause 8 and Schedule 1 (but only in circumstances where this Agreement is terminated on or after the Effective Date), and Clauses 15 to 28 (inclusive), shall survive termination of this Agreement. |
15. | Representations and warranties |
15.1 | Each party warrants to the other on the date of this Agreement that: |
(A) | it has the requisite power and authority to enter into and perform its obligations under this Agreement; |
(B) | this Agreement constitutes its binding obligations in accordance with its terms; and |
(C) | the execution and delivery of, and performance of its obligations under, this Agreement will not: |
(i) | result in any breach of any provision of its constitutional documents; |
(ii) | result in a breach of, or constitute a default under, any instrument to which it is a party or by which it is bound; or |
(iii) | result in a breach of any order, judgment, or decree of any court or governmental agency to which it is a party or by which it is bound. |
15.2 | Takeda represents and warrants to Shire that: |
(A) | no shareholder resolution requiring (i) a quorum of more than one third of the total voting rights attributable to the issued share capital of Takeda or (ii) a majority of more than two thirds of the Takeda Shares voted is required to be obtained by Takeda in order to implement the Acquisition; and |
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(B) | Takeda expects to maintain an investment grade credit rating up to and after the Effective Date and has reasonable grounds for such expectation. |
15.3 | No party shall have any claim against any other party pursuant to Clauses 15.1 to Clause 15.2 (inclusive) for misrepresentation or breach of warranty after the Effective Date (without prejudice to any liability for fraudulent misrepresentation or fraudulent misstatement). |
16. | Notices |
16.1 | A notice under this Agreement shall only be effective if it is in writing. |
16.2 | Notices under this Agreement shall be sent to a party by hand delivery or reputable next day international courier or by facsimile or email at its physical address, facsimile number or email address respectively, and shall be marked for the attention of the individual(s) set out below: |
(A) | Takeda: |
Attention: | Yoshihiro Nakagawa, Global General Counsel |
Physical address: |
1-1 Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan
|
Fax number: | +81 6 6204 2055 |
Email address: | yoshihiro.nakagawa@takeda.com |
With a copy to: | |
Attention: | Matthew Middleditch and James Inglis, Linklaters LLP |
Physical address: | One Silk Street, London EC2Y 8HQ |
Email address: |
matthew.middleditch@linklaters.com james.inglis@linklaters.com |
(B) | Shire: |
Attention: | Bill Mordan, General Counsel and Company Secretary |
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Physical address: | Block 2 & 3 Miesian Plaza, 50-58 Baggot Street Lower, Dublin 2, Ireland |
Fax number: | +353 (0) 1 429 7701 |
Email address: | wrmordan@shire.com |
With a copy to: | |
Attention: | Martin Hattrell and Christian Boney, Slaughter and May |
Physical address: | One Bunhill Row, London, EC1Y 8YY |
Email address: |
matrin.hattrell@slaughterandmay.com christian.boney@slaughterandmay.com |
16.3 | A party may change its notice details on giving notice to the other party of the change in accordance with Clauses 16.1 and 16.2. That notice shall only be effective on the date falling one Business Day after the notification has been given or such later date as may be specified in the notice. |
16.4 | Subject to Clause 16.5, any notice given under this Agreement shall, in the absence of earlier receipt, be deemed to have been duly given: |
(A) | if delivered by hand, on delivery; |
(B) | if sent by reputable next day international courier, on signature of a delivery receipt; |
(C) | if sent by facsimile, when the sender’s facsimile system generates a message confirming successful transmission of the notice; or |
(D) | if sent by email, when sent. |
16.5 | Any notice given under this Agreement outside the period between 9:00 a.m. and 5:00 p.m. (in the place to which that notice is addressed) on a Business Day (“Working Hours”) shall be deemed not to have been given until the start of the next period of Working Hours. |
16.6 | Each party shall, where it sends a notice by facsimile or email to another party, within two Business Days send a hard copy of the relevant notice via hand delivery or reputable next day international courier to the physical address of that other party. |
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16.7 | The provisions of this Clause 16 shall not apply in relation to the service of any claim form, application notice, order, judgment or other document relating to any proceedings, suit or action arising out of or in connection with this Agreement, whether contractual or non-contractual. |
17. | Remedies and waivers |
17.1 | No delay or omission by any party to this Agreement in exercising any right, power or remedy provided by law or under this Agreement shall: |
(A) | affect that right, power or remedy; or |
(B) | operate as a waiver of it. |
17.2 | The single or partial exercise of any right, power or remedy provided by Law or under this Agreement shall not preclude any other or further exercise of it or the exercise of any other right, power or remedy. |
17.3 | The rights, powers and remedies provided in this Agreement are cumulative and not exclusive of any rights, powers and remedies provided by Law. |
17.4 | Without prejudice to any other rights and remedies which any party may have, each party acknowledges and agrees that damages alone may not be an adequate remedy for any breach by any party of the provisions of this Agreement and any party shall be entitled to seek the remedies of injunction, specific performance and other equitable remedies, for any threatened or actual breach of any such provision of this Agreement by any party and no proof or special damages shall be necessary for the enforcement by any party of the rights under this Agreement. |
18. | Variation |
No variation of this Agreement shall be valid unless it is in writing (which, for this purpose, does not include email) and signed by or on behalf of each of the parties.
19. | Invalidity |
If at any time any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, that shall not affect or impair:
(A) | the legality, validity or enforceability in that jurisdiction of any other provision of this Agreement; or |
(B) | the legality, validity or enforceability under the law of any other jurisdiction of that or any other provision of this Agreement, |
and, if such provision would be valid and enforceable if deleted in whole or in part or reduced in application, such provision shall apply with such deletion or medication as may be necessary to make it valid and enforceable.
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20. | Entire agreement |
20.1 | Save for the non-disclosure agreement between Takeda and Shire dated 22 April 2018, the clean team confidentiality agreement between Takeda and Shire dated 30 April 2018 and the confidentiality and joint defense agreement dated 30 April 2018 (each of which remains in force as at the date of this Agreement), this Agreement constitutes the whole and only agreement between the parties relating to the Acquisition and supersedes any previous agreement whether written or oral between the parties in relation to the Acquisition. |
20.2 | Except in the case of fraud, each party acknowledges that it is entering into this Agreement in reliance upon only this Agreement and that it is not relying upon any pre-contractual statement that is not set out in this Agreement. |
20.3 | No party shall have any right of action against the other parties arising out of or in connection with any pre-contractual statement except to the extent that it is repeated in this Agreement or in the case of fraud. |
20.4 | For the purposes of this Clause 20, “pre-contractual statement” means any draft, agreement, undertaking, representation, warranty, promise, assurance or arrangement of any nature whatsoever, whether or not in writing, relating to the subject matter of this Agreement, made or given by any person at any time before the date of this Agreement. |
21. | Language |
Each notice or other communication under or in connection with this Agreement shall be in English.
22. | Contracts (Rights of Third Parties) Act 1999 |
22.1 | Save as set out in Clause 12.3, the parties do not intend that any term of this Agreement should be enforceable, by virtue of the Contracts (Rights of Third Parties) Act 1999, by any person who is not a party to this Agreement. |
22.2 | Notwithstanding Clause 12.3, the rights of the parties to terminate, rescind or agree any variation, waiver or settlement under this Agreement are not subject to the consent of any other person. |
23. | Assignment |
No party shall be entitled to assign (whether absolutely or by way of security and whether in whole or in part), transfer, mortgage, charge, declare itself a trustee for a third party of, or otherwise dispose of (in any manner whatsoever) the benefit of this Agreement (or any part of it) or sub-contract in any manner whatsoever its performance under this Agreement without the prior written consent of the other parties.
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24. | Costs and expenses |
Each party shall pay its own costs and expenses in relation to the negotiation, preparation, execution and carrying into effect of this Agreement and any matter contemplated by it (including the costs of preparation and/or submission of any filings and/or notifications).
25. | Further assurance |
Each party shall, at its own cost, use reasonable endeavours to do and execute and perform all such further deeds, documents, assurances, acts and things as may reasonably be required to give effect to this Agreement, and procure the doing of all such acts by any relevant third party.
26. | Counterparts |
26.1 | This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart. |
26.2 | Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute but one and the same instrument. |
26.3 | Delivery of an executed counterpart signature page of this Agreement by email (pdf) of facsimile shall be as effective as delivery of a manually executed counterpart of this Agreement. In relation to each counterpart, upon confirmation by or on behalf of the signatory that the signatory authorises the attachment of such counterpart signature page on the final text of this Agreement, such counterpart signature page shall take effect with such final text as a complete authorised counterpart. |
27. | Agent for service of process |
27.1 | Takeda hereby appoints Hackwood Secretaries Limited of One Silk Street, London EC2Y 8HQ to be its agent for service of process in England and Wales in connection with any claim form, application notice, order, judgment or other document relating to any proceedings, suit or action arising out of or in connection with this Agreement, whether contractual or non-contractual. |
27.2 | Shire hereby appoints Shire Biopharmaceuticals Holdings of 1 Kingdom Street, London, W2 6BD to be its agent for service of process in England and Wales in connection with any claim form, application notice, order, judgment or other document relating to any proceedings, suit or action arising out of or in connection with this Agreement, whether contractual or non-contractual. |
28. | Governing law and jurisdiction |
28.1 | This Agreement is to be governed by and construed in accordance with English law. Any matter, claim or dispute arising out of or in connection with this |
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Agreement, whether contractual or non-contractual, is to be governed by and determined in accordance with English law, provided that:
(A) | matters related to the exercise of, and compliance by the Shire Directors with, their fiduciary duties to Shire and its shareholders shall be construed in accordance with Jersey law; and |
(B) | matters related to the exercise of, and compliance by the Takeda Directors with, their fiduciary duties to Takeda and its shareholders shall be construed in accordance with Japanese law. |
28.2 | The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales in respect of any matter, claim or dispute arising out of or in connection with this Agreement, whether contractual or non-contractual. |
IN WITNESS WHEREOF the parties have executed this Agreement on the date first set out above:
EXECUTED BY | ) | ||
) | /s/ Susan Kilsby | ||
acting for and on behalf of Shire plc
|
) ) |
Name: Susan Kilsby
| |
EXECUTED BY | ) | ||
) | /s/ Christophe Weber | ||
acting for and on behalf of Takeda Pharmaceutical Company Limited
|
) ) |
Name: Christophe Weber
Title: President & CEO
| |
Schedule 1
Employee-related matters
General
1. | Takeda and Shire acknowledge and agree to the provisions set forth in this Schedule 1 and that the terms of this Schedule 1 will, where appropriate, apply to the Shire Long Term Incentive Plan 2015 (the “LTIP”); the Shire Global Employee Stock Purchase Plan (the “GESPP”); the Shire Sharesave Scheme 2008 and the Shire UK Sharesave Plan 2015 (together, the “UK Sharesave”); the Shire Irish Employee Stock Purchase Plan 2008 and the Shire Irish Sharesave Plan 2015 (together, the “Irish Sharesave”); the Shire Deferred Bonus Plan 2015 (a sub-plan of the LTIP) (the “DBP”); the Shire Portfolio Share Plan (the “PSP”); the options and restricted stock units over ADSs and Shire Shares that were originally granted over shares in Baxalta Inc and are governed by the rules of the Baxalta Incorporated 2015 Incentive Plan and the Governing Terms of the Substitute Awards (the “Baxalta Options” and “Baxalta RSUs”), together the “Shire Share Plans”, as detailed below; and all other employee incentive arrangements, compensation and benefits matters relating to the treatment of Shire employees in connection with the Acquisition as described in this Schedule. For the avoidance of doubt, the provisions of this Schedule 1 will, where appropriate, apply both in respect of currently subsisting options, Stock Appreciation Rights (“SARs”) and/or awards, and any options, SARs and/or awards granted following the date of this Agreement. |
Shire confirms, based on its records in respect of such awards, options and SARs as at 27 April 2018, that as at 27 April 2018, inclusive of dividend equivalents (calculated as at 27 April 2018) (and, for the avoidance of doubt, except as otherwise indicated in paragraph (C) below, the numbers below do not take into account any method of net settlement in respect of any award, option or SAR, nor do they take into account whether a SAR or option is underwater):
(A) | There are SARs over 5,514,370 ADSs; and over 6,857,487 Shire Shares, in each case under the LTIP. In respect of these, SARs over 1,490,275 ADSs; and 1,541,709 Shire Shares have vested (but are unexercised) as at 27 April 2018. |
(B) | There are restricted stock units and performance stock units over 1,283,295 ADSs; and over 1,712,774 Shire Shares, in each case under the LTIP. In respect of these, awards over 3,983 ADSs and 6,867 Shire Shares have vested (but the relevant Shire Shares not released) as at 27 April 2018. |
(C) | Based on a reasonable estimate of the exercise price as at an estimated exercise date, there are options over 188,728 ADSs; and 137,046 Shire Shares, in each case under the GESPP. No options have vested as at 27 April 2018. |
(D) | There are options over 124,695 Shire Shares under the UK Sharesave and the Irish Sharesave. In respect of these, options over 9,471 Shire Shares have vested (but are unexercised) as at 27 April 2018. |
(E) | There are awards over 25,305 ADSs; and 6,867 Shire Shares, in each case under the DBP. Awards over 1,425 ADSs have vested (but the relevant ADSs not released) as at 27 April 2018. |
(F) | There are SARs over 436,352 ADSs; and 361,701 Shire Shares, in each case under the PSP. All SARs have vested (but are unexercised) as at 27 April 2018. |
(G) | There are Baxalta Options over 4,219,245 ADSs; and Baxalta RSUs over 105,218 ADSs. Of these, Baxalta Options over 4,200,054 ADSs have vested (but are unexercised) as at 27 April 2018. |
2. | Subject to applicable confidentiality, legal and regulatory requirements, Shire agrees to co-operate with and provide such details to Takeda in relation to the Shire Share Plans and/or Shire employee incentive arrangements as Takeda may reasonably request in order to plan and make appropriate proposals to the participants in the Shire Share Plans or Shire employee incentive arrangements, as provided for in Rule 15 of the Code, including the proposals as set out in paragraphs 3, 4, 8, 9, 10, 12, 14, 15, 17, 18, 19, 21, 23 and 24 below (the “Proposals”). The parties agree that such Proposals will be sent to participants as soon as practicable after the Scheme Document (or Offer Document, as applicable) is published. If requested by Shire, the Proposals (or some of them) will take the form of a joint proposal to participants from Shire and Takeda in which case the terms of such communications will be agreed with Shire before they are despatched (such agreement not to be unreasonably withheld). Shire agrees it will despatch the proposals to the relevant participants on Takeda’s behalf. |
3. | Takeda and Shire agree that Shire shall propose an amendment to the Shire articles of association by the adoption and inclusion of a new article (to be set out in the notice of the Shire General Meeting) under which, with effect from the Scheme becoming effective, Shire Shares which are issued or transferred after the Effective Date in respect of the Scheme as a result of the vesting and/or exercise of options/SARs or vesting of awards under the Shire Share Plans or Shire employee incentive arrangements will, to the extent not otherwise acquired under the Scheme, be transferred to Takeda for the same consideration as is payable to shareholders under the Scheme (or such other consideration as may be agreed between Takeda and Shire and disclosed in the Scheme Document). Additionally, Shire agrees that it will not, between the Scheme Record Time and the Effective Date, issue any Shire Shares to satisfy the exercise of options/SARs or vesting of awards under the Shire Share Plans or Shire employee incentive arrangements. |
4. | Subject to paragraph 3, Takeda agrees that participants in the Shire Share Plans and Shire employee incentive arrangements shall be able, in accordance with and to the extent permitted under the provisions of the relevant Shire Share Plans/Shire employee incentive arrangements, and pursuant to the provisions of this Schedule 1, to exercise their options or SARs or realise their vested awards and, where applicable, receive the same consideration in respect of any Shire Shares that they acquire or receive under such options, SARs or awards as is offered to holders of Shire Shares under the Acquisition. |
5. | Shire may arrange the sale of a sufficient number of Shire Shares/ADSs that are acquired by participants on exercise or vesting of outstanding options, SARs and awards under the Shire Share Plans/Shire employee incentive arrangements to enable |
the applicable exercise price, income tax and employee’s social security contributions which arise and are payable at or around the point of exercise or vesting to be paid by Shire (or any member of its group) to the extent not deducted from the proceeds payable to the participants under the Acquisition.
6. | Takeda agrees that Shire may amend the rules of any of the Shire Share Plans in relation to the time at which options or SARs may be exercised or awards vest if, in the opinion of the Shire Board or the Remuneration Committee of Shire (the “Committee”), such amendments are necessary or desirable to implement the Acquisition, facilitate the administration of the relevant plan or to obtain or maintain favourable tax treatment for participants in such plans or any member of the Shire Group, save that no amendment to obtain favourable tax treatment for participants which may result in a material increased cost for the Takeda Group may be made without Takeda’s prior agreement. |
7. | The terms permitted by this Schedule 1 may be varied by Shire to the extent necessary to comply with any applicable tax or regulatory requirements provided that Shire will consult with Takeda prior to making any such variation (but shall not be obliged to act in accordance with anything discussed in such consultation or in accordance with any representations made by Takeda). |
PSP
8. | Takeda acknowledges that awards granted under the PSP that take the form of SARs will (to the extent not already exercised) remain exercisable for 12 months following the Sanction Date (or the Unconditional Date, as applicable) unless they lapse earlier in accordance with their terms. |
LTIP
9. | Takeda acknowledges that options, SARs and awards granted under the LTIP which would not otherwise become exercisable or vest prior to the Sanction Date (or the Unconditional Date, as applicable) will (in consequence of the Acquisition and in accordance with the rules of the LTIP), vest and, in the case of options/SARs, become exercisable on the Sanction Date (or the Unconditional Date, as applicable) in respect of such number of Shire Shares (or an amount of cash in lieu of such Shire Shares/ADSs as the Committee may determine in accordance with the rules of the LTIP) as may be determined by the Committee in accordance with the rules of the LTIP. Shire confirms the following has been agreed in principle by the Committee and Shire expects that these principles will be applied in respect of all LTIP awards in connection with the Acquisition: |
(A) | any applicable performance conditions will be assessed on, or shortly prior to, the Sanction Date in accordance with the rules of the LTIP; and |
(B) | no discretion will be exercised to vary the maximum potential vesting levels as set out in rules 12.2.2(i)-(iii) of the rules of the LTIP. |
10. | Takeda acknowledges that all options and SARs will (regardless of whether they vest or vested before or on the Sanction Date (or the Unconditional Date, as applicable), to the extent not already exercised) remain exercisable for 60 days following the Sanction Date (or the Unconditional Date, as applicable) unless they lapse earlier in accordance with their terms. |
11. | Takeda acknowledges that the Committee may, in accordance with Rule 3.4 of the LTIP, change any applicable performance condition prior to the Sanction Date (or the Unconditional Date, as applicable), if the Committee considers it appropriate to do so provided that (i) if the Committee does change any applicable performance condition, it will do so by reference to rational criteria and (ii) it will consult with Takeda prior to making any such change. |
12. | Takeda acknowledges that Shire may make a cash payment prior to the Sanction Date (or the Unconditional Date, as applicable), to certain participants whose options/SARs have an exercise price that is equal to or higher than the expected market value of a Shire Share on the Sanction Date (or the Unconditional Date, as applicable) to compensate them for loss of value in respect of their subsisting options/SARs where such loss occurs or is reasonably likely to occur as a consequence of the Acquisition, provided that: |
(A) | Shire and Takeda will consult in respect of the method of calculation used to determine the amount payable before such calculation is made; and |
(B) | the aggregate amount of the payments made shall not exceed US$15 million. |
13. | Takeda acknowledges that Shire may decide to grant options, SARs and/or awards under the LTIP prior to the Sanction Date (or the Unconditional Date, as applicable), in accordance with its historic practice (save that Shire may grant more conditional awards (known as restricted stock units) and less SARs than Shire has done in previous historic practice (and they may, for the avoidance of doubt, grant only conditional awards and no SARs) provided that the number of Shire Shares/ADSs in relation to which the conditional awards are granted is calculated by reference to an expected value that is no higher than the expected value usually attributable to the current proportions of SARs and conditional awards, calculated in accordance with historic practice). |
14. | Takeda agrees that it shall, following and subject to completion of the Acquisition, grant cash awards equal to the market value of the Shire Shares/ADSs under option, SAR or award which lapsed as a result of the Acquisition due to time prorating (after the application of performance conditions) (“Transition Awards”) on the following terms: |
(A) | the vesting schedule applicable to the Transition Awards will mirror the vesting schedule applicable to the original options, SARs or awards (as applicable) granted under the LTIP (and for the avoidance of doubt, the Transition Awards will vest in such proportions in respect of the amount subject to the Transition Award on such dates as would have applied had the original options, SARs or awards (as applicable) continued in full), as though the Acquisition had not occurred; |
(B) | a participant’s Transition Awards will vest in full upon the participant’s (a) termination of employment by Shire (or the participant’s relevant employer within the Shire Group or the Takeda Group, as appropriate) for any reason |
other than for Cause, (b) termination of employment by reason of death or disability; or (c) termination of employment by the participant for Good Reason;
(C) | a participant’s Transition Awards will vest pro-rata on termination of employment or resignation for any reason other than for Cause if such termination or resignation occurs on or after the date falling 12 months from the Effective Date; and |
(D) | such other terms as Takeda may, in consultation with the Committee, consider are equivalent to the terms of the options, SARs or awards under the LTIP to which the Transition Awards relate save that the Transition Award shall: |
(i) | not be subject to further performance conditions as the Transition Awards will only be granted to the extent that the performance conditions of the LTIP awards are determined to be satisfied; and |
(ii) | be deemed to be a benefit that is protected under any arrangements referred to in paragraphs 31 and 32 below but in respect of the Transition Award only, for the period ending with the date on which the Transition Award vests. |
DBP
15. | Takeda acknowledges that awards granted under the DBP which would not otherwise vest prior to the Sanction Date (or the Unconditional Date, as applicable) will (in consequence of the Acquisition and in accordance with the rules of the DBP) vest in full on the Sanction Date (or the Unconditional Date, as applicable) and may (subject to paragraph 25 below) be settled by issue or transfer of Shire Shares/ADSs or payment of a cash equivalent, as the Committee may determine in accordance with the rules of the DBP. |
16. | Takeda acknowledges that Shire may decide to grant awards under the DBP prior to the Sanction Date (or the Unconditional Date, as applicable), in accordance with its historic practice. |
UK Sharesave and Irish Sharesave
17. | Takeda agrees that if the Acquisition is effected by way of the Scheme, then subject to any legally required tax approvals, the Acquisition will be treated as a general offer for the purposes of vesting of any UK Sharesave and/or Irish Sharesave options. |
18. | Takeda acknowledges that under the rules of the UK Sharesave and Irish Sharesave, all outstanding options granted thereunder will be exercisable for a period of six months on and from the Effective Date (or the Unconditional Date, as applicable) unless they lapse earlier in accordance with their terms. |
19. | Takeda agrees that it will, following the Effective Date (or the Unconditional Date, as applicable) and subject to completion of the Acquisition, make (or procure that Shire will make), on the normal payroll date for the month following the date of exercise for each participant, to the holders of options under UK Sharesave and/or Irish Sharesave granted prior to the date of this Agreement who exercise those options on or after the Effective Date (or the Unconditional Date, as applicable) a one-off cash payment of an |
amount equal to the amount of income tax that each participant may incur on exercise as a result of the Scheme. For the avoidance of doubt, such cash payment would be grossed up to reflect tax and social security contributions due on that payment (at the individual’s marginal rate of tax). That gross payment would be subject to deductions for income tax and employee’s social security contributions.
20. | Takeda acknowledges that Shire may decide to grant options under either or both of the UK Sharesave and/or the Irish Sharesave prior to the Sanction Date (or the Unconditional Date, as applicable), in accordance with its historic practice. |
GESPP
21. | Takeda acknowledges that the Committee intends to determine that all outstanding options under the GESPP will be exercised immediately prior to, and conditional on, the sanctioning of the Scheme and that the Committee may determine whether the options are settled in Shire Shares/ADSs or cash, in accordance with the rules of the GESPP. |
22. | Takeda acknowledges that Shire may decide to grant options under the GESPP prior to the Sanction Date (or the Unconditional Date, as applicable), in accordance with its historic practice. |
Baxalta Options and Baxalta RSUs
23. | Shire confirms that it currently expects that, in connection with the Acquisition, the Committee will, in accordance with the terms of the Baxalta Options and Baxalta RSUs determine that the Acquisition is a merger or similar corporate transaction and consequently that all Baxalta Options and Baxalta RSUs will be cancelled on the Sanction Date (or the Unconditional Date, as applicable) in return for a cash payment of the value of the relevant Baxalta Options or Baxalta RSUs as determined as though the relevant Baxalta Option or Baxalta RSU had vested in full (and, in respect of the Baxalta Options, been immediately exercised) at the time of payment, in accordance with the terms of the Baxalta Options and Baxalta RSUs, such that no Baxalta Options or Baxalta RSUs will remain outstanding after the Sanction Date (or the Unconditional Date, as applicable). |
Excise Tax
24. | To the extent any Shire “disqualified individual" (as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “U.S. Code”)) would become subject to an excise tax under Section 4999 of the U.S. Code on the value of any “parachute payment” (as defined in Section 280G of the U.S. Code) in connection with the Acquisition (whether as a result of payments made on or following the Sanction Date, or Effective Date (or Unconditional Date, as applicable) or in connection with other events associated with the relevant date), Takeda and Shire agree that they shall work together between the date of this Agreement and the Effective Date to, where possible, eliminate and, otherwise, reduce the amount of any such excise tax and the related deduction loss, as permitted by law. For the avoidance of doubt, such measures may involve (without limitation) modifying the vesting or payment timing of any deemed parachute payments, incentives and/or awards to be received as provided in this Agreement in connection with the Acquisition or events associated with it, entering into, modifying and appropriately documenting any restrictive covenant agreements and post-employment consulting agreements agreed with employees in connection with the integration planning relating to the proposed Acquisition and engaging an independent firm to |
determine the value of such non-competition and/or consulting agreements.
Employee Trust
25. | The Shire Employee Benefit Trust (the “Trust”) holds as at 30 April 2018 173,003 unallocated ADSs and 328,819 unallocated Shire Shares. Shire agrees to recommend to the trustee of the Trust, to the extent the trustee of the Trust is permitted and without (i) requiring or requesting such trustee to satisfy any options/SARs/awards in any jurisdiction in which it is not permitted by any law or regulation to do so or in which there may be any regulatory, reporting or taxation issues if it did so; or (ii) prejudicing the interests of the Trust or any beneficiary or subjecting it to additional reporting requirements, regulation or taxation, that the trustee of the Trust will, in priority to the issue (including out of treasury) of Shire Shares, use the Shire Shares currently comprised in the Trust to satisfy any vesting and/or exercise of options, SARs and/or awards under any of the Shire Share Plans and/or Shire employee incentive arrangements which occurs following the date of this Agreement. |
Retention Arrangements
26. | The parties agree that Shire may implement employee retention arrangements on the terms provided herein for the CEO and the CFO on the following terms: |
(A) | in respect of the CEO, such retention arrangements shall comprise an amount equal to: |
2 x (ABS + ATB)
Where:
ABS = the CEO’s base salary payable for the 2018 financial year; and
ATB = the CEO’s target bonus for the 2018 financial year (i.e. at a level of performance which gives a bonus of 90% of salary); and
(B) | in respect of the CFO, such retention arrangements shall comprise an amount equal to: |
2 x (BBS + BTB)
Where:
BBS = the CFO’s base salary payable for the 2018 financial year; and
BTB = the CFO’s target bonus for the 2018 financial year (i.e. at a level of performance which gives a bonus of 80% of salary),
and, in each case, the amount comprised in such arrangement shall be payable (less any legally required deductions), subject to completion of the Acquisition, on the earlier of the date falling six months from the Effective Date (or the Unconditional Date, as applicable) and 30 June 2019 (the “Relevant Date”) provided the relevant employee is employed with Shire on the Relevant Date save that if the relevant employee’s employment ceases for any reason set out in paragraph 28(i)-(iii) on or prior to the
Relevant Date, the arrangement shall be payable in full (less any legally required deductions) within 30 days of the date of cessation. It is Shire’s intention that neither the CEO nor the CFO will receive any further payment in respect of any cessation of employment that occurs after the Effective Date (or the Unconditional Date, as applicable). If the CEO or CFO’s executive employment agreement is terminated on or before the Relevant Date, the retention payment described above shall be reduced by the amount paid to the employee under his executive employment agreement (on the terms in force upon termination of his employment) such termination payment being conditional upon signature of a release signed by the employee upon such termination, save that Shire shall cover the reasonable costs of the CEO continuing to participate in its health and dental benefit plans for the period of 12 months from the date of any termination of the CEO’s employment and the amount of such costs shall not be deducted from the retention payment.
27. | The parties agree that Shire may implement employee retention arrangements on the terms provided herein for approximately 300 key Shire employees (including members of the Shire Executive Committee) identified by Shire after consultation with Takeda (the "Key Shire Employees") which shall comprise an amount equal to: |
up to 1.5 x (CBS + CTB)
Where:
CBS = the Key Shire Employee’s base salary payable for the 2018 financial year; and
CTB = the Key Shire Employee’s bonus for the 2018 financial year at a level of performance which gives “at target” performance,
(the “Key Retention Award Arrangements"). The Key Retention Award Arrangements shall prescribe that, to be eligible to receive an award under the Key Retention Award Arrangements, the relevant Key Shire Employee must, subject to the terms set out in paragraph 28 below remain in the active employment of Shire (or an appropriate alternative employer within the Takeda Group) until, regardless of whether the Acquisition has completed, the earlier of 1 December 2019 or the date falling 12 months from the Effective Date (or the Unconditional Date, as applicable) (the "Retention Date"). Where due, such awards will, subject to paragraph 28 below, be payable (less any legally required deductions) within 30 days after the Retention Date.
28. | In circumstances where the employment of a Key Shire Employee: |
(i) | is terminated by Shire (or his/her relevant employer within the Shire Group or the Takeda Group, as appropriate) for any reason other than for Cause; |
(ii) | terminates by reason of death or disability; or |
(iii) | is terminated by the Key Shire Employee for a Good Reason, |
(each a "Permitted Acceleration Event"), in any which case prior to the Retention Date, then the applicable award shall instead be payable in full within 30 days after the
Permitted Acceleration Event (or as of such date established in compliance with applicable tax rules). In all other circumstances where the employment of a relevant Key Shire Employee terminates prior to the Retention Date, the relevant Key Shire Employee shall immediately forfeit the right to receive any payment under or in respect of the Key Retention Award Arrangements.
29. | Shire agrees to consult with Takeda in connection with the content of any submission made to the Panel in connection with the arrangements set out in paragraphs 26 to 28. |
30. | Takeda and Shire agree that Takeda shall, in due course, consider implementing employee retention arrangements in respect of such other employees of the Shire Group as Takeda shall consider appropriate and necessary, to take effect after the Effective Date (or the Unconditional Date, as applicable). |
Maintenance of Compensation and Benefits
31. | Takeda agrees that, it shall, or shall cause the relevant employing entity in the Takeda Group or Shire Group to, at a minimum, for the 24-month period immediately following the Effective Date (or the Unconditional Date, as applicable): |
(A) | in respect of each employee of the Shire Group (as identified immediately prior to the Effective Date (or the Unconditional Date, as applicable)) who remains in employment within the Shire Group or Takeda Group, maintain at least the same base salary or wage rate, cash incentive compensation opportunities and equity incentive compensation opportunity (or a cash incentive with the same grant date fair value) as were provided to each such employee immediately prior to the Effective Date (or the Unconditional Date, as applicable); and |
(B) | (subject to the below) provide a benefits package which is at least substantially comparable in the aggregate to the existing benefits available to such employee of Shire immediately prior to the Effective Date (or the Unconditional Date, as applicable). |
32. | For the avoidance of doubt, for the purposes of (B) above, the terms of any separation or severance pay plan or arrangement which may apply in respect of any such employee shall not be considered to be a "benefit" for these purposes. The change-in-control, separation and severance protections and benefits provided to each Shire employee under any plans or arrangements in place as of the date hereof shall be, with any amendments to any contract necessary to ensure such protected period is always at least 24 months, maintained in place and honoured until the end of the 24-month period following the Effective Date or such longer period provided by the terms of any such plan or arrangement. Further, the terms of paragraph 31 are not a commitment to or promise of continued employment for any employee from the Effective Date (or the Unconditional Date, as applicable). |
Bonus
33. | Takeda acknowledges that, in respect of bonuses granted in respect of the 2018 financial year, if the Effective Date (or the Unconditional Date, as applicable) occurs prior to the normal payment date of such bonus Shire may: |
(A) | determine that the relevant bonus will vest in full, subject to any applicable performance parameters, on or prior to the Effective Date (or the Unconditional Date, as applicable); and |
(B) | make such amendments to performance parameters applicable to such award or awards as Shire reasonably considers are appropriate where such parameters are no longer appropriate in the context of the Acquisition, in accordance with the rules of the Shire Annual Incentive Plan. |
34. | Takeda acknowledges that Shire may decide to grant bonuses prior to the Sanction Date (or the Unconditional Date, as applicable), in accordance with its historic practice. |
35. | Takeda agrees that, if the Effective Date (or the Unconditional Date, as applicable) occurs prior to 31 March 2019, it will grant awards under the Takeda bonus scheme to all Shire employees who would normally be entitled to participate in the Shire Annual Incentive Plan, subject to performance conditions, which shall be in respect of both the Takeda 2019 financial year and the period between the end of the Shire 2018 financial year and the 2019 Takeda financial year, such bonus opportunities being at least as favourable to the relevant employees as those provided by Shire for the bonus period prior to the Effective Date (or the Unconditional Date, as applicable), provided that Shire has not granted an award under the Shire Annual Incentive Plan (or any similar plan) for the same period. |
Repatriation
36. | Takeda acknowledges that the CEO of Shire may be permitted to work in Zug, Switzerland by Shire prior to the Sanction Date (or the Unconditional Date, as applicable) if the CEO’s visa may expire before or by that date, and confirms that it will procure that, following the Effective Date (or the Unconditional Date, as applicable), the CEO of Shire will be (or will continue to be) permitted to work in Zug, Switzerland. Takeda further confirms that it will procure that Shire or another member of the Shire Group or a member of the Takeda Group shall cover the reasonable costs associated with such repatriation up to a maximum cost of US$ 500,000 inclusive of such grossed up amount that reflects tax and social security contributions due on that payment (at the CEO’s marginal rate of tax). |
Definitions
37. | "Cause" shall have the meaning prescribed for such term (or such similar term) in any contract of employment applicable to an employee provided such contract of employment was entered into before the date of this Agreement and shall mean for any other employee: (A) material breach by the employee of the terms and conditions of the employee’s employment, including but not limited to (i) material breach by the employee of Shire's or any relevant member of the Takeda Group’s (as applicable) code of business conduct; (ii) material breach by the employee of the employee’s employment contract (if any); (iii) commission by the employee of an act of fraud, embezzlement or theft in connection with the employee's duties or in the course of the employee's employment; (iv) wrongful disclosure by the employee of secret processes or confidential information of the Shire Group or the Takeda Group; or (v) failure by the employee to substantially perform the duties of the employee’s employment (other than any such failure resulting from the employee’s disability) provided that any such determination in respect of whether such a failure has occurred must be made on a |
reasonable basis; or (B) to the extent permitted by applicable law, engagement by the employee, directly or indirectly, for the benefit of the employee or others, in any outside activity, employment or business which is competitive with the Shire Group and/or the Takeda Group.
38. | "Good Reason” shall have the meaning prescribed for such term (or such similar term) in any contract of employment applicable to an employee provided such contract of employment was entered into before the date of this Agreement and shall mean for any other employee: (i) any material reduction in an employee’s base salary or total variable compensation opportunity, (ii) a relocation in the principal place of an employee’s employment that increases his or her daily commute by more than 50 miles from that immediately prior to the Effective Date; or (iii) any material change in that employee’s role. |
Acknowledgements
39. | Takeda’s acknowledgements in paragraphs 8, 9, 10, 11, 12, 13, 15, 16, 18, 20, 21, 22, 33, 34, and 36 do not impose any contractual restrictions or obligations on Shire or the board of Shire Directors or any committee thereof. |
Schedule 2
Form of Announcement
EXHIBIT 99.1
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO TAKEDA SHARES EXCEPT ON THE BASIS OF INFORMATION IN THE TRANSACTION DOCUMENTS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
MAY 8, 2018
RECOMMENDED OFFER
for
SHIRE PLC
by
TAKEDA PHARMACEUTICAL COMPANY LIMITED
Summary
· | The boards of Takeda Pharmaceutical Company Limited (“Takeda”) and Shire plc (“Shire”) are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire (the “Acquisition”). |
· | Under the terms of the Acquisition, each Shire Shareholder will be entitled to receive: |
for each Shire Share | $30.33 in cash |
and either | |
0.839 New Takeda Shares | |
or | |
1.678 Takeda ADSs |
· | The Acquisition terms imply an equivalent value of: |
· | £48.17 per Shire Share based on the closing price of ¥4,535 per Takeda Share and the exchange rates of £:¥ of 1:147.61 and £:$ of 1:1.3546 as at the Latest Practicable Date; and |
· | £49.01 per Shire Share based on the closing price of ¥4,923 per Takeda Share and the exchange rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018 (being the day prior to the announcement that the Shire Board would, in principle, be willing to recommend the Consideration). |
· | The equivalent value of £49.01 per Shire Share values the entire issued and to be issued ordinary share capital of Shire at approximately £46 billion and represents an illustrative premium of approximately: |
1
· | 64.4 per cent. to the closing price of £29.81 per Shire Share on March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire); and |
· | 56.2 per cent. to the 30 trading day volume weighted average price of £31.37 per Shire Share for the 30 Shire trading days ending March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire). |
· | In addition, Shire Shareholders will be entitled to receive any dividends announced, declared or paid by Shire in the ordinary course prior to the Effective Date without any consequential reduction in the Consideration, subject to and on the terms set out in paragraph 18.1. |
· | Immediately following completion of the Acquisition, Shire Shareholders will own approximately 50 per cent. of the Combined Group. |
· | At completion of the Acquisition, the New Takeda Shares will be listed on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges. In addition, Takeda will apply for its ADSs (each representing 0.5 Takeda Shares) to be listed on the NYSE effective upon or shortly after the Effective Date. |
· | The Takeda Board believes the Acquisition will: |
· | create a global, values-based, R&D driven biopharmaceutical leader incorporated and headquartered in Japan, with an attractive geographic footprint and the scale to drive future development; |
· | strengthen Takeda’s core therapeutic areas, bringing together complementary positions in gastroenterology (GI) and neuroscience, and provide leading positions in rare diseases and plasma-derived therapies; |
· | create a highly complementary, robust, modality-diverse pipeline and a strengthened R&D engine focused on breakthrough innovation; and |
· | deliver compelling financial benefits for the shareholders of both Takeda and Shire, including significant accretion to underlying earnings per Takeda Share1, return on invested capital above Takeda’s cost of capital, and expect it to generate substantial cost synergies of at least $1.4 billion.2 |
· | Takeda has remained disciplined with respect to the terms of the Acquisition and intends to maintain its well-established dividend policy. |
· | The substantial cash flow generation expected to result from the Acquisition will enable the Combined Group to de-lever quickly following completion. Takeda intends to maintain its investment grade credit rating with a target net debt to EBITDA ratio of 2.0x or less in the medium term. |
· | Takeda will announce its results for the financial year ended March 31, 2018 on May 14, 2018. |
_____________________
1 | The statement that the Acquisition is underlying earnings accretive is not intended as a profit forecast and should not be construed as such, and is not subject to the requirements of Rule 28 of the Takeover Code. The statement should not be interpreted to mean that the earnings per share in any future fiscal period will necessarily match or be greater than those for the relevant preceding financial period. |
2 | This statement includes a quantified financial benefits statement which has been reported on for the purposes of the Takeover Code (see Appendix IV). |
2
· | Subject to customary governance and shareholder approval, Takeda has agreed that up to three Shire Directors will join the Takeda Board with effect from completion of the Acquisition. |
· | The Shire Directors, who have been so advised by Citi, Goldman Sachs and Morgan Stanley as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their financial advice to the Shire Directors, each of Citi, Goldman Sachs and Morgan Stanley has taken into account the commercial assessments of the Shire Directors. |
· | Accordingly, the Shire Directors intend to recommend unanimously that Shire Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Shire General Meeting, as the Shire Directors have irrevocably undertaken to do in respect of their own beneficial holdings of a total of 367,606 Shire Shares (including those represented by Shire ADSs), representing approximately 0.04 per cent. of the ordinary share capital of Shire in issue on the Latest Practicable Date. Further details of those irrevocable undertakings are set out in Appendix III to this Announcement. |
· | The Acquisition is also subject to the approval by Takeda Shareholders of certain resolutions at the Takeda Extraordinary General Meeting to approve the issue of the New Takeda Shares as consideration under the Acquisition. The Takeda Board3 has resolved unanimously to recommend that Takeda Shareholders vote in favour of the resolutions to be proposed at the Takeda Extraordinary General Meeting, as those Takeda Directors who hold Takeda Shares4 have irrevocably undertaken to do in respect of their entire beneficial holdings of, in aggregate, 113,696 Takeda Shares, representing approximately 0.01 per cent. of Takeda’s issued share capital on the Latest Practicable Date. Further details of those irrevocable undertakings are set out in Appendix III to this Announcement. |
· | It is proposed that the Acquisition will be effected by means of a scheme of arrangement of Shire under Article 125 of the Jersey Companies Law, further details of which are contained in the full text of this Announcement and which will be set out in the Scheme Document. |
· | The Acquisition is expected to become effective in the first half of 2019, subject to the satisfaction or (where applicable) waiver of the Conditions and certain further terms set out in Appendix I to this Announcement. A break fee will be payable by Takeda in certain circumstances, as set out in paragraph 11. |
· | The Scheme Document will include further details of the Scheme, together with notices of the Court Meeting and the Shire General Meeting and the expected timetable, and will specify the action to be taken by Shire Shareholders. It is expected that the Scheme Document will be despatched to Shire Shareholders in the fourth quarter of 2018. |
· | The Takeda Shareholder Documents will be sent to Takeda Shareholders at, or around, the same time as the Scheme Document is despatched to Shire Shareholders. |
· | A facility will be made available under which Shire Shareholders will be able to elect (subject to the terms and conditions of the facility) to receive the US Dollar cash portion of the |
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3 | There were two directors absent from the Takeda Board. Mr Jean-Luc Butel recused himself from the Takeda Board’s consideration and approval of the Acquisition as a result of his interest in Shire Shares (as described in paragraph 20 of this Announcement), pursuant to Article 369 of the Japanese Companies Act. Mr. James Kehoe recused himself from the Takeda Board’s consideration and approval of the Acquisition in light of his previously announced resignation from his position as Takeda’s Chief Financial Officer (effective March 31, 2018) and as a Takeda Director (to become effective on May 31, 2018). |
4 | Other than Mr. James Kehoe, who is expected to dispose of his Takeda Shares on or shortly following his resignation as a Takeda Director (to become effective on May 31, 2018). |
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Consideration in pounds Sterling (net of exchange rate fees) at the applicable market exchange rate on the latest reasonably practicable date for fixing such rate prior to the relevant payment date. Further details of this facility will be set out in the Scheme Document.
Commenting on the Acquisition, Christophe Weber, Chief Executive Officer of Takeda, said:
“Since its inception, Takeda has transformed into an agile, R&D-driven global pharmaceutical company that is well-positioned to deliver innovative and transformative care to patients around the world. Shire’s highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda. Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies. We are looking forward to the benefits this combination will bring to patients worldwide, the opportunities it will bring for our employees and the returns it will deliver for our shareholders.”
Commenting on the Acquisition, Susan Kilsby, Chairman of Shire, said:
“Over the last 30 years, Shire has become the global leader in treating rare diseases, delivering innovative products that transform patients’ lives. With this combination, Shire helps create an even stronger biopharmaceutical company, with a robust R&D pipeline and expanded global footprint. We are proud of what Shire has become and are grateful to all Shire employees for their contributions. We firmly believe that this combination recognizes the strong growth potential of our leading products and innovative pipeline and is in the best interests of our shareholders, our patients and the communities we serve.”
Commenting on the Acquisition, Dr. Flemming Ornskov, Chief Executive Officer of Shire, said:
“I would like to thank the entire Shire team for all that we have accomplished over the last 5 years to transform Shire into the leading rare disease biotech company and a tenacious champion for patients in need. I am confident that this relentless focus will enable us to continue delivering against our priorities throughout this process. With a truly innovative portfolio and pipeline, I believe that the combination of the two companies is in the best interests of shareholders and offers an opportunity to improve the lives of even more patients globally with rare and highly specialised conditions.”
Investor and Analyst Presentation
There will be two investor and analyst conference calls today, held as follows:
Investor and Analyst Presentation #1 - English only
Investors and analysts can dial into the conference call using the numbers below:
Time: | 4.15pm – 5pm JST / 8.15am – 9am BST / 3.15am – 4am EST |
International Dial-In Number: | +44 (0) 20 3003 2666 |
Japan Toll Free Number: | 006633132499 |
UK Toll Free Number: | 0808 109 0700 |
USA Toll Free Number: | 1 866 966 5335 |
Passcode: | 161017# |
A webcast (slides only, no audio) for the conference call will be available at the following link: https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/
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Investor and Analyst Presentation #2 - English and simultaneous Japanese translation
Investors and analysts can dial into the conference call using the numbers below:
Time: | 10pm – 11pm JST / 2pm – 3pm BST / 9am – 10am EST |
Japan Toll Free Number: | 0120 557 366 |
Passcode: | 78771074# |
International Dial-In Number: | +81 (0) 3 6629 1042 |
UK Toll Free Number: | 0800 026 1544 |
USA Toll Free Number: | 1 855 369 0433 |
Passcode: | 11350071# |
A webcast for the conference call (slides and audio, but without the ability to participate in the Q&A session) will be available at the following links:
· | https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/ (English) |
· | https://www.takeda.com/jp/investors/reports/quarterly-announcements/quarterly-announcements-2018/ (Japanese) |
A copy of the presentation will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, in due course on Takeda’s website at www.takeda.com/investors/offer-for-shire and on Shire’s website at www.shire.com. The contents of the websites referred to in this Announcement are not incorporated into and do not form part of this Announcement.
There will be a playback facility for both conference calls, however this will not include the Q&A sessions.
This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices). The Acquisition will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II to this Announcement contains the sources of information and bases of calculations of certain information contained in this Announcement. Appendix III to this Announcement contains details of the irrevocable undertakings received in relation to the Acquisition. Appendix IV contains details of and bases of calculation of the anticipated financial benefits of the Acquisition. Appendix V to this Announcement contains definitions of certain expressions used in this summary and in this Announcement.
For the purposes of Rule 28 of the Takeover Code, Quantified Financial Benefits Statements contained in this Announcement are the responsibility of Takeda and the Takeda Directors and not of Shire or the Shire Directors. Any statement of intention, belief or expectation for the Combined Group following the Effective Date is an intention, belief or expectation of the Takeda Directors and not of the Shire Directors. Appendix IV sets out the anticipated Quantified Financial Benefits Statements relating to cost savings and synergies arising out of the Acquisition and provides underlying information and bases of belief. Appendix IV also
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includes reports from Takeda’s reporting accountant, Deloitte LLP, and its financial advisers, Evercore, J.P. Morgan Cazenove and Nomura, in connection with anticipated Quantified Financial Benefits Statements, as required by Rule 28.1(a) of the Takeover Code, and provides underlying information and bases for the accountant’s and advisers’ respective reports. Each of Deloitte LLP, Evercore, J.P. Morgan Cazenove and Nomura has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.
Enquiries:
Takeda Elissa Johnsen (Media – outside of Japan) elissa.johnsen@takeda.com +1 224 554 3185
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Takeda Kazumi Kobayashi (Media – within Japan) Kazumi.kobayashi@takeda.com +81 3 3278 2095
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Takeda Takashi Okubo (Investor Relations) takeda.ir.contact@takeda.com +81 3 3278 2306
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Takeda Tsuyoshi Tada (Media – within Japan) tsuyoshi.tada@takeda.com +81 3 3278 2417
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Evercore (joint financial adviser to Takeda) (US) Will Hiltz John Honts +1 212 857 3100 (UK) Julian Oakley +44 207 653 6000
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J.P. Morgan Cazenove (joint financial adviser to Takeda) Michele Colocci Dwayne Lysaght James Mitford James Robinson +44 207 742 4000
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Nomura (joint financial adviser to Takeda) Akira Kiyota Paolo Cicchine Andrew McNaught Oliver Tucker +44 207 102 1000
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Finsbury (communications support to Takeda) (UK) James Murgatroyd / Rollo Head / Anjali Unnikrishnan +44 207 251 3801 (US) Kal Goldberg / Chris Ryall +1 646 805 2000
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Shire Christoph Brackmann (Investor Relations) christoph.brackmann@shire.com +41 41 288 41 29
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Shire Sun Kim (Investor Relations) sun.kim@shire.com +1 617 588 8175
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Shire Katie Joyce (Media) kjoyce@shire.com +1 781 482 2779 |
Citigroup Global Markets Limited (joint financial adviser to Shire) Chris Hite +1 212 816 6000 Cary Kochman Jan Skarbek Andrew Seaton (Corporate Broking) +44 207 986 4000
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Goldman Sachs International (joint financial adviser to Shire) Anthony Gutman Robert King Nick Harper +44 207 774 1000 |
Morgan Stanley & Co. International plc (joint financial adviser to Shire) Clint Gartin Philippe Gallone David Kitterick Peter Moorhouse (Corporate Broking) +44 207 425 8000
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FTI Consulting (Media – Outside US) Ben Atwell Brett Pollard +44 (0) 203 727 1000 |
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Linklaters LLP, Nishimura & Asahi and Ogier are retained as legal advisers to Takeda. Slaughter and May, Davis Polk & Wardwell LLP, Nagashima Ohno & Tsunematsu and Mourant Ozannes are retained as legal advisers to Shire.
Important Notices About Financial Advisers
Evercore Partners International LLP (“Evercore”), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and this Announcement and will not regard any other person as its client in relation to the Acquisition or this Announcement and shall not be responsible to anyone other than Takeda for providing the protections afforded to clients of Evercore, or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with the Acquisition, this Announcement or any matter referred to herein.
JPMorgan Securities Japan Co., Ltd., together with its affiliate J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority) (“J.P. Morgan”), is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and will not regard any other person as its client in relation to the Acquisition and shall not be responsible to anyone other than Takeda for providing the protections afforded to clients of J.P. Morgan, or for providing advice in connection with the Acquisition or any matter referred to herein.
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Nomura International plc (“Nomura”), which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority in the United Kingdom, is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and this Announcement and Nomura, its affiliates and its respective officers, employees, agents, representatives and/or associates will not regard any other person as their client, nor will they be responsible to anyone other than Takeda for providing the protections afforded to clients of Nomura or for giving advice in relation to the Acquisition, this Announcement or any matter or referred to herein. Neither Nomura nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Nomura in connection with the Acquisition, this Announcement or any matter referred to herein.
Citigroup Global Markets Limited (“Citi”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Citi, or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Citi nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Citi in connection with the Acquisition, this Announcement or any matter referred to herein.
Goldman Sachs International (“Goldman Sachs”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Goldman Sachs or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Goldman Sachs nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Goldman Sachs in connection with the Acquisition, this Announcement or any matter referred to herein
Morgan Stanley & Co. International plc (“Morgan Stanley”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Morgan Stanley or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Morgan Stanley nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Morgan Stanley in connection with the Acquisition, this Announcement or any matter referred to herein.
Further Information
This Announcement is provided for information purposes only. It is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise nor will there be any
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sale, issuance, exchange or transfer of securities of Shire or Takeda pursuant to the Acquisition or otherwise in any jurisdiction in contravention of applicable law.
The Acquisition will be subject to Jersey laws and to the applicable requirements of the Takeover Code, the Panel, the Listing Rules, the London Stock Exchange, the Financial Conduct Authority and the UKLA.
The Acquisition will be implemented solely pursuant to the terms of the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any decision in respect of the Scheme or other response in relation to the Acquisition by Shire Shareholders should be made only on the basis of the information contained in the Scheme Document. Shire Shareholders are advised to read the Scheme Document (including the related Forms of Proxy and forms of election) carefully once these become available because they will contain important information in relation to the Acquisition, the New Takeda Shares and the Combined Group.
The New Takeda Securities are not being offered to the public by means of this Announcement.
This Announcement does not constitute a prospectus or prospectus equivalent document.
Takeda reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the acquisition of the Shire Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, the Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the terms of the Co-operation Agreement and, among other things, the change in structure by which the Acquisition is to be implemented and compliance with all applicable laws, including US securities laws.
Restricted Jurisdictions
The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom and Jersey may be restricted by law and therefore any persons into whose possession this Announcement comes who are subject to the laws of any jurisdiction other than the United Kingdom and Jersey should inform themselves about, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom or Jersey to vote their Shire Shares with respect to the Scheme at the Court Meeting, to execute and deliver forms of proxy appointing another to vote at the Court Meeting on their behalf or to hold or vote Takeda Shares may be affected by the laws of the relevant jurisdiction in which they are located. Any failure to comply with such requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and other persons involved in the Acquisition disclaim any responsibility or liability for any violation of such restrictions by any person.
This Announcement has been prepared for the purpose of complying with Jersey law, the Takeover Code, the Market Abuse Regulation and the Disclosure and Transparency Rules and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of jurisdictions outside Jersey.
Unless otherwise determined by Takeda or required by the Takeover Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction. No person may vote in favour of the Acquisition by any use, means, instrumentality or form, and the Acquisition will not be capable of acceptance, from or within a Restricted Jurisdiction, if to do so would constitute
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a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction, where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from Restricted Jurisdictions, where to do so would violate the laws in that jurisdiction. If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation) the Takeover Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.
The availability of the New Takeda Securities under the Acquisition to Shire Shareholders who are not resident in the United Kingdom or Jersey, or the ability of those persons to continue to hold such securities, may be affected by the laws or regulatory requirements of the relevant jurisdiction in which they are resident. Persons into whose possession this Announcement comes who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Shire Shareholders who are in any doubt regarding such matters should consult an appropriate independent financial adviser in their relevant jurisdiction without delay. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.
The New Takeda Securities may not be offered, sold or delivered, directly or indirectly, in, into or from any Restricted Jurisdiction or to, or for the account or benefit of, any Restricted Overseas Persons except pursuant to an applicable exemption from, or in a transaction not subject to, applicable securities laws of those jurisdictions, or otherwise permitted under applicable securities laws of those jurisdictions.
Further details in relation to Shire Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom and Jersey will be contained in the Scheme Document.
Additional information for US investors
Notice to US investors in Shire: the Acquisition relates to the shares of a Jersey company and is being made by means of a scheme of arrangement provided for under the Jersey Companies Law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act, and it is expected that any New Takeda Securities to be issued pursuant to the Scheme to Shire Shareholders would be issued in reliance upon the exemption from the registration requirements under the US Securities Act provided by Section 3(a)(10) thereof. Under applicable US securities laws, persons (whether or not US persons) who are or will be “affiliates” (within the meaning of Rule 144 of the US Securities Act) of Takeda prior to, or after, the Effective Date will be subject to certain transfer restrictions relating to the New Takeda Securities received in connection with the Acquisition. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and Jersey to schemes of arrangement which differ from the disclosure requirements of United States tender offer and proxy solicitation rules and the US Securities Act. If, in the future, Takeda exercises the right to implement the Acquisition by way of a Takeover Offer and determines to extend the offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Financial information included in this Announcement and the Scheme Document has been or will have been prepared in accordance with accounting standards applicable in the United Kingdom and Jersey that may not
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be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with US GAAP.
The receipt of consideration by a US holder for the transfer of its Shire Shares pursuant to the Scheme will be a taxable transaction for United States federal income tax purposes. Each Shire Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him, including under applicable United States state and local, as well as foreign and other, tax laws.
It may be difficult for US holders of Shire Shares to enforce their rights and any claim arising out of the US federal laws, since Takeda and Shire are located primarily in a non-US jurisdiction, and some or all of their officers and directors may be residents of a non-US jurisdiction. US holders of Shire Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to the jurisdiction and judgment of a US court.
New Takeda Securities issued pursuant to the Scheme will not be registered under any US state securities laws and may only be issued to persons resident in a state pursuant to an exemption from the registration requirements of the securities laws of such state.
For the purpose of qualifying for the exemption provided by Section 3(a)(10) of the US Securities Act, Shire will advise the Court that its sanctioning of the Scheme will be relied on by Takeda as an approval of the Scheme following a hearing on its fairness to Shire Shareholders, at which Court hearing all Shire Shareholders are entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme and with respect to which notification will be given to all such holders.
Forward Looking Statements
This Announcement contains certain statements about Takeda and Shire that are or may be forward looking statements, including with respect to a possible combination involving Takeda and Shire. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, forward looking statements often include words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “will”, “may”, “should”, “would”, “could”, “anticipates”, “estimates”, “projects” or words or terms of similar substance or the negative thereof. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the possibility that a possible combination will not be pursued or consummated, failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the possible combination if it is pursued, adverse effects on the market price of Takeda’s or Shire’s ordinary shares and on Takeda’s or Shire’s operating results because of a failure to complete the possible combination, failure to realise the expected benefits of the possible combination, negative effects relating to the announcement of the possible combination or any further announcements relating to the possible combination or the consummation of the possible combination on the market price of Takeda’s or Shire’s ordinary shares, significant transaction costs and/or unknown liabilities, general economic and business conditions that affect the combined companies following the consummation of the possible combination, changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax laws, regulations, rates and policies, future business combinations or disposals and competitive developments. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no
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assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement.
Additional risk factors that may affect future results are contained in Shire’s most recent Annual Report on Form 10-K and in Shire’s subsequent Quarterly Reports on Form 10-Q, in each case including those risks outlined in ‘ITEM1A: Risk Factors’, and in Shire’s subsequent reports on Form 8-K and other Securities and Exchange Commission filings (available at www.shire.com and www.sec.gov), the contents of which are not incorporated by reference into, nor do they form part of, this Announcement. These risk factors expressly qualify all forward-looking statements contained in this Announcement and should also be considered by the reader.
All forward-looking statements attributable to Takeda or Shire or any person acting on either company’s behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by applicable law, neither Takeda nor Shire undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
Medical information
This Announcement contains information about products that may not be available and in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs, including the ones under development.
No profit forecasts or estimates
Unless expressly stated otherwise, nothing in this Announcement (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share or dividend per share for Takeda or Shire, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for Takeda or Shire, as appropriate.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree
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company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel’s website at http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129.
Electronic Communications
Please be aware that addresses, electronic addresses and certain other information provided by Shire Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Shire may be provided to Takeda during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11 of the Takeover Code.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published by Rule 26 of the Takeover Code will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) on Takeda’s and Shire’s websites at www.takeda.com/investors/offer-for-shire and www.shire.com respectively by no later than 12 noon (London time) on May 9, 2018, the Business Day following this Announcement. For the avoidance of doubt, the contents of these websites are not incorporated into and do not form part of this Announcement.
Shire Shareholders may request a hard copy of this Announcement by: (i) contacting Souheil Salah during business hours on +44 (0) 203 5490660 (lines are open from 9am to 5pm (London time), Monday to Friday (excluding public holidays in England and Wales), or (ii) by submitting a request by post to Souheil Salah, One Kingdom Street, 9th Floor, Paddington, London W2 6BD, UK. If you have received this Announcement in electronic form, copies of this Announcement and any document or information incorporated by reference into this document will not be provided unless such a request is made. Shire Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.
If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under Financial Services (Jersey) Law 1998 (as amended) if you are resident in Jersey, the
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Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.
Rounding
Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
SHIRE LEI: 54930005LQRLI2UXRQ59
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THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND INVESTORS SHOULD NOT MAKE ANY INVESTMENT DECISION IN RELATION TO TAKEDA SHARES EXCEPT ON THE BASIS OF INFORMATION IN THE TRANSACTION DOCUMENTS WHICH ARE PROPOSED TO BE PUBLISHED IN DUE COURSE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
MAY 8, 2018
RECOMMENDED OFFER
for
SHIRE PLC
by
TAKEDA PHARMACEUTICAL COMPANY LIMITED
1 | Introduction |
The boards of Takeda Pharmaceutical Company Limited (“Takeda”) and Shire plc (“Shire”) are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Takeda will acquire the entire issued and to be issued ordinary share capital of Shire (the “Acquisition”). It is proposed that the Acquisition will be effected by means of a scheme of arrangement of Shire under Article 125 of the Jersey Companies Law (the “Scheme”).
2 | The Acquisition |
Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out below and in Appendix I and the full terms and conditions to be set out in the Scheme Document, Shire Shareholders will be entitled to receive:
for each Shire Share | $30.33 in cash |
and either | |
0.839 New Takeda Shares | |
or | |
1.678 Takeda ADSs |
The Acquisition terms imply an equivalent value of:
· | £48.17 per Shire Share based on the closing price of ¥4,535 per Takeda Share and the exchange rates of £:¥ of 1:147.61 and £:$ of 1:1.3546 as at the Latest Practicable Date; and |
· | £49.01 per Shire Share based on the closing price of ¥4,923 per Takeda Share and the exchange rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018 (being |
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the day prior to the announcement that the Shire Board would, in principle, be willing to recommend the Consideration).
The equivalent value of £49.01 per Shire Share values the entire issued and to be issued ordinary share capital of Shire at approximately £46 billion and represents an illustrative premium of approximately:
· | 64.4 per cent. to the closing price of £29.81 per Shire Share on March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire); and |
· | 56.2 per cent. to the 30 trading day volume weighted average price of £31.37 per Shire Share for the 30 Shire trading days ending March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire). |
Immediately following completion of the Acquisition, Shire Shareholders will hold approximately 50 per cent. of the Combined Group.
Under the terms of the Acquisition, Takeda has agreed that Shire Shareholders will be entitled to receive any dividends announced, declared, made or paid by Shire, in each case in the ordinary course (including as to amount and on usual biannual declaration, record and payment dates), in respect of any completed six-month period ending 30 June and 31 December prior to the Effective Date. Such dividends shall not exceed:
· | 5.60 US$ cents per Shire Share for the six month period ending June 30, 2018 and a further 34.51 US$ cents per Shire Share for the six month period ending December 31, 2018 (totalling 40.11 US$ cents per Shire Share); |
· | in respect of any subsequent six month period ending 30 June, an amount representing not more than 110 per cent. of the dividend per Shire Share paid in respect of the six month period ending June 30, 2018; and |
· | in respect of any subsequent six month period ending 31 December, an amount, when taken in aggregate with any amount paid for the six month period ending 30 June in the same financial year, representing not more than 115 per cent. of the total dividend per Shire Share paid in respect of the year ending December 31, 2018, |
(each dividend that is permissible under these criteria being, a “Permitted Dividend”), without any consequential reduction in the Consideration payable by Takeda in respect of each Shire Share (including such Shire Shares underlying the Shire ADSs) under the Acquisition. If any dividend and/or other form of capital return or distribution is announced, declared, made or paid by Shire in respect of Shire Shares on or after the date of this Announcement and prior to the Effective Date, other than a Permitted Dividend, or in excess of a Permitted Dividend, Takeda reserves the right to reduce the Consideration payable in respect of each Shire Share (including such Shares underlying the Shire ADSs) under the Acquisition: (i) in the case of an amount in excess of a Permitted Dividend, by an amount equivalent to all or any part of such excess; or (ii) in the case of a dividend and/or other form of capital return or distribution which is not a Permitted Dividend, by the amount of all or part of any such dividend and/or other form of capital return or distribution.
At completion of the Acquisition, the New Takeda Shares will be listed on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges. In addition, Takeda will apply for its ADSs (each representing 0.5 Takeda Shares) to be listed on the NYSE effective on or shortly after the Effective Date.
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Shire Shareholders and holders of Shire ADSs (other than certain persons in Restricted Jurisdictions) will be entitled to elect whether to receive the non-cash portion of the consideration payable to them pursuant to the Acquisition in the form of either Takeda Shares or Takeda ADSs, subject to making a valid notification by completing and returning the relevant form (which will accompany the Scheme Document) and subject to the terms and conditions applicable to Takeda ADSs.
Takeda also intends to offer a dealing facility to certain Shire Shareholders who own 200 or fewer Shire Shares, pursuant to which they will be able to elect to have the New Takeda Shares to which they become entitled pursuant to the Scheme, sold on their behalf. Further details of this facility will be set out in the Scheme Document.
A facility will also be made available under which Shire Shareholders will be able to elect (subject to the terms and conditions of the facility) to receive the US Dollar cash portion of the Consideration in pounds Sterling (net of exchange rate fees) at the applicable market exchange rate on the latest reasonably practicable date for fixing such rate prior to the relevant payment date. Further details of this facility will be set out in the Scheme Document.
3 | Background to and reasons for the Acquisition |
3.1 | The growth and transformation of Takeda |
Founded in 1781 in Osaka, Japan, Takeda is a global pharmaceutical leader with an innovative portfolio. With its strong values, Takeda is committed to bringing better health and a brighter future to people globally.
Over the past four years, Takeda has been on a transformation journey, focused on becoming an agile, R&D driven, global pharmaceutical company that is well positioned to deliver highly innovative medicines and transformative care to patients around the world. Takeda has continued to strengthen its reputation through world-class products and innovation, while remaining true to its values.
Takeda has been successful in strengthening its pipeline through increased productivity in development stages as well as collaborations with academia, biotechs and start-ups. Takeda has also revitalised its R&D engine, with 17 new molecular entity clinical products moving up to the next stage of clinical development during the past fiscal year. Takeda intends to continue to leverage the combination of internal and external innovation following completion of the Acquisition.
As part of its transformation journey, Takeda has focused on developing and commercializing innovative therapies that address unmet clinical needs in gastroenterology (GI), oncology and neuroscience plus vaccines. Rare disease is an evolving focus of Takeda’s R&D development strategy with more than one-third of its clinical pipeline programs targeting rare diseases.
Takeda has a strong track record of successful cross-border M&A and post-acquisition integration, including the acquisition of ARIAD Pharmaceuticals in 2017, Nycomed in 2011 and Millennium Pharmaceuticals in 2008. Earlier this year, Takeda announced its proposed acquisition of TiGenix, which is expected to complete in mid-2018.
Takeda’s management team is highly experienced and diverse and has a proven track record of executing complex business integrations and large-scale transformations. Takeda is dedicated to carrying out integration efforts in a manner consistent with Takeda’s core values of integrity, fairness, honesty and perseverance, building on the expertise of
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employees of both companies and ensuring it focuses on its principles of (i) putting patients at the center; (ii) building trust with society; (iii) reinforcing its reputation; and (iv) developing business performance. The combination of Takeda’s and Shire’s patient focus together with Takeda’s values will guide the Combined Group as it creates an environment that inspires, enables collaboration and moves the Combined Group forward.
3.2 | Reasons for the Acquisition |
The Takeda Board believes there is a compelling strategic and financial rationale for undertaking the Acquisition, which will deliver the following benefits:
Creates a global, values-based, R&D driven biopharmaceutical leader incorporated and headquartered in Japan, with an attractive geographic footprint and provides the scale to drive future development
· | The Acquisition will result in a Combined Group with an attractive geographic footprint and leading positions in Japan and the US, two of the largest pharmaceutical markets globally. US revenues are expected to account for close to 50 per cent. of the total revenues of the Combined Group. Shire’s portfolio will also benefit from Takeda’s strong international presence in emerging markets and Japan. |
· | As a result of greater scale and efficiencies in its commercial activities, the Acquisition will enable the Combined Group to further fuel its productive R&D engine, better positioning Takeda to deliver highly-innovative medicines and transformative care to patients around the world. |
Strengthens Takeda’s presence across two of its three core therapeutic areas, and provides leading positions in rare diseases and plasma-derived therapies
· | The Acquisition will accelerate Takeda’s transformation by bringing together Takeda’s and Shire’s complementary positions in gastroenterology (GI) and neuroscience. It will also provide the Combined Group with leading positions in rare diseases and plasma-derived therapies. |
· | Following completion of the Acquisition, Takeda will continue to focus on the acceleration of its oncology business, following its recent acquisition of ARIAD Pharmaceuticals. In addition, Takeda’s vaccine business will continue to address the world’s most pressing public health needs. |
· | Takeda expects that the Combined Group will derive approximately 75 per cent. of sales from five areas: gastroenterology (GI), neuroscience, oncology and rare diseases, plus plasma-derived therapies. |
Creates a highly complementary, robust, modality-diverse pipeline and a strengthened R&D engine focused on breakthrough innovation
· | Takeda and Shire have highly complementary pipelines. Shire has strong expertise in rare diseases, an attractive modality diverse mid- and late-stage pipeline enriched with large-molecule programs, as well as cutting-edge technologies in gene therapy and recombinant proteins, and Takeda has a productive early stage development and research-orientated R&D program. |
· | Both Takeda and Shire have focused R&D efforts in the Boston area, a well-established center of innovation in the US. This is further supported by Takeda’s |
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Shonan Health Innovation Park, which is the first health innovation ecosystem in Japan.
· | Over the past four years, Takeda has transformed its R&D engine to drive productivity and has begun to realize the value of the therapeutic area focus and increased external partnerships as evidenced by the enrichment of its early stage pipeline. The Acquisition will accelerate this transformation and will provide additional cash flow to continue to invest in its R&D engine and have a broader patient reach. |
Delivers compelling financial benefits for the Combined Group - enhancing Takeda’s cash flow profile, with management committed to delivering substantial synergies and generating attractive returns for shareholders
· | The Acquisition is expected to deliver substantial annual cost synergies of at least $1.4 billion by the end of the third fiscal year following completion of the Acquisition5, with the potential for additional revenue synergies from the complementary geographic and therapeutic focus. Further details are set out in paragraph 4 below. |
· | The Acquisition will be significantly accretive to underlying earnings per Takeda Share from the first full fiscal year following completion of the Acquisition6 and will produce strong combined cashflows. |
· | The Acquisition is also expected to result in attractive returns for Takeda Shareholders, with the return on invested capital (ROIC) expected to exceed Takeda’s cost of capital within the first full fiscal year following completion of the Acquisition. |
· | Takeda has remained disciplined with respect to the terms of the Acquisition and intends to maintain its well-established dividend policy and investment grade credit rating. |
· | The substantial cash flow generation expected to result from the Acquisition will enable the Combined Group to de-lever quickly following completion of the Acquisition. Takeda intends to maintain its investment grade credit rating with a target net debt to EBITDA ratio of 2.0x or less in the medium term. |
· | An enlarged and well-positioned combined portfolio will strengthen the Combined Group’s ability to invest in the business and deliver returns to Takeda Shareholders. Takeda’s dividend policy has remained consistent over the past 8 years, with an annual dividend of 180 JPY per share having been paid to Takeda Shareholders. Takeda’s well-established dividend policy will continue to be a key component of future shareholder returns. |
· | The Acquisition is expected to result in the Combined Group being the only pharmaceutical company listed on both the Tokyo Stock Exchange in Japan, where |
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5 | This statement includes a quantified financial benefits statement which has been reported on for the purposes of the Takeover Code (see Appendix IV). |
6 | The statement that the Acquisition is underlying earnings accretive is not intended as a profit forecast and should not be construed as such, and is not subject to the requirements of Rule 28 of the Takeover Code. The statement should not be interpreted to mean that the earnings per share in any future fiscal period will necessarily match or be greater than those for the relevant preceding financial period. |
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it will continue to have its primary listing, and the NYSE in the US, enabling it to access two of the world’s largest capital markets.
· | In addition to Takeda continuing to be the largest pharmaceutical company listed on the Tokyo Stock Exchange, the Acquisition will result in Takeda becoming the 8th largest company listed on the Tokyo Stock Exchange by reference to pro forma market capitalisation as at the Latest Practicable Date. |
4 | Potential Synergies |
Takeda is confident that the Acquisition will create an opportunity to recognise significant recurring cost synergies, with the potential for additional revenue synergies from the combination of Shire and Takeda’s combined infrastructure, market presence, and development capabilities.
The Takeda Directors expect recurring pre-tax cost synergies for the Combined Group to reach a run-rate of at least $1.4 billion per annum by the end of the third fiscal year following completion of the Acquisition. Takeda expects these anticipated synergies to accrue as a direct result of the Acquisition and that they would not otherwise be achieved on a standalone basis.
Significant recurring cost synergy potential
The constituent elements of quantified cost synergies, which are expected to originate from the cost bases of both Shire and Takeda, include:
· | Manufacturing and supply: approximately 4 per cent. of the identified cost synergies are expected to be generated from savings from in-sourcing Oral Solid Dose manufacturing through Takeda excess capacity, efficiencies in operational procurement spend and reduced overheads; |
· | R&D: approximately 43 per cent. of the identified cost synergies are expected to be generated from removal of duplicated R&D costs, through rationalising ongoing research and early stage pipeline programs to optimise value of R&D spend and reducing overlapping resources; and |
· | Sales, marketing and administrative efficiencies: approximately 53 per cent. of the identified cost synergies are expected to be generated from the reduction of overlapping marketing presence in gastroenterology (GI) and neuroscience, consolidation of overlapping office locations, the elimination of duplicated IT systems, the optimisation of marketing and sales employee and non-employee costs and the reduction of duplicate costs across central support functions. |
Realisation costs and cost dis-synergies
The Takeda Directors expect the realisation of the quantified synergies will require estimated one-off cash costs of approximately $2.4 billion incurred in the first three fiscal years following completion of the Acquisition.
The Takeda Directors do not expect any other material cost dis-synergies to arise in connection with the Acquisition.
Tax structure
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The proposed tax structure of the Combined Group has not been finalised at this stage, but the Takeda Directors expect that the Combined Group may not be able to maintain Shire’s current tax profile.
Revenue growth potential
In addition to the quantified financial benefits highlighted above, the Takeda Directors further expect that the Combined Group will be able to realise additional revenue synergies which have not been quantified at this stage. The Takeda Directors expect these to arise from leveraging the combined strengthened global infrastructure of Takeda and Shire and through greater market presence in the prioritized therapeutic areas, particularly in gastroenterology (GI) and neuroscience.
The foregoing statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the Takeover Code and otherwise, the statements of estimated cost savings and synergies contained in this Announcement and the statements of intention, belief or expectation for the Combined Group and Takeda following completion of the Acquisition contained in this Announcement are solely the responsibility of Takeda and the Takeda Directors, and not of the Shire Directors.
These statements are not intended as a profit forecast and should not be interpreted as such.
Appendix IV includes a copy of these statements of anticipated cost savings and synergies arising out of the Acquisition and provides underlying assumptions and the bases of preparation. Appendix IV also includes reports from Takeda’s reporting accountant, Deloitte LLP, and its financial advisers, Evercore, J.P. Morgan Cazenove and Nomura, in connection with anticipated quantified financial benefits statements, as required by Rule 28.1(a) of the Takeover Code, and provides underlying assumptions and bases for the accountant’s and financial advisers’ respective reports. Each of Deloitte LLP, Evercore, J.P. Morgan Cazenove and Nomura has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.
5 | Financing of the Acquisition |
Takeda intends to finance the cash consideration payable to Shire Shareholders pursuant to the Acquisition from third party debt as described below.
Takeda has entered into a bridge facility agreement of $30.85 billion with, among others, J.P. Morgan Chase Bank N.A., Sumitomo Mitsui Banking Corporation and MUFG Bank, Ltd (the “Bridge Facility Agreement”), part of the proceeds of which will be used to fund the cash element of the Consideration payable to Shire Shareholders in connection with the Acquisition. The bridge facility will be unsecured and have a maturity of 364 days from the date of funding. It is currently contemplated that prior to completion of the Acquisition the commitments under the Bridge Facility Agreement will be reduced or refinanced with a combination of long-term debt, hybrid capital and available cash resources. Takeda is committed to a strong balance sheet and intends to maintain its investment grade credit rating following completion of the Acquisition.
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Each of Evercore, J.P. Morgan Cazenove and Nomura, as financial adviser to Takeda, is satisfied that sufficient cash resources are available to Takeda to enable it to satisfy in full the cash consideration payable to Shire Shareholders under the terms of the Acquisition.
Further information on the financing of the Acquisition will be set out in the Scheme Document.
6 | Recommendations |
The Shire Directors, who have been so advised by Citi, Goldman Sachs and Morgan Stanley as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their financial advice to the Shire Directors, each of Citi, Goldman Sachs and Morgan Stanley has taken into account the commercial assessments of the Shire Directors.
Accordingly, the Shire Directors intend to recommend unanimously that Shire Shareholders vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Shire General Meeting.
The Acquisition is also subject to the approval by Takeda Shareholders of certain resolutions at the Takeda Extraordinary General Meeting to approve the issue of the New Takeda Shares as consideration under the Acquisition, as described in paragraph 17.1 below. The Takeda Board7 has resolved unanimously to recommend that Takeda Shareholders vote in favour of the resolutions to be proposed at the Takeda Extraordinary General Meeting.
7 | Background to and reasons for the recommendation |
Shire has a long-term track record of delivering growth and returns for Shire Shareholders. Between 2013 and 2017 financial years ending 31 December, Shire’s revenues and Non-GAAP EBITDA more than tripled, and Non-GAAP diluted earnings per ADS nearly doubled. Since January 1, 2013, Shire has also delivered share price appreciation of 104 per cent. and a total shareholder return of 110 per cent., compared to appreciation in the FTSE 100 of 28 per cent. and total shareholder return of 57 per cent. over the same period.
This financial and shareholder value performance has been driven by Shire’s pursuit of a strategy to transform itself into the leader in treating rare diseases through organic growth and a series of significant acquisitions, including ViroPharma Inc. in 2014, NPS Pharmaceuticals Inc. in 2015, Dyax Corp. in 2016 and Baxalta Inc. in 2016. This transformation, in particular the acquisition of Baxalta, has resulted in Shire’s Rare Disease business accounting for approximately 70 per cent. of the Shire Group’s total sales in the financial year ended December 31, 2017, versus approximately 33 per cent. of total sales in the financial year ended December 31, 2013. Over the same period, Shire has enhanced its product pipeline significantly, almost doubling the number of pipeline projects from 20 to approximately 40.
As part of this transformation process, Shire has continued to assess and optimise the structure of the Shire Group in order to maximise value for Shire Shareholders, including by
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7 | There were two directors absent from the Takeda Board. Mr Jean-Luc Butel recused himself from the Takeda Board’s consideration and approval of the Acquisition as a result of his interest in Shire Shares (as described in paragraph 20 of this Announcement), pursuant to Article 369 of the Japanese Companies Act. Mr. James Kehoe recused himself from the Takeda Board’s consideration and approval of the Acquisition in light of his previously announced resignation from his position as Takeda’s Chief Financial Officer (effective March 31, 2018) and as a Takeda Director (to become effective on May 31, 2018). |
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unlocking embedded value in the business. Most recently, this process has led to the strategic review of Shire’s Neuroscience business and the creation of a separate reporting division since the start of 2018, and the sale of Shire’s Oncology business to Servier S.A.S. for a total consideration of $2.4 billion, each of which has continued to sharpen Shire’s focus on rare disease leadership.
As a result, Shire is now focused around attractive, core therapeutic areas (including Immunology, Hematology, Genetic Diseases, Internal Medicine and Neuroscience with growing therapeutic areas in Ophthalmics) and is guided by the clear strategic goal to be the leading global biotech company delivering innovative medicines to patients with rare diseases. The sale of Shire’s Oncology business to Servier S.A.S. for $2.4 billion is expected to close in the second quarter or third quarter of 2018, with the net proceeds intended to be used to repay debt. The Shire Board believes that Shire is well positioned to generate long-term growth and create value for Shire Shareholders, as a leader in rare diseases.
The Shire Board recognises that the Acquisition represents an opportunity to create a global, values-based, R&D driven biopharmaceutical leader, and to realise commercial and financial benefits. The Acquisition will bring together Takeda’s and Shire’s complementary therapeutic positions in internal medicine and neuroscience, with growth pillars in rare diseases, as well as creating an attractive global geographic footprint.
As part of the Combined Group, Shire has the opportunity to benefit alongside Takeda from enhanced scale and financial resources within its R&D engine, which should enable further innovation to address unmet needs for patients. The Acquisition will combine complementary pipelines: Shire’s expertise in rare diseases and strong late-stage pipeline; and Takeda’s early development and research-orientated R&D program. This will yield a robust, modality-diverse pipeline for the Combined Group.
In assessing the terms of the Acquisition, the Shire Board has taken into account a number of factors, including:
· | that based on an equivalent value of £49.01 per Shire Share8, the terms of the Acquisition represent a premium of approximately 64.4 per cent. to the closing price per Shire Share of £29.81 on March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire); |
· | that the Consideration comprises a significant cash component of $30.33 (£21.75)9 for each Shire Share; |
· | that Shire Shareholders have the opportunity to participate in future value creation arising from the financial benefits of the Combined Group, through their aggregate shareholding of approximately 50 per cent. in the Combined Group; and |
· | an assessment of the value delivered as a result of the Acquisition and the value delivered in standalone and certain other strategic options. |
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8 | Based on the closing price of ¥4,923 per Takeda Share and the exchange rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018 (being the day prior to the announcement that the Shire Board would, in principle, be willing to recommend the Consideration). |
9 | Based on the exchange rate of £:$ of 1:1.3945 on April 23, 2018 (being the day prior to the announcement that the Shire Board would, in principle, be willing to recommend the Consideration). |
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Following careful consideration of the above factors, the Shire Board believes that the terms of the Acquisition substantially recognise Shire’s growth potential and longer term prospects and the Acquisition is in the best interests of Shire Shareholders as a whole.
8 | Information on Takeda |
Takeda is a global, R&D-driven pharmaceutical leader, bringing highly innovative, life changing medicines to patients across the globe in 70 countries and regions. Founded and incorporated in Japan, it is traded on the Tokyo Stock Exchange. With a market capitalisation of approximately $33.1 billion (as at the Latest Practicable Date), it has approximately 30,000 employees globally who are committed to bringing better health and a brighter future to people globally. Takeda is also committed to its corporate social responsibility program dedicated to global health and its access to medicine strategy that aims to bring Takeda’s products to all patients across the globe.
Takeda has a focused, world-class, innovative, R&D organization, making an impact on patients’ lives by translating science into transformative medicines. Takeda has a focus on highly innovative medicine and takes pride in its 36 ongoing clinical R&D programs, of which more than one third have orphan drug designations. Takeda focuses its research efforts on gastroenterology (GI), oncology and neuroscience, plus vaccines. Takeda has been successful at strengthening its pipeline through increased productivity in development stages as well as collaborations with academia, biotechs and startups. Takeda’s productive R&D engine leverages a combination of internal and external innovation to deliver a sustainable pipeline. Takeda actively engages in R&D collaborations and has more than 180 active partnerships enabling it to stay at the leading edge of innovation.
Across its key therapeutic areas of gastroenterology (GI), oncology, and neuroscience plus vaccines, Takeda benefits from key brands with strong on-market positions and an innovative and rapidly growing pipeline:
Gastroenterology (GI): Takeda is leading in areas of gastroenterology (GI) associated with high unmet needs such as inflammatory bowel disease, acid-related diseases and motility disorders. Takeda’s growth brands include Entyvio (vedolizumab) for the treatment of inflammatory bowel disease; Takecab (vonoprazan) for the treatment of acid-related diseases; and Alofisel (darvadstrocel) for the treatment of complex perianal fistulas in Crohn’s disease. Takeda is also partnering on two programs in celiac disease and is actively engaged in human microbiome research.
Oncology: Takeda is dedicated to developing and delivering novel medicines to cancer patients worldwide through science, innovation and passion. Takeda’s recently approved products include Ninlaro (ixazomib) for the treatment for multiple myeloma; and Alunbrig (brigatinib) for the treatment of non-small cell lung cancer. Takeda’s pipeline includes key R&D programs of pevonedistat (for the treatment of high risk myelodysplastic syndrome and low blast acute myelogenous leukemia) and TAK-788 (an EGFR/HER2 inhibitor for the treatment of non-small cell lung cancer), as well as a leading immuno-oncology research platform.
Neuroscience: Takeda’s mission is to bring innovative medicines to patients suffering from neuropsychiatric disorders for whom there are no treatments available, with a focus on neurodegenerative conditions, certain rare neurological diseases and highly selective areas of profound unmet need in psychiatry. Takeda markets Trintellix (vortioxetine), for the treatment of depression, in the US (and in the future, in Japan) through a collaboration with
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Lundbeck. The neuroscience pipeline includes TAK-831 (a potential treatment for Friedreich’s Ataxia), TAK-341 (a potential treatment for Parkinson’s) and a new partnership with Wave Therapeutics. Takeda also incorporates external innovations in digital medicine, including personalised patient monitoring devices for better characterization of disease conditions, improved outcome assessments and enhancing the ability to detect drug efficacy.
Vaccines: Takeda’s global vaccine business is applying innovation to address some of the world's most challenging infectious diseases. Takeda has a wealth of knowledge in vaccine development and manufacturing, and global access to advance a pipeline of vaccines to address some of the world’s most pressing public health needs. The pipeline includes an important Phase 3 dengue vaccine candidate (TAK-003) that could potentially address a critical public health problem, especially in emerging markets. Takeda also has initiated development of a Zika vaccine (TAK-426) with funding from US Government organizations, which received Fast Track designation from the FDA earlier this year.
For the financial year ended March 31, 2017 (reported on May 10, 2017), Takeda reported a 6.9 per cent. increase in underlying global revenue to 1,716.7 billion JPY (prior financial year: 1,605.4 billion JPY), a 24.2 per cent. increase in core earnings to 227.2 billion JPY (prior financial year: 183.0 billion JPY) and a 14.7 per cent. revenue growth from its growth drivers (gastroenterology (GI), oncology, neuroscience and emerging markets) (prior financial year: 9.5 per cent.). Takeda’s growth drivers accounted for 55 per cent. of total revenue for the financial year ended March 31, 2017.
For the nine months ended 31 December 2017 (reported on February 1, 2018), Takeda reported a 6.7 per cent. increase in underlying global revenue to 1,323.0 billion JPY (Q3 2016: 1,240.3 billion JPY), a 32.8 per cent. increase in core earnings to 262.6 billion JPY (Q3 2016: 197.8 billion JPY) and a 14.5 per cent. revenue growth from its growth drivers, which accounted for 61 per cent. of total revenue. As at December 31, 2017, Takeda’s net debt was 698.2 billion JPY and Takeda’s net debt to EBITDA ratio was 1.9x (down from 2.7x at March 31, 2017).
Takeda will announce its results for the financial year ended March 31, 2018 on May 14, 2018.
9 | Information on Shire |
Shire is a leading global biotechnology company focused on serving patients with rare diseases and other highly specialised conditions. Shire has grown both organically and through acquisition, completing a series of major transactions that have brought therapeutic, geographic and pipeline growth and diversification.
Shire seeks to develop and deliver breakthrough therapies for people around the world affected by rare diseases, and those with highly specialised conditions, who lack effective therapies to live their lives to the fullest.
Serving patients and partnering with healthcare communities in over 100 countries, Shire strives to develop best-in-class products across core therapeutic areas including Immunology, Hematology, Neuroscience, Internal Medicine, Genetic Diseases, Oncology and Ophthalmics. On April 16, 2018, Shire announced that it has entered into an agreement with Servier for the sale of its Oncology business for $2.4 billion. The transaction is expected to close in the second quarter or third quarter of 2018.
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Shire has a robust portfolio of leading brands across 7 franchises:
Immunology: The Immunology franchise includes immunoglobulin therapies, which are used to treat a number of conditions including primary immunodeficiency, as well as a portfolio of therapies to treat hereditary angioedema.
Hematology: The Hematology portfolio is primarily focused on hemophilia, a rare bleeding disorder.
Neuroscience: The Neuroscience portfolio is focused on ADHD, a neurodevelopmental disorder that manifests as a persistent pattern of inattention and/or hyperactivity-impulsivity that interferes with functioning or development.
Internal Medicine: The Internal Medicine franchise is focused on rare and specialised conditions such as short bowel syndrome, a rare and potentially fatal condition in which patients struggle to maintain adequate nutrition and hydration, and hypoparathyroidism, a rare disorder of the endocrine system responsible for regulating electrolyte levels, especially calcium.
Genetic Diseases: The portfolio in Genetic Diseases includes enzyme replacement therapies for three lysosomal storage disorders: Hunter syndrome (mucopolysaccharidosis II), Gaucher disease (glucocerebrosidase enzyme deficiency), and Fabry disease (alpha-galactosidase A enzyme deficiency). These are rare, genetic diseases that mainly affect children, and have potential to severely impact quality of life and reduce life expectancy if not controlled.
Oncology: The Oncology business includes treatments for rare and difficult-to-treat cancers including acute lymphoblastic leukemia and metastatic pancreatic cancer. As noted above, on April 16, 2018, Shire announced that it has entered into an agreement with Servier for the sale of the Oncology business for $2.4 billion. The transaction is expected to close in the second quarter or third quarter of 2018.
Ophthalmics: XIIDRA, the only product approved in the US to treat the signs and symptoms of dry eye disease, is the foundational product for the Ophthalmics franchise. Dry eye disease is a highly prevalent condition in which the eye does not produce an adequate volume of tears or when the tears are not of the correct consistency, leading to irritation, blurry vision, and potentially corneal damage.
For the 52 weeks ended December 31, 2017, Shire’s product sales were $14,449 million (2016: $10,886 million which included Baxalta (acquired on June 3, 2016) and Dyax (acquired on January 22, 2016)) and it generated non GAAP EBITDA of $6,492 million (2016: $4,710 million which included Baxalta (acquired on June 3, 2016) and Dyax (acquired on January 22, 2016)).
For the three months ended March 31, 2018 (reported on April 26, 2018), Shire’s product sales were $3,637 million (2017: $3,412 million) and it generated non GAAP EBITDA of $1,607 million (2017: $1,576 million).
10 | Management, employees, locations and R&D |
The Takeda Board believes that there is a strong strategic fit between Takeda’s business and Shire’s business. The Takeda Board considers that Shire’s product portfolio and pipeline are highly complementary to Takeda’s and their combination will create a Combined Group that is a leader in highly innovative medicines that are transformative to patients. The Takeda
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Board believes that Takeda is the ideal acquirer for Shire and expects to apply the Combined Group’s expertise across therapeutic areas, research capabilities, infrastructure and employee talents to provide innovative solutions for patients, benefits for stakeholders and growth for shareholders.
10.1 | Employees and employment rights |
The Takeda Board attaches great importance to the skills, experience and market knowledge of the existing employees of Shire. Takeda is excited to bring in members of Shire to enhance Takeda’s therapeutic offerings and grow the value of the Combined Group in the longer term. The Takeda Board also believes Shire’s employees will benefit from greater opportunities as a result of being part of a larger, more global group with a wider range of complementary products and treatments and a deeper combined R&D capability.
The Takeda Board intends to look at ways to optimize the structure of the merged administrative and operational business units of the Combined Group in order to achieve the anticipated benefits of the Acquisition.
Takeda’s evaluation work to identify potential synergies of the Combined Group has confirmed there will be some duplication between the two businesses. However, Takeda has not yet received sufficiently detailed information to formulate comprehensive plans or intentions regarding the impact of the Acquisition on Shire and its wide ranging and distinct business units and operational divisions. The detailed steps for the integration plan will be developed further following completion of the Acquisition but Takeda will aim to retain the best talent across the Combined Group.
Based on current integration planning, Takeda expects a potential reduction of between 6 and 7 per cent. of the total Combined Group workforce globally, comprising between 1.8 and 2.1 per cent. attributable to the optimisation of R&D functions and the balance attributable to sales, marketing and administrative efficiencies. These reductions are expected to occur during the first three years following completion of the Acquisition. However, it is also anticipated that headcount reductions will be partly mitigated by further job opportunities over the medium term as a result of the potential revenue synergy opportunities, as well as the standalone growth of the Combined Group, natural attrition and the elimination of vacant roles.
The finalisation and implementation of any workforce reductions will be subject to comprehensive planning and appropriate engagement with stakeholders, including affected employees and any appropriate employee representative bodies. Takeda would implement any job reductions in accordance with all relevant legal obligations. Takeda intends to approach the employee and management integration process with the aim of retaining and motivating the best talent across the Combined Group.
Takeda confirms that the existing contractual and employment rights, including in relation to pensions, of all Shire Group employees will be fully safeguarded upon, and following, completion of the Acquisition. Takeda does not intend to make any material changes to the conditions of employment or the balance of the skills and functions of the employees and management of the Shire Group or the Takeda Group.
10.2 | Headquarters and locations |
Upon completion of the Acquisition, Takeda will maintain its global headquarters in Japan, expand its R&D presence in the Boston area and have major regional locations in Japan,
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Singapore, Switzerland and the US. The Takeda leadership team will be primarily located in Tokyo or the Boston area. Takeda will commence a review of the functions to be undertaken at Shire’s current headquarters in Dublin within the first year following completion of the Acquisition.
The Takeda Board will evaluate the consolidation of Shire’s operations into Takeda’s in the Boston area, Switzerland and Singapore and the possibility of retaining Shire’s offices in these locations. The Takeda Board will also consider efficiencies which may be obtained from combining Shire’s manufacturing facilities into those of Takeda.
The Takeda Board does not envisage any other changes with respect to the redeployment of Shire’s existing material fixed assets.
10.3 | Pensions |
The Takeda Board does not intend to make any changes with regard to employer contributions into Shire’s existing pension schemes or the accrual of benefits to existing members or the admission of new members to such pension schemes. Takeda intends that following completion of the Acquisition, it will continue to comply with Shire’s existing defined benefit pensions obligations, including commitments to make previously agreed deficit contributions and contractually required contributions.
10.4 | Retention Arrangements |
Takeda wishes to ensure strong business momentum through retention and to ensure that employees are fairly treated. Accordingly, Takeda has agreed that Shire may implement employee retention arrangements for a number of key Shire employees throughout the organisation who have been identified by Shire after consultation with Takeda.
As part of this, Dr. Flemming Ornskov (CEO of Shire) and Mr Thomas Dittrich (CFO of Shire), will each be entitled to receive a cash payment equivalent to 200% of their respective annual salaries and target bonuses for the financial year ending December 31, 2018, which, in each case, will be payable, subject to completion of the Acquisition, on the earlier of their ceasing employment, June 30, 2019 and the date falling 6 months after completion of the Acquisition and provided that the relevant executive is in employment on that payment date (subject to customary exceptions and conditions) (the “Executive Retention Arrangements”). The total value of the Executive Retention Arrangements is $9.1 million.
As required by, and solely for the purposes of, Rule 16.2 of the Takeover Code, Citi, Goldman Sachs and Morgan Stanley have (in their capacity as independent advisers to Shire for the purposes of Rule 3 of the Takeover Code) reviewed the terms of the Executive Retention Arrangements together with other information deemed relevant and advised Shire that the Executive Retention Arrangements are fair and reasonable so far as the Shire Shareholders are concerned. In providing their advice, Citi, Goldman Sachs and Morgan Stanley have taken into account the commercial assessments of Shire.
10.5 | Composition of the Takeda Board following completion of the Acquisition |
Takeda has agreed that, subject to customary governance and shareholder approval, up to three Shire Directors will join the Takeda Board with effect from the completion of the Acquisition.
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10.6 | R&D |
The Takeda Board believes that Takeda and Shire have highly complementary R&D activities. The Takeda Board considers that Shire’s primarily development-focused portfolio aligns well with Takeda’s largely research-oriented productive R&D engine, which will result in a robust, modality-diverse pipeline focused on meeting the needs of the patients we aim to serve. The Takeda Board understands the importance of continued investment in R&D to the Combined Group, with innovation a key driving factor in its success and the value its therapeutics provide.
The Takeda Board expects that, following completion of the Acquisition, R&D spend will be optimized by approximately $600 million10 through the removal of duplicated costs between Shire and Takeda, including through rationalising programs to optimise value of R&D spend and reducing overlapping resources. Takeda intends to continue to invest in and execute its late stage pipeline.
10.7 | Other items |
No statements in this paragraph 10 constitute “post-offer undertakings” for the purposes of Rule 19.5 of the Code.
11 | Offer-related Arrangements |
Confidentiality Agreement
Takeda and Shire have entered into a mutual confidentiality agreement dated April 22, 2018 (the “Confidentiality Agreement”) pursuant to which each of Takeda and Shire has undertaken, among other things, to keep confidential information relating to the other party and not to disclose it to third parties (other than to permitted disclosees) unless required by law or regulation.
This agreement also contains undertakings from both Shire and Takeda that for a period of 18 months, subject to certain exceptions, neither Takeda nor Shire will approach or solicit the other’s directors, officers, senior managers and certain of their other employees.
Confidentiality and Joint Defense Agreement
Takeda, Shire and their respective legal counsels have also entered into a Confidentiality and Joint Defense Agreement dated April 30, 2018, the purpose of which is to ensure that the exchange and/or disclosure of certain materials relating to the parties and in relation to, in particular, the anti-trust workstream only takes place between their respective legal counsels and external experts, and does not diminish in any way the confidentiality of such materials and does not result in a waiver of any privilege, right or immunity that might otherwise be available.
Clean Team Confidentiality Agreement
Takeda and Shire have entered into a Clean Team Confidentiality Agreement dated April 30, 2018, which sets out how any confidential information that is competitively sensitive can be disclosed, used or shared for the purposes of due diligence, synergies evaluation, integration planning and regulatory clearance. Such commercially sensitive information must only be
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10 | This statement includes a quantified financial benefits statement which has been reported on for the purposes of the Takeover Code (see Appendix IV). The approximate $600 million of R&D spend optimization can be calculated as 43 per cent. of the $1.4 billion of total run rate pre-tax cost synergies set out in Appendix IV. |
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made available to the party receiving information through designated persons removed from day-to-day commercial/strategic operations and decisions and external professional advisers. The findings of such designated persons and the external advisers may only be relayed to other employees, officers and directors of the receiving party in specified circumstances and subject to certain restrictions.
Co-operation Agreement
Takeda and Shire have entered into a Co-operation Agreement dated May 8, 2018 pursuant to which Takeda has agreed to use all reasonable endeavours to implement the Acquisition and to secure the regulatory clearances and authorisations necessary to satisfy the Regulatory Conditions.
Takeda and Shire have agreed to certain undertakings to co-operate and provide each other with reasonable information, assistance and access in relation to the filings, submissions and notifications to be made in relation to such regulatory clearances and authorisations. Takeda has also given certain undertakings in relation to the Takeda Extraordinary General Meeting and the obtaining of the necessary approvals from Takeda Shareholders.
Takeda has the right to terminate the Co-operation Agreement where:
(i) | the Scheme Document is not posted by December 31, 2018 (or such later date as may, with the consent of the Panel, be agreed between Takeda and Shire); |
(ii) | the Court Meeting or Shire General Meeting is not held by the 22nd day after the expected date of such meetings as set out in the Scheme Document (or such later date as may, with the consent of the Panel, be agreed between Takeda and Shire and the Court may allow), subject to certain permitted adjournments as specified in the Co-operation Agreement; |
(iii) | the Scheme is not approved at the Court Meeting, the Shire Resolutions are not passed at the Shire General Meeting or the Court refuses to sanction the Scheme or grant the Court Order; |
(iv) | the Shire Directors have withdrawn, or adversely modified, adversely qualified or failed to provide, or they have failed to reaffirm (when requested by Takeda to do so) their unanimous and unconditional recommendation that the Shire Shareholders vote in favour of the Scheme and the Shire Resolutions (including prior to publication of the Scheme Document, their intention to do so); |
(v) | a competing transaction is recommended by the Shire Directors or becomes effective; or |
(vi) | any Condition has become incapable of satisfaction by the Long Stop Date or waiver by the Long Stop Date (in circumstances where invocation of the relevant Condition is permitted by the Panel) or has not been waived by Takeda (where it has the right to do so). |
Either Takeda or Shire may terminate the Co-operation Agreement on the occurrence of any of the break fee triggers described below. Takeda and Shire may also terminate the Co-operation Agreement by mutual consent.
The Co-operation Agreement will also terminate if:
(i) | the Acquisition is withdrawn or lapses before the Long Stop Date, other than where Takeda has exercised its right to implement the Acquisition by way of a Takeover |
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Offer with Shire’s consent or where such Takeover Offer otherwise continues to be recommended by the Shire Directors; or
(ii) | the Scheme (or Takeover Offer, as the case may be) has not become effective by the Long Stop Date. |
Takeda has undertaken that if, at or prior to termination of the Co-operation Agreement:
(i) | the Takeda Board withdraws or adversely modifies, adversely qualifies or fails to provide, or fails to reaffirm (when requested by Shire to do so) its recommendation that the Takeda Shareholders vote in favour of the Takeda Resolutions (including prior to publication of the Takeda Shareholder Documents, their intention to do so) and either Takeda or Shire serves notice to terminate the Co-operation Agreement, Takeda will pay to Shire an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 2 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in this Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of Shire, as set out in this Announcement) and converted using an exchange rate of £:$ of 1:1.3546; or |
(ii) | the Takeda Resolutions are not passed at the Takeda Extraordinary General Meeting and either Takeda or Shire serves notice to terminate the Co-operation Agreement, Takeda will pay to Shire an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 1 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in this Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of Shire, as set out in this Announcement) and converted using an exchange rate of £:$ of 1:1.3546; or |
(iii) | on or before the Long Stop Date, the Scheme (or Takeover Offer, as the case may be) lapses or is withdrawn as a result of Takeda invoking and being permitted by the Panel to invoke any Regulatory Condition, or Takeda not waiving a Regulatory Condition which is not satisfied, or if the European Commission on or before such date initiates a Phase 2 review under the EU Merger Regulation or a similar event has occurred in a Member State of the EU, Takeda will pay to Shire an amount in cash in US dollars (rounded down to the nearest US dollar) equal to 1.5 per cent. of the product of £48.17 (being the equivalent value of the cash and Takeda Shares to be delivered per Shire Share, as set out in this Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of Shire, as set out in this Announcement) and converted using an exchange rate of £:$ of 1:1.3546. |
No break fee will be payable if the Co-operation Agreement has already terminated prior to the occurrence of the relevant break fee trigger. If more than one of the foregoing break fee triggers occurs prior to such termination, Takeda will pay the highest break fee applicable to such triggers. In no event shall Takeda be required to pay more than one of the break fee amounts described above.
In addition, the regulatory break fee referred to in paragraph (iii) above will not be payable if:
(i) | Shire has obstructed Takeda from being able to agree and implement, in time to avoid a break fee trigger, any remedy offered by Takeda to, or imposed by, a |
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Relevant Authority in connection with the satisfaction of a Regulatory Condition by withholding information or failing to co-operate with reasonable requests made by Takeda in connection with any such remedy, provided that Takeda is not in breach of certain of its obligations under the Co-operation Agreement and such remedy is to be implemented conditional upon the Effective Date; or
(ii) | the break fee trigger referred to in paragraph (iii) above is caused to a material extent by Shire undertaking, after the date of the Co-operation Agreement, an acquisition of any interest in shares, businesses or assets that would reasonably be expected to result in the break fee being triggered without Takeda’s prior written consent. |
12 | Conditions to the Acquisition |
The Acquisition is subject to the Conditions and further terms set out below and in Appendix I to this Announcement and to be set out in the Scheme Document, including, among other things, upon:
(i) | the receipt of antitrust clearances in the European Union, United States, China, Japan, Brazil and in other relevant jurisdictions; |
(ii) | the Shire Meetings being held no later than the 22nd day after the expected date of such meetings to be set out in the Scheme Document in due course (or such later date as may be agreed between Takeda and Shire and the Court may allow); |
(iii) | the approval of the Scheme by the requisite majorities of Shire Shareholders at the Shire Meetings; |
(iv) | the Scheme being sanctioned by the Court; |
(v) | the Scheme becoming effective by the Long Stop Date; |
(vi) | the passing at the Takeda Extraordinary General Meeting of the Takeda Resolutions; |
(vii) | Takeda having submitted an application for listing of the New Takeda Shares to the Tokyo Stock Exchange and the Local Japanese Stock Exchanges by no later than three weeks prior to the Effective Date and no objection having been received from the Tokyo Stock Exchange or the Local Japanese Stock Exchanges in relation thereto (or, if received, no such objection remaining outstanding); and |
(viii) | Takeda receiving confirmation that the relevant listing application regarding the Takeda ADSs has been approved for listing, subject to official notice of issuance, on the New York Stock Exchange. |
13 | The Scheme |
It is intended that the Acquisition will be effected by means of a Court-sanctioned scheme of arrangement between Shire and the Scheme Shareholders under Article 125 of the Jersey Companies Law.
The purpose of the Scheme is to provide for Takeda to become the holder of the entire issued and to be issued ordinary share capital of Shire. This is to be achieved by the transfer of the Scheme Shares to Takeda, in consideration for which the Scheme Shareholders will receive the Consideration.
To become effective, the Scheme must be approved at the Court Meeting by a majority in number representing at least 75 per cent. of the voting rights of the Scheme Shareholders
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(or the relevant class or classes thereof, if applicable) present and voting (and entitled to vote), either in person or by proxy, at such Court Meeting. The Scheme also requires the passing at the Shire General Meeting of the Shire Resolutions. The Shire General Meeting is expected to be held immediately after the Court Meeting. Following the Shire Meetings, the Scheme must be sanctioned by the Court. Finally, the Court Order must be delivered to the Registrar of Companies for registration, upon which the Scheme will become effective.
The Scheme is also subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions that will be set out in the Scheme Document.
The Scheme Document will include full details of the Scheme, together with the explanatory statement required pursuant to Article 126 of the Jersey Companies Law and the notices convening the Court Meeting and the Shire General Meeting. The Scheme Document will also contain the expected timetable for the Acquisition, and will specify the necessary actions to be taken by Shire Shareholders. The Scheme Document is expected to be despatched to Shire Shareholders and, for information only, to persons with information rights and holders of options granted under the Shire Share Plans, in the fourth quarter of 2018 (subject to agreement between Shire and Takeda, and the availability of the Court to approve the Scheme Document for posting). The Panel has consented to Shire posting the Scheme Document later than 28 days following the date of this Announcement.
Once the necessary approvals from Shire Shareholders and Takeda Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived and the Scheme has been sanctioned by the Court, the Scheme will become effective upon delivery of the Court Order to the Registrar of Companies for registration.
Upon the Scheme becoming effective, it will be binding on all Shire Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Shire General Meeting (and if they attended and voted, whether or not they voted in favour).
The Scheme will be governed by Jersey law and will be subject to the jurisdiction of the Court. The Scheme will be subject to the application requirements of the Takeover Code, the Panel, the London Stock Exchange and the UK Listing Authority.
14 | Shire ADSs |
Takeda and Shire have agreed that they will put arrangements in place to allow holders of Shire ADSs to participate in the Acquisition in respect of the underlying Shire Shares that the Shire ADSs represent. Shire Shareholders and holders of Shire ADSs (other than certain persons in Restricted Jurisdictions) will be entitled to elect whether to receive the non-cash portion of the Consideration payable to them pursuant to the Acquisition in the form of either Takeda Shares or Takeda ADSs subject to making a valid notification by completing and returning the relevant form (which will accompany the Scheme Document) and subject to the terms and conditions applicable to Takeda ADSs.
Shire ADS holders will be entitled to attend the Shire General Meeting and the Court Meeting, provided that such holders either (i) request that the Shire Depositary issue such holders a proxy in respect of the Shire Shares that their Shire ADSs represent or (ii) surrender their Shire ADSs to the Shire Depositary for cancellation and withdraw the Shire Shares that their Shire ADSs represent. All Shire ADS holders on the relevant record date will be entitled to vote in the Shire General and Court Meetings by instructing the Shire Depositary as to how to exercise the voting rights pertaining to the Shire Shares represented
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by such Shire ADSs. The Shire Depositary (directly or through a financial intermediary) will contact holders of Shire ADSs with further details of these arrangements, including relevant documentation and timing requirements, in due course.
Holders of Shire ADSs should take particular notice of the deadline for providing voting instructions, which may be earlier than that applicable to holders of Shire Shares. Holders of Shire ADSs should consult the Scheme Document and other materials to be distributed in due course by the Shire Depositary in connection with the Acquisition for further information in respect of giving voting instructions in respect of their Shire ADSs.
It is currently anticipated that, following the Effective Date, Takeda will pay to the Shire Depositary the aggregate of all cancellation fees which may be incurred by Shire ADS holders upon the surrender of Shire ADSs to the Shire Depositary for the purposes of receiving the Consideration.
15 | Shire Share Plans |
Participants in any of the Shire Share Plans will be contacted regarding the effect of the Acquisition on their rights under the Shire Share Plans and appropriate proposals will be made to such participants in due course. Details of the proposals will be set out in the Scheme Document and in separate letters to be sent to participants in the Shire Share Plans.
16 | De-listing of Shire Shares and Shire ADSs |
Prior to the Scheme becoming effective, Shire will make an application for the cancellation of the listing of Shire Shares on the Official List and for the cancellation of trading of the Shire Shares on the London Stock Exchange’s main market for listed securities in each case to take effect on or shortly after the Effective Date. The Scheme Document will set out details of the expected last day of dealings in Shire Shares on the main market of the London Stock Exchange and the latest time for registration of transfers prior to the Effective Date.
On or shortly after the Effective Date, Takeda also intends to terminate the listing of the Shire ADSs on NASDAQ and to succeed to the registration of Shire under the US Exchange Act pursuant to Rule 12g-3(a) thereunder. The Scheme Document will set out details regarding the expected last day of dealings in Shire ADSs on NASDAQ and the latest time for registration of transfers of Shire ADSs prior to the Effective Date. Takeda also intends to request that Shire terminate its ADS program from or shortly after the Effective Date.
Shire ADSs currently are "margin securities" under the regulations of the Board of Governors of the US Federal Reserve System, which status has the effect, among other things, of allowing US brokers to extend credit on the collateral of Shire ADSs for purposes of buying, carrying and trading in securities. Assuming there is a delisting of Shire ADSs from NASDAQ, such securities will no longer be "margin securities" and, therefore, will no longer be able to be used as collateral for the purpose of loans made by US brokers.
17 | The New Takeda Securities and Settlement |
17.1 | Takeda Shareholder Approval |
The Acquisition is conditional upon the approval of the Takeda Resolutions by Takeda Shareholders at the Takeda Extraordinary General Meeting. The quorum for the Takeda Extraordinary General Meeting is one-third of the total voting rights attributable to Takeda’s issued share capital, and the Takeda Resolutions must be approved by Takeda Shareholders
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representing at least two-thirds of the Takeda Shares voted at the Takeda Extraordinary General Meeting.
Takeda will prepare and send to Takeda Shareholders the Takeda Shareholder Documents which will contain, among other things, the notice convening the Takeda Extraordinary General Meeting and information on Takeda, the Combined Group and the New Takeda Securities. The Takeda Shareholder Documents will be sent to Takeda Shareholders at or around the same time as the Scheme Document is despatched to Shire Shareholders.
17.2 | The New Takeda Shares |
The New Takeda Shares will, when issued, be ordinary shares with no par value in the capital of Takeda, will be fully paid and rank pari passu in all respects with the other Takeda Shares in issue at that time, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date.
Fractions of New Takeda Shares will not be issued to Shire Shareholders pursuant to the Acquisition. Entitlements to New Takeda Shares pursuant to the Acquisition will be rounded off. The resulting fractional entitlements will be aggregated and sold in the market as soon as practicable after the Effective Date and the net proceeds of sale will be distributed in due proportion to the Shire Shareholders entitled to them.
17.3 | Share Dealing Facility |
Takeda intends to offer a dealing facility to certain Shire Shareholders who own 200 or fewer Shire Shares immediately prior to the Effective Date. Eligible Shire Shareholders who wish to make use of this facility will be able to elect, in lieu of any of the other settlement options referred to in paragraph 17.4 below, to have the New Takeda Shares to which they become entitled pursuant to the Scheme sold on their behalf as soon as practicable following the completion of the Acquisition. Details of such facility will be included in the Scheme Document.
17.4 | Settlement Options |
The New Takeda Securities will be available for settlement within 14 days of the Effective Date in accordance with Rule 31.8 of the Takeover Code. Details of the settlement options available to Shire Shareholders and holders of Shire ADSs will be set out in the Scheme Document.
As part of these settlement options, Shire Shareholders and holders of Shire ADSs (other than certain persons in Restricted Jurisdictions) will be entitled to elect whether to receive the non-cash portion of the Consideration payable to them pursuant to the Acquisition in the form of either Takeda Shares or Takeda ADSs, subject to making a valid notification by completing the relevant form (which will accompany the Scheme Document) and subject to the terms and conditions applicable to Takeda ADSs.
In addition, in light of the technical requirements in relation to the holding of listed Japanese shares (including those of Takeda), Takeda intends to make available, to certain Shire Shareholders outside of Japan, a facility to enable the holding by such persons of the New Takeda Shares following the completion of the Acquisition. Further details will be included in the Scheme Document.
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17.5 | Registration and Listing of the New Takeda Securities |
The New Takeda Shares will be registered under the FIEA and the rules of the Tokyo Stock Exchange. Upon or shortly after the Effective Date, the New Takeda Shares will be admitted to listing on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges.
Takeda understands that the Tokyo Stock Exchange may, as a result of the proposed terms of the Acquisition (including in particular the respective percentages of the Combined Group expected to be held by former Shire Shareholders immediately following the Effective Date), decide, on and following the Effective Date, that Takeda will be subject to a technical re-examination regarding its eligibility as a listed company under the Securities Listing Regulations of the Tokyo Stock Exchange as of the Effective Date. In such event Takeda will take such steps as are necessary to ensure that the Tokyo Stock Exchange’s decision is withdrawn prior to the Effective Date or, if such withdrawal cannot practicably be achieved prior to the Effective Date, that the re-examination process is completed as soon as practicable following the Effective Date. Any such re-examination process would not affect completion of the Acquisition nor the timing thereof.
Takeda also intends to seek a listing of the Takeda ADSs on the NYSE with effect upon or shortly after the Effective Date and also succeed to Shire’s registration under The US Exchange Act pursuant to Rule 12g - 3(a) thereunder.
18 | Dividends |
18.1 | Shire Dividends |
Under the terms of the Acquisition, Takeda has agreed that Shire Shareholders will be entitled to receive any dividends announced, declared, made or paid by Shire, in each case in the ordinary course (including as to amount and on usual biannual declaration, record and payment dates), in respect of any completed six-month period ending 30 June and 31 December prior to the Effective Date. Such dividends shall not exceed:
· | 5.60 US$ cents per Shire Share for the six month period ending June 30, 2018 and a further 34.51 US$ cents per Shire Share for the six month period ending December 31, 2018 (totalling 40.11 US$ cents per Shire Share); |
· | in respect of any subsequent six month period ending 30 June, an amount representing not more than 110 per cent. of the dividend per Shire Share paid in respect of the six month period ending June 30, 2018; and |
· | in respect of any subsequent six month period ending 31 December, an amount, when taken in aggregate with any amount paid for the six month period ending 30 June in the same financial year, representing not more than 115 per cent. of the total dividend per Shire Share paid in respect of the year ending December 31, 2018, |
(each dividend that is permissible under these criteria being, a “Permitted Dividend”), without any consequential reduction in the Consideration payable by Takeda in respect of each Shire Share (including such Shire Shares underlying the Shire ADSs) under the Acquisition. If any dividend and/or other form of capital return or distribution is announced, declared, made or paid by Shire in respect of Shire Shares on or after the date of this Announcement and prior to the Effective Date, other than a Permitted Dividend, or in excess of a Permitted Dividend, Takeda reserves the right to reduce the Consideration payable in respect of each Shire Share (including such Shares underlying the Shire ADSs) under the Acquisition: (i) in the case of an amount in excess of a Permitted Dividend, by an amount
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equivalent to all or any part of such excess; or (ii) in the case of a dividend and/or other form of capital return or distribution which is not a Permitted Dividend, by the amount of all or part of any such dividend and/or other form of capital return or distribution.
18.2 | Takeda Dividends |
As stated in paragraph 3 above, Takeda’s dividend policy has remained consistent over the past 8 years, with an annual dividend of 180 JPY per share having been paid to Takeda Shareholders. Takeda’s well-established dividend policy will continue to be a key component of future shareholder returns.
Although the precise timing and quantum of Takeda’s final dividend in respect of the financial year ending March 31, 2018 remains to be announced, based on previous dividend timetables, it is expected that the New Takeda Securities to be issued to Shire Shareholders pursuant to the Acquisition will be issued after the last cum-dividend trading date for such dividend and, accordingly, will not rank for any dividend declared by Takeda in respect of such period.
19 | Irrevocable undertakings |
Takeda has received irrevocable undertakings from each of the Shire Directors to vote in favour of the Scheme at the Court Meeting and the resolutions to be proposed at the Shire General Meeting in respect of a total of 367,606 Shire Shares (including such Shire Shares underlying Shire ADSs), representing approximately 0.04 per cent. of the issued ordinary share capital of Shire in issue on the Latest Practicable Date. Further details of these irrevocable undertakings (including the circumstances in which they will fall away) are set out in Appendix III to this Announcement.
Shire has received irrevocable undertakings from each of the Takeda Directors, who hold Takeda Shares,11 to vote in favour of the Takeda Resolutions (including any resolutions required for the appointment of the Shire Directors to the Takeda Board, as referred to at paragraph 10.5 above) at the Takeda Extraordinary General Meeting in respect of a total of 113,696 Takeda Shares, representing approximately 0.01 per cent. of the issued ordinary share capital of Takeda in issue on the Latest Practicable Date. Further details of these irrevocable undertakings (including the circumstances in which they will fall away) are set out in Appendix III to this Announcement.
20 | Disclosure of Interests in Shire |
Takeda confirms that it made an Opening Position Disclosure setting out the details required to be disclosed by it under Rule 8.1(a) of the Takeover Code on April 13, 2018.
Save in respect of the irrevocable undertakings referred to in paragraph 19 above and as disclosed below, neither Takeda, nor any of the Takeda Directors, nor, so far as Takeda is aware, any person acting in concert (within the meaning of the Takeover Code) with it has: (i) any interest in or right to subscribe for any relevant securities (within the meaning of the Takeover Code) of Shire; nor (ii) any short positions in respect of any relevant securities of Shire (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery; nor (iii) borrowed or lent any relevant
________________________
11 Other than Mr. James Kehoe, who is expected to dispose of his Takeda Shares on or shortly following his resignation as a Takeda Director (to become effective on May 31, 2018).
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securities of Shire (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Takeover Code), nor is any such person party to any dealing arrangement of the kind referred to in Note 11 of the definition of “acting in concert” in the Takeover Code in relation to relevant securities of Shire:
Name | Capacity | Nature of Interest | Number of relevant securities held in Shire |
Jean-Luc Butel | Takeda director | Ordinary shares | 7,383 |
J.P. Morgan Securities LLC (PCS) | Connected party | Equity Depository Receipt (Long) | 1,878 |
JPMorgan Structured Products BV | Connected party | Physically-settled derivatives (Long) | 39,746 |
J.P. Morgan Chase Bank (Custody) | Connected party | Equity Common Shares (Long) | 2 |
J.P. Morgan Chase Bank (Custody) | Connected party | Equity Depository Receipt (Long) | 165 |
‘Interests in securities’ for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an ‘interest’ by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities.
As previously disclosed in Takeda’s Opening Position Disclosure in respect of Shire made on April 13, 2018, Mr. Butel, a non-executive director of Takeda, is a former executive of Baxter International Inc. ("Baxter") and Baxalta Incorporated ("Baxalta"), the latter of which was acquired by Shire in 2016 following its spin-out from Baxter. Mr. Butel's interests in Shire as described above resulted from the exercise in 2016 of stock options granted in respect of his employment with Baxalta and Baxter. Takeda has been informed by Mr. Butel that he intends to sell such interests in Shire as soon as practicable (although a minimum of 24 hours following) the publication of this Announcement. The Panel has agreed that the other provisions of Rule 4.2(a) of the Takeover Code will not apply to this sale.
21 | General |
Takeda reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the acquisition of the Shire Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, the Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the terms of the Co-operation Agreement and, among other things, the change in structure by which the Acquisition is to be implemented and compliance with all applicable laws, including US securities laws.
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The Acquisition will be made on the terms and subject to the Conditions and further terms set out in Appendix I to this Announcement. The sources of information and bases of calculations contained in this Announcement are set out in Appendix II to this Announcement. A summary of the irrevocable undertakings is contained in Appendix III to this Announcement. Appendix IV contains details of and bases of calculation of the anticipated financial benefits of the Acquisition. Certain terms used in this Announcement are defined in Appendix V to this Announcement.
Evercore, J.P. Morgan Cazenove, Nomura, Deloitte LLP, Citi, Goldman Sachs and Morgan Stanley have each given and not withdrawn their consent to the publication of this Announcement with the inclusion herein of the references to their names in the form and context in which they appear.
22 | Documents available on website |
Copies of the following documents will be made available on Takeda’s and Shire’s websites at www.takeda.com/investors/offer-for-shire and www.shire.com respectively until the Effective Date:
· | this Announcement; |
· | the irrevocable undertakings referred to in paragraph 19 above and summarised in Appendix III to this Announcement; |
· | the Co-operation Agreement described in paragraph 11 above; |
· | the Confidentiality Agreement, the Confidentiality and Joint Defense Agreement and the Clean Team Confidentiality Agreement, in each case as described in paragraph 11 above; and |
· | the documents relating to financing of the Acquisition referred to in paragraph 5 above. |
23 | Analyst and Investor Presentations |
There will be two investor and analyst conference calls today, held as follows:
Investor and Analyst Presentation #1 - English only
Investors and analysts can dial into the conference call using the numbers below:
Time: | 4.15pm – 5pm JST / 8.15am – 9am BST / 3.15am – 4am EST |
International Dial-In Number: | +44 (0) 20 3003 2666 |
Japan Toll Free Number: | 006633132499 |
UK Toll Free Number: | 0808 109 0700 |
USA Toll Free Number: | 1 866 966 5335 |
Passcode: | 161017# |
A webcast (slides only, no audio) for the conference call will be available at the following link: https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/
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Investor and Analyst Presentation #2 - English and simultaneous Japanese translation
Investors and analysts can dial into the conference call using the numbers below:
Time: | 10pm – 11pm JST / 2pm – 3pm BST / 9am – 10am EST |
Japan Toll Free Number: | 0120 557 366 |
Passcode: | 78771074# |
International Dial-In Number: | +81 (0) 3 6629 1042 |
UK Toll Free Number: | 0800 026 1544 |
USA Toll Free Number: | 1 855 369 0433 |
Passcode: | 11350071# |
A webcast for the conference call (slides and audio, but without the ability to participate in the Q&A session) will be available at the following links:
· | https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/ (English) |
· | https://www.takeda.com/jp/investors/reports/quarterly-announcements/quarterly-announcements-2018/ (Japanese) |
A copy of the presentation will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, in due course on Takeda’s website at www.takeda.com/investors/offer-for-shire and on Shire’s website at www.shire.com. The contents of the websites referred to in this Announcement are not incorporated into and do not form part of this Announcement.
There will be a playback facility for both conference calls, however this will not include the Q&A sessions.
Enquiries:
Takeda Elissa Johnsen (Media – outside of Japan) elissa.johnsen@takeda.com +1 224 554 3185
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Takeda Kazumi Kobayashi (Media – within Japan) Kazumi.kobayashi@takeda.com +81 3 3278 2095
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Takeda Takashi Okubo (Investor Relations) takeda.ir.contact@takeda.com +81 3 3278 2306
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Takeda Tsuyoshi Tada (Media – within Japan) tsuyoshi.tada@takeda.com +81 3 3278 2417
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Evercore (joint financial adviser to Takeda) (US) Will Hiltz John Honts +1 212 857 3100 (UK) Julian Oakley +44 207 653 6000
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J.P. Morgan Cazenove (joint financial adviser to Takeda) Michele Colocci Dwayne Lysaght James Mitford James Robinson +44 207 742 4000
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Nomura (joint financial adviser to Takeda) Akira Kiyota Paolo Cicchine Andrew McNaught Oliver Tucker +44 207 102 1000
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Finsbury (communications support to Takeda) (UK) James Murgatroyd / Rollo Head / Anjali Unnikrishnan +44 207 251 3801 (US) Kal Goldberg / Chris Ryall +1 646 805 2000
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Shire Christoph Brackmann (Investor Relations) christoph.brackmann@shire.com +41 41 288 41 29
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Shire Sun Kim (Investor Relations) sun.kim@shire.com +1 617 588 8175
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Shire Katie Joyce (Media) kjoyce@shire.com +1 781 482 2779
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Citigroup Global Markets Limited (joint financial adviser to Shire) Chris Hite +1 212 816 6000 Cary Kochman Jan Skarbek Andrew Seaton (Corporate Broking) +44 207 986 4000
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Goldman Sachs International (joint financial adviser to Shire) Anthony Gutman Robert King Nick Harper +44 207 774 1000 |
Morgan Stanley & Co. International plc (joint financial adviser to Shire) Clint Gartin Philippe Gallone David Kitterick Peter Moorhouse (Corporate Broking) +44 207 425 8000
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FTI Consulting (Media – Outside US) Ben Atwell |
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Brett Pollard +44 (0) 203 727 1000
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Linklaters LLP, Nishimura & Asahi and Ogier are retained as legal advisers to Takeda. Slaughter and May, Davis Polk Wardwell LLP, Nagashima Ohno & Tsunematsu and Mourant Ozannes are retained as legal advisers to Shire.
Important Notices About Financial Advisers
Evercore Partners International LLP (“Evercore”), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and this Announcement and will not regard any other person as its client in relation to the Acquisition or this Announcement and shall not be responsible to anyone other than Takeda for providing the protections afforded to clients of Evercore, or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with the Acquisition, this Announcement or any matter referred to herein.
JPMorgan Securities Japan Co., Ltd., together with its affiliate J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority) (“J.P. Morgan”), is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and will not regard any other person as its client in relation to the Acquisition and shall not be responsible to anyone other than Takeda for providing the protections afforded to clients of J.P. Morgan, or for providing advice in connection with the Acquisition or any matter referred to herein.
Nomura International plc (“Nomura”), which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority in the United Kingdom, is acting as financial adviser exclusively to Takeda and no one else in connection with the Acquisition and this Announcement and Nomura, its affiliates and its respective officers, employees, agents, representatives and/or associates will not regard any other person as their client, nor will they be responsible to anyone other than Takeda for providing the protections afforded to clients of Nomura or for giving advice in relation to the Acquisition, this Announcement or any matter or referred to herein. Neither Nomura nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Nomura in connection with the Acquisition, this Announcement or any matter referred to herein.
Citigroup Global Markets Limited (“Citi”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Citi, or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Citi nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Citi in connection with the Acquisition, this Announcement or any matter referred to herein.
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Goldman Sachs International (“Goldman Sachs”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Goldman Sachs or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Goldman Sachs nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Goldman Sachs in connection with the Acquisition, this Announcement or any matter referred to herein
Morgan Stanley & Co. International plc (“Morgan Stanley”), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as financial adviser to Shire and no one else in connection with the Acquisition, this Announcement and the matters described herein, and shall not be responsible to anyone other than Shire for providing the protections afforded to clients of Morgan Stanley or for providing advice in connection with the Acquisition, this Announcement or any matter referred to herein. Neither Morgan Stanley nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Morgan Stanley in connection with the Acquisition, this Announcement or any matter referred to herein.
Further Information
This Announcement is provided for information purposes only. It is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Acquisition or otherwise nor will there be any sale, issuance, exchange or transfer of securities of Shire or Takeda pursuant to the Acquisition or otherwise in any jurisdiction in contravention of applicable law.
The Acquisition will be subject to Jersey laws and to the applicable requirements of the Takeover Code, the Panel, the Listing Rules, the London Stock Exchange, the Financial Conduct Authority and the UKLA.
The Acquisition will be implemented solely pursuant to the terms of the Scheme Document (or, in the event that the Acquisition is to be implemented by means of a Takeover Offer, the Offer Document), which will contain the full terms and conditions of the Acquisition including details of how to vote in respect of the Acquisition. Any decision in respect of the Scheme or other response in relation to the Acquisition by Shire Shareholders should be made only on the basis of the information contained in the Scheme Document. Shire Shareholders are advised to read the Scheme Document (including the related Forms of Proxy and forms of election) carefully once these become available because they will contain important information in relation to the Acquisition, the New Takeda Shares and the Combined Group.
The New Takeda Securities are not being offered to the public by means of this Announcement.
This Announcement does not constitute a prospectus or prospectus equivalent document.
Takeda reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the acquisition of the Shire Shares by way of a Takeover Offer as an alternative to the Scheme. In such event, the Takeover Offer will be implemented on substantially the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the terms of the Co-operation Agreement and, among
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other things, the change in structure by which the Acquisition is to be implemented and compliance with all applicable laws, including US securities laws.
Restricted Jurisdictions
The release, publication or distribution of this Announcement in jurisdictions other than the United Kingdom and Jersey may be restricted by law and therefore any persons into whose possession this Announcement comes who are subject to the laws of any jurisdiction other than the United Kingdom and Jersey should inform themselves about, and observe, any applicable requirements. In particular, the ability of persons who are not resident in the United Kingdom or Jersey to vote their Shire Shares with respect to the Scheme at the Court Meeting, to execute and deliver forms of proxy appointing another to vote at the Court Meeting on their behalf or to hold or vote Takeda Shares may be affected by the laws of the relevant jurisdiction in which they are located. Any failure to comply with such requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and other persons involved in the Acquisition disclaim any responsibility or liability for any violation of such restrictions by any person.
This Announcement has been prepared for the purpose of complying with Jersey law, the Takeover Code, the Market Abuse Regulation and the Disclosure and Transparency Rules and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws and regulations of jurisdictions outside Jersey.
Unless otherwise determined by Takeda or required by the Takeover Code, and permitted by applicable law and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction. No person may vote in favour of the Acquisition by any use, means, instrumentality or form, and the Acquisition will not be capable of acceptance, from or within a Restricted Jurisdiction, if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction, where to do so would violate the laws in that jurisdiction, and persons receiving this Announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from Restricted Jurisdictions, where to do so would violate the laws in that jurisdiction. If the Acquisition is implemented by way of a Takeover Offer (unless otherwise permitted by applicable law and regulation) the Takeover Offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the Takeover Offer may not be capable of acceptance by any such use, means, instrumentality or facilities.
The availability of the New Takeda Securities under the Acquisition to Shire Shareholders who are not resident in the United Kingdom or Jersey, or the ability of those persons to continue to hold such securities, may be affected by the laws or regulatory requirements of the relevant jurisdiction in which they are resident. Persons into whose possession this Announcement comes who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Shire Shareholders who are in any doubt regarding such matters should consult an appropriate independent financial adviser in their relevant jurisdiction without delay. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.
The New Takeda Securities may not be offered, sold or delivered, directly or indirectly, in, into or from any Restricted Jurisdiction or to, or for the account or benefit of, any Restricted Overseas
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Persons except pursuant to an applicable exemption from, or in a transaction not subject to, applicable securities laws of those jurisdictions, or otherwise permitted under applicable securities laws of those jurisdictions.
Further details in relation to Shire Shareholders who are resident in, ordinarily resident in, or citizens of, jurisdictions outside the United Kingdom and Jersey will be contained in the Scheme Document.
Additional information for US investors
Notice to US investors in Shire: the Acquisition relates to the shares of a Jersey company and is being made by means of a scheme of arrangement provided for under the Jersey Companies Law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act, and it is expected that any New Takeda Securities to be issued pursuant to the Scheme to Shire Shareholders would be issued in reliance upon the exemption from the registration requirements under the US Securities Act provided by Section 3(a)(10) thereof. Under applicable US securities laws, persons (whether or not US persons) who are or will be “affiliates” (within the meaning of Rule 144 of the US Securities Act) of Takeda prior to, or after, the Effective Date will be subject to certain transfer restrictions relating to the New Takeda Securities received in connection with the Acquisition. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in the United Kingdom and Jersey to schemes of arrangement which differ from the disclosure requirements of United States tender offer and proxy solicitation rules and the US Securities Act. If, in the future, Takeda exercises the right to implement the Acquisition by way of a Takeover Offer and determines to extend the offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Financial information included in this Announcement and the Scheme Document has been or will have been prepared in accordance with accounting standards applicable in the United Kingdom and Jersey that may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with US GAAP.
The receipt of consideration by a US holder for the transfer of its Shire Shares pursuant to the Scheme will be a taxable transaction for United States federal income tax purposes. Each Shire Shareholder is urged to consult his independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to him, including under applicable United States state and local, as well as foreign and other, tax laws.
It may be difficult for US holders of Shire Shares to enforce their rights and any claim arising out of the US federal laws, since Takeda and Shire are located primarily in a non-US jurisdiction, and some or all of their officers and directors may be residents of a non-US jurisdiction. US holders of Shire Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to the jurisdiction and judgment of a US court.
New Takeda Securities issued pursuant to the Scheme will not be registered under any US state securities laws and may only be issued to persons resident in a state pursuant to an exemption from the registration requirements of the securities laws of such state.
For the purpose of qualifying for the exemption provided by Section 3(a)(10) of the US Securities Act, Shire will advise the Court that its sanctioning of the Scheme will be relied on by Takeda as an approval of the Scheme following a hearing on its fairness to Shire Shareholders, at which Court hearing all Shire Shareholders are entitled to attend in person or through counsel to support or oppose the sanctioning of the Scheme and with respect to which notification will be given to all such holders.
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Forward Looking Statements
This Announcement contains certain statements about Takeda and Shire that are or may be forward looking statements, including with respect to a possible combination involving Takeda and Shire. All statements other than statements of historical facts included in this Announcement may be forward looking statements. Without limitation, forward looking statements often include words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “will”, “may”, “should”, “would”, “could”, “anticipates”, “estimates”, “projects” or words or terms of similar substance or the negative thereof. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward-looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the possibility that a possible combination will not be pursued or consummated, failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the possible combination if it is pursued, adverse effects on the market price of Takeda’s or Shire’s ordinary shares and on Takeda’s or Shire’s operating results because of a failure to complete the possible combination, failure to realise the expected benefits of the possible combination, negative effects relating to the announcement of the possible combination or any further announcements relating to the possible combination or the consummation of the possible combination on the market price of Takeda’s or Shire’s ordinary shares, significant transaction costs and/or unknown liabilities, general economic and business conditions that affect the combined companies following the consummation of the possible combination, changes in global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax laws, regulations, rates and policies, future business combinations or disposals and competitive developments. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and you are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Announcement.
Additional risk factors that may affect future results are contained in Shire’s most recent Annual Report on Form 10-K and in Shire’s subsequent Quarterly Reports on Form 10-Q, in each case including those risks outlined in ‘ITEM1A: Risk Factors’, and in Shire’s subsequent reports on Form 8-K and other Securities and Exchange Commission filings (available at www.shire.com and www.sec.gov), the contents of which are not incorporated by reference into, nor do they form part of, this Announcement. These risk factors expressly qualify all forward-looking statements contained in this Announcement and should also be considered by the reader.
All forward-looking statements attributable to Takeda or Shire or any person acting on either company’s behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Except to the extent otherwise required by applicable law, neither Takeda nor Shire undertake any obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
Medical information
This Announcement contains information about products that may not be available and in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs, including the ones under development.
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No profit forecasts or estimates
Unless expressly stated otherwise, nothing in this Announcement (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period and no statement in this Announcement should be interpreted to mean that earnings or earnings per share or dividend per share for Takeda or Shire, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share or dividend per share for Takeda or Shire, as appropriate.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel’s website at http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129.
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Electronic Communications
Please be aware that addresses, electronic addresses and certain other information provided by Shire Shareholders, persons with information rights and other relevant persons in connection with the receipt of communications from Shire may be provided to Takeda during the Offer Period as required under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11 of the Takeover Code.
Publication on Website and Availability of Hard Copies
A copy of this Announcement and the documents required to be published by Rule 26 of the Takeover Code will be made available (subject to certain restrictions relating to persons resident in Restricted Jurisdictions) on Takeda’s and Shire’s websites at www.takeda.com/investors/offer-for-shire and www.shire.com respectively by no later than 12 noon (London time) on May 9, 2018, the Business Day following this Announcement. For the avoidance of doubt, the contents of these websites are not incorporated into and do not form part of this Announcement.
Shire Shareholders may request a hard copy of this Announcement by: (i) contacting Souheil Salah during business hours on +44 (0) 203 5490660 (lines are open from 9am to 5pm (London time), Monday to Friday (excluding public holidays in England and Wales), or (ii) by submitting a request by post to Souheil Salah, One Kingdom Street, 9th Floor, Paddington, London W2 6BD, UK. If you have received this Announcement in electronic form, copies of this Announcement and any document or information incorporated by reference into this document will not be provided unless such a request is made. Shire Shareholders may also request that all future documents, announcements and information to be sent to them in relation to the Acquisition should be in hard copy form.
If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under Financial Services (Jersey) Law 1998 (as amended) if you are resident in Jersey, the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.
Rounding
Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
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APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE ACQUISITION
Part A: Conditions of the Scheme and the Acquisition
Long Stop Date
1 | The Acquisition is conditional upon the Scheme becoming unconditional and effective, subject to the Takeover Code, by not later than the Long Stop Date. |
Scheme approval
2 | The Scheme will be subject to the following conditions: |
2.1 | its approval by a majority in number representing at least 75 per cent. of the voting rights of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) who are present and vote (and who are entitled to vote), whether in person or by proxy, at the Court Meeting and at any separate class meeting which may be required by the Court (or at any adjournment of any such meetings), such Court Meeting and any such separate class meeting to be held on or before the 22nd day after the expected date of the Court Meeting to be set out in the Scheme Document (or such later date, if any, as may, with the consent of the Panel, be agreed by Takeda and Shire and the Court may allow); |
2.2 | the Shire Resolutions being duly passed by the requisite majority or majorities of Shire Shareholders at the Shire General Meeting, or at any adjournment thereof, such Shire General Meeting to be held on or before the 22nd day after the expected date of the Shire General Meeting as set out in the Scheme Document (or such later date, if any, as may, with the consent of the Panel, be agreed by Takeda and Shire and the Court may allow); and |
2.3 | the sanction of the Scheme by the Court (with or without modification but subject to any modification being on terms acceptable to Shire and Takeda) and the delivery of a copy of the Court Order to the Registrar of Companies for registration. |
Takeda Shareholder approval
3 | The Acquisition will be conditional upon the passing at the Takeda Extraordinary General Meeting of the Takeda Resolutions. |
General Conditions
4 | In addition, subject as stated in Part B below and to the requirements of the Panel, the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Scheme effective will not be taken unless such Conditions (as amended if appropriate) have been satisfied or, where relevant, waived: |
Admission of the New Takeda Securities
(a) | Takeda having submitted an application for listing of the New Takeda Shares to the Tokyo Stock Exchange and the Local Japanese Stock Exchanges by no later than three weeks prior to the Effective Date and no objection having been received from the Tokyo Stock Exchange or the Local Japanese Stock Exchanges in relation thereto (or, if received, no such objection remaining outstanding), so that the New Takeda Shares will be admitted to listing on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges with effect from their issuance and will be admitted to trading on the Tokyo Stock Exchanges and the Local Japanese Stock Exchanges by no later than 14 days after the Effective Date; |
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(b) | confirmation having been received by Takeda that the Takeda ADSs have been approved for listing, subject to official notice of issuance, on the New York Stock Exchange; |
Antitrust clearances
European Union merger control
(c) | insofar as the Acquisition falls within the scope of Council Regulation (EC) 139/2004 (the “Regulation”): |
(i) | the European Commission taking a decision, on terms reasonably satisfactory to Takeda, that it shall not initiate proceedings under Article 6(1)(c) of the Regulation in relation to the Acquisition or any matter arising from or relating to the Acquisition; |
(ii) | if the European Commission makes a referral under Article 9(1) of the Regulation to the competent authorities of a National Competition Authority (“NCA”) of any Member State other than the UK; that NCA taking a decision, on terms reasonably satisfactory to Takeda, of equivalent effect to that set out in sub-paragraph (i) above; and |
(iii) | if the European Commission makes a referral under Article 9(1) of the Regulation to the competent UK authority (being the Competition and Markets Authority), it being established on terms satisfactory to Takeda that the Competition and Markets Authority does not intend to make a CMA Phase 2 Reference of the Acquisition or of any matter arising from or relating to the Acquisition; |
United States merger control
(d) | all necessary notifications and filings having been made and all applicable waiting periods (including any extensions thereof) under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) and the rules and regulations made thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the Acquisition (including, without limitation, its implementation) and the acquisition or the proposed acquisition of any shares or other securities in, or control of, Shire by Takeda or any member of the Wider Takeda Group; |
Chinese merger control
(e) |
(i) | State Administration for Market Regulation (“SAMR”) issuing a notice approving the Acquisition; or |
(ii) | the applicable review period pursuant to the PRC Anti-Monopoly Law, including any extension of such period, having elapsed and no prohibitions or restrictive conditions that are not on terms reasonably satisfactory to Takeda having been imposed by SAMR in relation to the Acquisition; |
Japanese merger control
(f) | the waiting period under the Japanese Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of April 14, 1947, as amended) with respect to the Acquisition having expired and notification having been received from |
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the Japan Fair Trade Commission (“JFTC”) of its decision not to issue a cease and desist order pursuant to Article 9 of JFTC Regulation No. 1 of 1953;
Brazilian merger control
(g) | Brazil’s Council for Economic Defence (“CADE”) having approved the consummation of the Acquisition unconditionally or, if approved with conditions, on such conditions as are reasonably satisfactory to Takeda, pursuant to the Brazilian competition law No 12529 of 30 November 2011, Title VII Chapter 3; |
Notifications, waiting periods and Authorisations
(h) | other than in relation to the matters referred to in Conditions 4(a) to 4(g), all material notifications, filings or applications which are deemed necessary by Takeda having been made in connection with the Acquisition and all necessary waiting periods and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with in each case in respect of the Acquisition and all Authorisations deemed reasonably necessary by Takeda in any jurisdiction for or in respect of the Acquisition and the acquisition or the proposed acquisition of any shares or other securities in, or control or management of, Shire or any other member of the Wider Shire Group by any member of the Wider Takeda Group having been obtained in terms and in a form satisfactory to Takeda from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider Shire Group or the Wider Takeda Group has entered into contractual arrangements and all such Authorisations necessary, appropriate or desirable to carry on the business of any member of the Wider Shire Group in any jurisdiction having been obtained and all such Authorisations remaining in full force and effect at the time at which the Acquisition becomes otherwise effective and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations; |
General antitrust and regulatory
(i) | other than in relation to the matters referred to in Conditions 4(a) to 4(h), no antitrust regulator or other Third Party having given notice of a decision to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference (and in each case, not having withdrawn the same), or having required any action to be taken or otherwise having done anything, or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in each case, not having withdrawn the same) and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to: |
(i) | require, prevent or materially delay the divestiture or materially alter the terms envisaged for such divestiture by any member of the Wider Takeda Group or by any member of the Wider Shire Group of all or any material part of its businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof); |
(ii) | require any member of the Wider Takeda Group or the Wider Shire Group to acquire or offer to acquire any shares, other securities (or the equivalent) or |
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interest in any member of the Wider Shire Group or any asset owned by any Third Party (other than in the implementation of the Acquisition);
(iii) | impose any limitation on, or result in a delay in, the ability of any member of the Wider Takeda Group directly or indirectly to acquire, hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Shire or on the ability of any member of the Wider Shire Group or any member of the Wider Takeda Group directly or indirectly to hold or exercise effectively all or any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise voting or management control over, any member of the Wider Shire Group, to an extent which is material in the context of the Combined Group taken as a whole or material in the context or the Acquisition; |
(iv) | otherwise adversely affect any or all of the business, assets, profits or prospects of any member of the Wider Shire Group or any member of the Wider Takeda Group; |
(v) | result in any member of the Wider Shire Group or any member of the Wider Takeda Group ceasing to be able to carry on business under any name under which it presently carries on business; |
(vi) | make the Acquisition, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Shire by any member of the Wider Takeda Group void, unenforceable and/or illegal under the laws of any relevant jurisdiction, or otherwise, directly or indirectly, materially prevent or prohibit, restrict, restrain or delay or otherwise to a material extent or otherwise materially interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise challenge, impede, interfere or require material amendment of the Acquisition or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, Shire by any member of the Wider Takeda Group; |
(vii) | require, prevent or materially delay a divestiture by any member of the Wider Takeda Group of any shares or other securities (or the equivalent) in any member of the Wider Shire Group or any member of the Wider Takeda Group, to an extent which is material in the context of the Combined Group taken as a whole or material in the context of the Acquisition; or |
(viii) | impose any material limitation on the ability of any member of the Wider Takeda Group of any member of the Wider Shire Group to conduct, integrate or co-ordinate all or any part of its business with all or any part of the business of any other member of the Wider Takeda Group and/or the Wider Shire Group, |
and all applicable waiting and other time periods (including any extensions thereof) during which any such antitrust regulator or other Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Shire Shares or otherwise intervene having expired, lapsed or been terminated;
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Certain matters arising as a result of any arrangement, agreement, etc.
(j) | except as Disclosed, there being no provision of any arrangement, agreement, lease, licence, franchise, permit or other instrument to which any member of the Wider Shire Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or be subject or any event or circumstance which, as a consequence of the Acquisition or the acquisition or the proposed acquisition by any member of the Wider Takeda Group of any shares or other securities (or the equivalent) in Shire or because of a change in the control or management of any member of the Wider Shire Group or otherwise, would reasonably be expected to result in, to an extent which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition: |
(i) | any monies borrowed by, or any other indebtedness, actual or contingent, of, or any grant available to, any member of the Wider Shire Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited; |
(ii) | the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Shire Group or any such mortgage, charge or other security interest (whenever created, arising or having arisen) becoming enforceable; |
(iii) | any such arrangement, agreement, lease, licence, franchise, permit or other instrument being terminated or the rights, liabilities, obligations or interests of any member of the Wider Shire Group being adversely modified or adversely affected or any onerous obligation or liability arising or any adverse action being taken or arising thereunder; |
(iv) | the rights, liabilities, obligations, interests or business of any member of the Wider Shire Group or any member of the Wider Takeda Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider Shire Group or any member of the Wider Takeda Group in or with any other person or body or firm or company (or any arrangement or arrangement relating to any such interests or business) being or becoming capable of being terminated, or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder; |
(v) | any member of the Wider Shire Group ceasing to be able to carry on business under any name under which it presently carries on business; |
(vi) | the value of, or the financial or trading position or prospects of, any member of the Wider Shire Group being prejudiced or adversely affected; or |
(vii) | the creation or acceleration of any liability (actual or contingent) by any member of the Wider Shire Group, |
and no event having occurred which, under any provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any
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member of the Wider Shire Group is a party or by or to which any such member or any of its assets are bound, entitled or subject, would result in any of the events or circumstances as are referred to in Conditions (j) to (vii);
Certain events occurring since 31 December 2017
(k) | except as Disclosed, no member of the Wider Shire Group having since 31 December 2017: |
(i) | issued or agreed to issue or authorised or proposed the issue, of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares, securities or convertible securities or transferred or sold or agreed to transfer or sell or authorised or proposed the transfer or sale of Shire Shares out of treasury (except, where relevant, as between Shire and wholly owned subsidiaries of Shire or between the wholly owned subsidiaries of Shire and except for the issue or transfer out of treasury of Shire Shares on the exercise of employee share options or vesting of employee share awards in the ordinary course under the Shire Share Plans); |
(ii) | recommended, declared, paid or made or resolved to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than (i) dividends (or other distributions whether payable in cash or otherwise) lawfully paid or made by any wholly owned subsidiary of Shire to Shire or any of its wholly owned subsidiaries and (ii) Permitted Dividends declared or paid by Shire in the ordinary course prior to the Effective Date; |
(iii) | other than pursuant to the Acquisition (and except for transactions between Shire and its wholly owned subsidiaries or between the wholly owned subsidiaries of Shire and transactions in the ordinary course of business) implemented, effected, authorised or proposed or announced its intention to implement, effect, authorise or propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or acquisition or disposal of assets or shares or loan capital (or the equivalent thereof) in any undertaking or undertakings in any such case to an extent which is material in the context of the Wider Shire Group taken as a whole or in the context of the Acquisition; |
(iv) | except for transactions between Shire and its wholly owned subsidiaries or between the wholly owned subsidiaries of Shire, and except for transactions in the ordinary course of business, disposed of, or transferred, mortgaged or created any security interest over any asset or any right, title or interest in any asset or authorised, proposed or announced any intention to do so in a manner which is material in the context of the Wider Shire Group taken as a whole or in the context of the Acquisition; |
(v) | except for transactions between Shire and its wholly owned subsidiaries or between the wholly owned subsidiaries of Shire and except for transactions in the ordinary course, issued, authorised or proposed or announced an intention to authorise or propose, the issue of or made any change in or to the terms of any debentures or become subject to any contingent liability or incurred or increased any indebtedness in each case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; |
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(vi) | entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, arrangement, agreement, transaction or commitment (whether in respect of capital expenditure or otherwise) which is outside of the ordinary course and is of a long-term, unusual or onerous nature or magnitude or which is or which involves an obligation of a nature or magnitude which is materially restrictive on the Wider Shire Group taken and as a whole, and in either case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; |
(vii) | entered into or materially varied the terms of, or made any offer (which remains open for acceptance) to enter into or materially vary the terms of any contract, service agreement, commitment or arrangement with any director or, except for salary increases, bonuses or variations of terms in the ordinary course, senior executive of Shire, other than as agreed by the Panel or agreed with Takeda; |
(viii) | proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any employee of the Wider Shire Group which are material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition, other than in accordance with the terms of the Acquisition or as agreed by the Panel or Takeda; |
(ix) | purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, except in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital; |
(x) | except in the ordinary course of business, waived, compromised or settled any claim by or against any member of the Wider Shire Group which is material in the context of the Wider Shire Group as a whole or material in the context of the Acquisition; |
(xi) | terminated or varied the terms of any agreement or arrangement which is of a long term or unusual nature between any member of the Wider Shire Group and any other person in a manner which is materially adverse to the Wider Shire Group taken as a whole; |
(xii) | made or agreed or consented to or procured any change to, or the custodian or trustee of any scheme having made a change to: |
(a) | the terms of the governing documents of any pension scheme(s) established by any member of the Wider Shire Group for its directors, former directors, employees, former employees or their dependants; |
(b) | the contributions payable to any such scheme(s) or to the benefits which accrue, or to the pensions which are payable, thereunder; |
(c) | the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or |
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(d) | the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued, made, agreed or consented to, |
to an extent which is in any such case material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition, and other than in accordance with applicable law;
(xiii) | carry out any act: |
(a) | which would or could reasonably be expected to lead to the commencement of the winding up of any pension scheme(s) established by any member of the Wider Shire Group for its directors, former directors, employees, former employees or their dependants; |
(b) | which would or might create a material debt owed by an employer to any such plan; or |
(c) | which would or might accelerate any obligation on any employer to fund or pay additional contributions to any such plan, |
to an extent which is in any such case material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition;
(xiv) | been unable, or admitted in writing that it is unable, to pay its debts when they fall due or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business, in each case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; |
(xv) | (other than in respect of a member of the Wider Shire Group which is dormant and was solvent at the relevant time) taken any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous or equivalent steps or proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed, in any case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; |
(xvi) | (except for transactions between Shire and its wholly owned subsidiaries or between the wholly owned subsidiaries of Shire), made, authorised, proposed or announced an intention to propose any change in its loan capital, in any case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; |
(xvii) | except for transactions between members of the Wider Shire Group and transactions entered into the ordinary course of business, entered into, implemented or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of business or corporate |
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entities, in any case which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition; or
(xviii) | entered into any agreement, arrangement, commitment or contract or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this Condition (k); |
No adverse change, litigation, regulatory enquiry or similar
(l) | except as Disclosed, since 31 December 2017 there having been, in each case to an extent which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition: |
(i) | no adverse change and no circumstance having arisen which would or might reasonably be expected to result in any adverse change in, the business, assets, financial or trading position or profits or prospects or operational performance of any member of the Wider Shire Group; |
(ii) | no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against or in respect of, any member of the Wider Shire Group or to which any member of the Wider Shire Group is or may become a party (whether as claimant, defendant or otherwise) having been threatened, announced, instituted or remaining outstanding by, against or in respect of, any member of the Wider Shire Group; |
(iii) | no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Shire Group having been threatened in writing, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider Shire Group; |
(iv) | no contingent or other liability having arisen or become apparent to Takeda which is or would be reasonably likely to affect adversely the business, assets, financial or trading position or profits or prospects of any member of the Wider Shire Group; and |
(v) | no steps having been taken and no omissions having been made which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Shire Group which is necessary for the proper carrying on of its business; |
No discovery of certain matters regarding information, liabilities and environmental issues
(m) | except as Disclosed, Takeda not having discovered, in each case to an extent which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition: |
(i) | that any financial, business or other information concerning the Wider Shire Group publicly announced prior to the date of this Announcement by or on behalf of any member of the Wider Shire Group is misleading, contains a material misrepresentation of any fact, or omits to state a fact necessary to make that information not misleading where the relevant information has not |
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subsequently been corrected prior to the date of this Announcement by disclosure, either publicly or otherwise to Takeda;
(ii) | that any member of the Wider Shire Group is subject to any liability, contingent or otherwise which is not Disclosed in the annual report and accounts of Shire for the financial year ended 31 December 2017; |
(iii) | that any past or present member of the Wider Shire Group has failed to comply in any material respect with any applicable legislation, regulations or other requirements of any jurisdiction or any Authorisations relating to the use, treatment, storage, carriage, disposal, discharge, spillage, release, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider Shire Group; or |
(iv) | that there is or is reasonably likely to be any obligation or liability (whether actual or contingent) or requirement to make good, remediate, repair, reinstate or clean up any property, asset or any controlled waters currently or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Shire Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation or order of any Third Party in any jurisdiction or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto; |
Anti-corruption
(n) | except as Disclosed, Takeda not having discovered, in each case to an extent which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition: |
(i) | any member of the Wider Shire Group or any person that performs or has performed services for or on behalf of any such company is or has engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti-corruption legislation; or |
(ii) | any past or present member of the Wider Shire Group has engaged in any activity or business with, or made any investments in, or made any payments to any government, entity or individual covered by any of the economic sanctions administered by the United Nations or the European Union (or any of their respective member states) or the United States Office of Foreign Assets Control or any other governments or supranational body or authority in any jurisdiction; |
No criminal property
(o) | except as Disclosed, Takeda not having discovered, in each case to an extent which is material in the context of the Wider Shire Group taken as a whole or material in the context of the Acquisition, |
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any asset of any member of the Wider Shire Group that constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition).
Part B: Certain further terms of the Acquisition
1 | Subject to the requirements of the Panel, Takeda reserves the right to waive: |
(i) | any of the Conditions set out in the above Condition 2 for the timing of the Court Meeting and the Shire General Meeting. If any such deadline is not met, Takeda will make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked or waived the relevant Condition or agreed with Shire to extend the deadline in relation to the relevant Condition. In all other respects, Condition 2 cannot be waived; and |
(ii) | in whole or in part, all or any of the above Conditions 4(b) to 4(o) (inclusive) (in the case of 4(b) with the prior written consent of Shire). |
Conditions 3, 4(a) and 4(b) cannot be waived (in the case of 4(b) without the prior written consent of Shire). Conditions 3 and 4(a) must be fulfilled by, and Conditions 4(b) to 4(o) (inclusive) must be fulfilled or waived (in the case of 4(b) with the prior written consent of Shire) by, no later than 11.59 p.m. on the date immediately preceding the Court Sanction Hearing.
2 | If Takeda is required by the Panel to make an offer for Shire Shares under the provisions of Rule 9 of the Takeover Code, Takeda may make such alterations to any of the above Conditions and terms of the Acquisition as are necessary to comply with the provisions of that Rule. |
3 | The Acquisition will lapse if: |
(i) | in so far as the Acquisition or any matter arising from or relating to the Scheme or Acquisition constitutes a concentration with a Community dimension within the scope of the Regulation, the European Commission either initiates proceedings under Article 6(1) of the Regulation or makes a referral to a competent authority in the United Kingdom under Article 9(1) of the Regulation and there is then a CMA Phase 2 Reference; or |
(ii) | the Acquisition or any matter arising from or relating to the Scheme or Acquisition becomes subject to a CMA Phase 2 Reference, |
in each case, before the date of the Court Meeting.
4 | Save where Takeda has confirmed the satisfaction or waiver of all Conditions (other than Condition 2) pursuant to the terms of the Co-operation Agreement, Takeda will be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of Conditions 4(a) to 4(o) (inclusive) by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment. |
5 | The Shire Shares acquired under the Acquisition will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching |
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or accruing to them, including, without limitation, voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid, or any other return of capital (whether by reduction of share capital or share premium account or otherwise) made, on or after the Effective Date (other than any Permitted Dividend).
6 | If, after the date of this Announcement but prior to the Effective Date, any dividend and/or other form of capital return or distribution is declared, paid or made or becomes payable by Shire, Takeda has agreed that Shire Shareholders will be entitled to receive any Permitted Dividends without any consequential reduction in the consideration payable in respect of each Shire Share (including such Shire Shares underlying the Shire ADSs) under the Acquisition. If any dividend and/or other form of capital return or distribution is authorised, declared, made or paid in respect of Shire Shares on or after the date of this Announcement and prior to the Effective Date, other than a Permitted Dividend, or in excess of a Permitted Dividend, Takeda reserves the right (without prejudice to any right Takeda may have, with the consent of the Panel, to invoke Condition 4(k)(ii) above) to reduce the consideration payable in respect of each Shire Share (including such Shire Shares underlying the Shire ADSs) by an amount equivalent to all or any part of such excess, in the case of Permitted Dividends, or otherwise by the amount of all or part of any such dividend and/or other form of capital return or distribution. |
7 | Takeda reserves the right to elect (with the consent of the Panel and subject to the terms of the Co-operation Agreement) to implement the acquisition of the Shire Shares and Shire ADSs by way of a Takeover Offer as an alternative to the Scheme: (i) with the consent of Shire; (ii) if a third party announces a firm intention to make an offer for the issued and to be issued ordinary share capital of Shire; (iii) if the Shire Directors have withdrawn, or adversely modified, adversely qualified or failed to provide, or they have failed to reaffirm (when requested by Takeda to do so) their unanimous and unconditional recommendation that the Shire Shareholders vote in favour of the Scheme and the Shire Resolutions (including prior to publication of the Scheme Document, their intention to do so); or (iv) other than in certain circumstances specified in the Co-operation Agreement, if the Court Meeting or Shire General Meeting is not held by the 22nd day after the expected date of such meetings as set out in the Scheme Document (or such later date as may, with the consent of the Panel, be agreed between Takeda and Shire and the Court may allow). |
8 | The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements. The New Takeda Securities to be issued pursuant to the Acquisition have not been and will not be registered under the US Securities Act nor under any of the relevant securities laws of any other Restricted Jurisdiction. Accordingly, the New Takeda Securities may not be offered, sold or delivered, directly or indirectly, in the United States, or any other Restricted Jurisdiction, except pursuant to exemptions from applicable requirements of any such jurisdiction, including the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. |
9 | The Acquisition is not being made, directly or indirectly, in, into or from, or by use of the mails of, or by any means of instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of, any Restricted Jurisdiction where to do so would violate the laws of that jurisdiction. |
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10 | The Scheme will be governed by Jersey law and will be subject to the jurisdiction of the Court and to the Conditions and further terms set out in this Appendix I and to be set out in the Scheme Document. The Co-operation Agreement and any dispute or claim arising out of, or in connection with, (whether contractual or non-contractual in nature) is governed by English law (save to the extent expressly set out therein) and is subject to the jurisdiction of the courts of England and Wales. The Acquisition will be subject to the applicable requirements of Jersey law, the Takeover Code, the Panel, the Listing Rules, the London Stock Exchange, the Financial Conduct Authority and the UKLA. |
11 | The New Takeda Shares will be issued credited as fully paid and will rank pari passu in all aspects with the Takeda Shares in issue at that time, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling on or after the Effective Date. |
12 | Each of the Conditions will be regarded as a separate Condition and will not be limited by reference to any other Condition. |
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APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
(i) | The “Latest Practicable Date” for the purposes of this Announcement means: |
· | with respect to the total number of Takeda Shares currently in issue, April 30, 2018; |
· | with respect to the trading price of a Takeda Share on the Tokyo Stock Exchange, May 2, 2018; and |
· | otherwise, May 4, 2018. |
(ii) | As at the Latest Practicable Date, there were 913,621,638 Shire Shares in issue (excluding 7,357,283 ordinary shares held in treasury). The International Securities Identification Number for the Shire Shares is JE00B2QKY057. |
(iii) | Any references to the issued and to be issued ordinary share capital of Shire are based on: |
· | the 913,621,638 Shire Shares referred to in paragraph (ii) above; and |
· | 25,151,718 Shire Shares which may be issued on or after the date of this Announcement to satisfy the exercise of options/share appreciation rights or vesting of awards outstanding under the Shire Share Plans as at May 1, 2018, estimated based on the closing price of ¥4,535 per Takeda Share and the exchange rates of £:¥ of 147.61 and £:$ of 1.3546, as at the Latest Practicable Date; less |
· | 847,828 Shire Shares as at April 30, 2018 held by the Shire Employee Benefit Trust which can be used to satisfy the exercise of options/share appreciation rights or vesting of awards under the Shire Share Plans. |
(iv) | As at the Latest Practicable Date, there were 794,530,136 Takeda Shares in issue (excluding 161,259 ordinary shares held in treasury), consisting of 781,110,160 ordinary shares with voting rights attached, and 13,419,976 ordinary shares in respect of which the voting rights attaching to such shares are not exercisable or which do not carry voting rights. |
(v) | The value placed by the Acquisition on the entire issued and to be issued ordinary share capital of Shire is calculated: |
· | by reference to an equivalent value of £49.01 per Shire Share based on the closing price of ¥4,923 per Takeda Share and the exchange rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018; and |
· | on the basis of the issued and to be issued share capital of Shire (as set out in paragraph (iii) above). |
(vi) | The share capital of the Combined Group (being 1,581,449,654) has been calculated as the sum of: |
· | 794,530,136 Takeda Shares, being the number of Takeda Shares in issue as at the Latest Practicable Date; and |
· | 786,919,518 New Takeda Shares which would be issued pursuant to the terms of the Acquisition (being 0.839 New Takeda Shares to be issued per Shire Share multiplied by the issued and to be issued share capital of Shire as set out in paragraph (iii) above). |
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(vii) | The percentage of the share capital of the Combined Group that will be owned by Shire Shareholders is calculated by dividing the number of New Takeda Shares to be issued pursuant to the terms of the Acquisition referred to in paragraph (vi) above by the issued share capital of the Combined Group (as set out in paragraph (vi) above) and multiplying the resulting sum by 100 to produce a percentage. |
(viii) | The market capitalisation of Takeda has been calculated: |
· | by reference to the closing price of ¥4,535 per Takeda Share as at the Latest Practicable Date; and |
· | on the basis of the share capital of Takeda (as set out in paragraph (iv) above). |
(ix) | The pro forma market capitalisation of the Combined Group has been calculated: |
· | by reference to the closing price of ¥4,535 per Takeda Share as at the Latest Practicable Date; and |
· | on the basis of the share capital of the Combined Group (as set out in paragraph (vi) above). |
(x) | Unless otherwise stated all prices and closing prices for Shire Shares and Takeda Shares are derived from Bloomberg. |
(xi) | The volume weighted average price of a Shire Share is derived from Bloomberg by reference to the volume weighted average price over the last 30 Shire trading days up to March 23, 2018 (being the last Business Day prior to rumours of Takeda’s possible interest in an offer for Shire). |
(xii) | Unless otherwise stated, the financial information relating to Shire is extracted from the audited consolidated financial statements of Shire for the financial year to December 31, 2017 and from the unaudited consolidated financial statements of Shire for the three months ended March 31, 2018, prepared in accordance with US GAAP. |
(xiii) | The financial information relating to Takeda is extracted from the consolidated financial statements of Takeda for the financial year ended March 31, 2017 and the nine months ended December 31, 2017, prepared in accordance with IFRS. |
(xiv) | Unless otherwise stated, where amounts are shown in both Japanese Yen and US Dollars, or converted between the aforementioned currencies, in this document, an exchange rate of $1.00:¥108.97 as at the Latest Practicable Date has been used, which has been derived from data provided by Bloomberg. |
(xv) | Unless otherwise stated, where amounts are shown in both Japanese Yen and Sterling, or converted between the aforementioned currencies, in this document, an exchange rate of £1.00:¥147.61 as at the Latest Practicable Date has been used, which has been derived from data provided by Bloomberg. |
(xvi) | Unless otherwise stated, where amounts are shown in both US Dollars and Sterling, or converted between the aforementioned currencies, in this document, an exchange rate of £1.00:$1.3546 as at the Latest Practicable Date has been used, which has been derived from data provided by Bloomberg. |
(xvii) | The synergy numbers are unaudited and are based on analysis by Takeda’s management and on Takeda’s internal records. Further information underlying the Quantified Financial |
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Benefits Statement contained in this Announcement is provided in Appendix IV to this Announcement.
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APPENDIX III
IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings in respect of Shire Shares (including such Shire Shares represented by Shire ADSs)
Shire Directors’ Irrevocable Undertakings
Name of Shire Director | Number of Shire Shares in respect of which undertaking is given | Percentage of Shire issued share capital (excluding treasury shares) (1) |
Olivier Bohuon | 2,577 | <0.01 |
Ian Clark | 759 (held as ADSs) | <0.01 |
Thomas Dittrich | 9,400 | <0.01 |
Gail Fosler | 24,435 (held as ADSs) | <0.01 |
Steven Gillis | 4,998 (held as ADSs) | <0.01 |
David Ginsburg | 3,255 (held as ADSs) | <0.01 |
Susan Kilsby | 25,470 | <0.01 |
Sara Mathew | 8,622 | <0.01 |
Flemming Ornskov | 227,577 (181,677 held as ADSs) | 0.02 |
Albert Stroucken | 60,513 (held as ADSs) | <0.01 |
Total | 367,606 | 0.04 |
Ordinary shares that are held in the form of ADSs: one ADS is equivalent to three ordinary shares of 5p each.
(1) As at the Latest Practicable Date.
The obligations of the Shire Directors under the irrevocable undertakings shall lapse and cease to have effect on and from the earlier of the following occurrences:
· | if Takeda announces that it does not intend to proceed with the Acquisition and no new, revised or replacement Scheme or Takeover Offer is announced by Takeda in accordance with Rule 2.7 of the Takeover Code at the same time; |
· | in circumstances where the Acquisition is being implemented by way of the Scheme and Takeda elects to exercise its right to effect a Switch (as defined in the Co-operation Agreement) in accordance with the terms of the Co-operation Agreement, if the Offer Document has not been despatched within 28 days of the date of issue of the press announcement announcing the change in structure (or such later date as the Panel may agree); |
· | on the earlier of: (i) the Long Stop Date; and (ii) the date on which the Scheme (or Takeover Offer, as applicable) lapses or is withdrawn in accordance with its terms (other than where such lapse or withdrawal: (a) is as a result of the exercise of Takeda’s right to effect a Switch (as defined in the Co-operation Agreement) in accordance with the Co-operation |
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Agreement; or (b) is otherwise to be followed by an announcement under Rule 2.7 of the Takeover Code made by Takeda or a person acting in concert with Takeda to implement the Acquisition by a different offer or scheme on substantially the same or improved terms and which is recommended by the Shire Directors); or
· | any competing offer for the entire issued and to be issued ordinary share capital of Shire is made which is declared wholly unconditional (if implemented by way of takeover offer) or otherwise becomes effective (if implemented by way of a scheme of arrangement). |
Irrevocable undertakings in respect of Takeda Shares
Takeda Directors’ Irrevocable Undertakings
Name of Takeda Director | Number of Takeda Shares in respect of which undertaking is given | Percentage of Takeda issued share capital |
Christophe Weber | 81,700 | 0.01 |
Masato Iwasaki | 8,996 | <0.01 |
Yoshiaki Fujimori | 1,300 | <0.01 |
Masahiro Sakane | 900 | <0.01 |
Toshiyuki Shiga | 700 | <0.01 |
Yasuhiko Yamanaka | 17,800 | <0.01 |
Shiro Kuniya | 1,700 | <0.01 |
Koji Hatsukawa | 600 | <0.01 |
Total | 113,696 | 0.01 |
The obligations of the Takeda Directors under the irrevocable undertakings shall lapse and cease to have effect on and from the earlier of the following occurrences:
· | Takeda announces that it does not intend to proceed with the Acquisition and no new, revised or replacement Scheme is announced by Takeda in accordance with Rule 2.7 of the Code at the same time; |
· | the Scheme Document is not despatched on or before December 31, 2018 (or such later date as Shire and Takeda, with the consent of the Panel, may agree); |
· | on the earlier of: (i) the Long Stop Date; and (ii) the date on which the Scheme (or Takeover Offer, as the case may be) lapses or is withdrawn in accordance with its terms (other than where such lapse or withdrawal: (a) is as a result of the exercise of Takeda’s right to effect a Switch (as defined in the Co-operation Agreement) in accordance with the terms of the Co-operation Agreement; or (b) is otherwise to be followed by an announcement under Rule 2.7 of the Code made by Takeda or a person acting in concert with Takeda to implement the Acquisition by a different offer or scheme on substantially the same or improved terms and which is recommended by the Shire Directors); or |
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· | any competing offer for the issued and to be issued ordinary share capital of Shire is made which is declared wholly unconditional (if implemented by way of takeover offer) or otherwise becomes effective (if implemented by way of a scheme of arrangement). |
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APPENDIX
IV
STATEMENT ON QUANTIFIED FINANCIAL BENEFITS
Part A
Takeda has made the following quantified financial benefits statement in paragraph 4 of the Announcement (the “Quantified Financial Benefits Statement”):
“The Takeda Directors expect recurring pre-tax cost synergies for the Combined Group to reach a run-rate of at least $1.4 billion per annum by the end of the third fiscal year following completion of the Acquisition. Takeda expects these anticipated synergies to accrue as a direct result of the Acquisition and that they would not otherwise be achieved on a standalone basis.
Significant recurring cost synergy potential
The constituent elements of quantified cost synergies, which are expected to originate from the cost bases of both Shire and Takeda, include:
· | Manufacturing and supply: approximately 4 per cent. of the identified cost synergies are expected to be generated from savings from in-sourcing Oral Solid Dose manufacturing through Takeda excess capacity, efficiencies in operational procurement spend and reduced overheads; |
· | R&D: approximately 43 per cent. of the identified cost synergies are expected to be generated from removal of duplicated R&D costs, through rationalising ongoing research and early stage pipeline programs to optimise value of R&D spend and reducing overlapping resources; and |
· | Sales, marketing and administrative efficiencies: approximately 53 per cent. of the identified cost synergies are expected to be generated from the reduction of overlapping marketing presence in gastroenterology (GI) and neuroscience, consolidation of overlapping office locations, the elimination of duplicated IT systems, the optimisation of marketing and sales employee and non-employee costs and the reduction of duplicate costs across central support functions. |
Realisation costs and cost dis-synergies
The Takeda Directors expect the realisation of the quantified synergies will require estimated one-off cash costs of approximately $2.4 billion incurred in the first three fiscal years following completion of the Acquisition.
The Takeda Directors do not expect any other material cost dis-synergies to arise in connection with the Acquisition.”
Further information supporting the Quantified Financial Benefits Statement, including the principal assumptions and sources of information, is set out below.
Bases of Belief for the Quantified Financial Benefits Statement
Synergy planning commenced in advance of the first approach by Takeda to the Shire Board, when a Takeda synergy team was established to evaluate and assess the potential synergies available from the Acquisition and undertake an initial planning exercise.
The Takeda synergy team has engaged with senior subject matter experts in the R&D, manufacturing, finance and commercial functional areas within the Takeda organisation to provide
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input into the development of the cost synergy plan and identification of potential savings. This has included input from the Takeda executive leadership team.
In preparing a detailed synergy plan, the Takeda synergy team has also worked alongside and with the support of external consultants engaged by Takeda.
In preparing the Quantified Financial Benefits Statement, both Takeda and Shire have shared certain operating and financial information to facilitate an analysis in support of evaluating the potential synergies available from the Acquisition. In circumstances where data has been limited for commercial or other reasons, the Takeda synergy team has made estimates and assumptions to aid its development of individual synergy initiatives. The assessment and quantification of the potential synergies have in turn been informed by Takeda management's industry experience and knowledge of the existing businesses.
The baseline used for the quantified cost synergies is Shire’s budgeted cost base for the financial year ended December 31, 2018, supported where relevant by certain information from Takeda’s cost base for the financial year ended March 31, 2018 and Takeda’s budgeted cost base for the financial year ending March 31, 2019.
In general, the synergy assumptions have in turn been risk adjusted, exercising a degree of prudence in the calculation of the estimated synergy benefit set out above.
In arriving at the Quantified Financial Benefits Statements, the Takeda Directors have assumed:
· | no material change in macroeconomic, political or legal conditions in the markets and regions in which Takeda or Shire operate that materially impact on the implementation or costs to achieve the proposed cost savings; |
· | no material impact on the underlying operations of either company or their ability to continue to conduct their businesses; |
· | no material change in current foreign exchange rates; |
· | no change in tax legislation or tax rates or other legislation or regulation in the countries in which Takeda and Shire operate that could materially impact the ability to achieve any cost savings; and |
· | the completion of the disposal of the oncology business by Shire, as announced by Shire on April 16, 2018. |
Reports
The Takeda Board believes that the Combined Group should be able to achieve the synergies set out in the Quantified Financial Benefits Statement.
As required by Rule 28.1(a) of the Takeover Code, Deloitte LLP, as reporting accountants to Takeda, and Evercore, J.P. Morgan Cazenove and Nomura, as financial advisers to Takeda, have provided the reports required under that Rule.
Copies of these reports are included in this Appendix IV. Each of Deloitte LLP, Evercore, J.P. Morgan Cazenove and Nomura has given and not withdrawn its consent to the publication of its report in this Announcement in the form and context in which it is included.
Notes
1. | The statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a |
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result, the cost savings and synergies referred to may not be achieved, or those achieved could be materially different from those estimated.
2. | No statement in the Quantified Financial Benefits Statement, or this Announcement generally, should be construed as a profit forecast or interpreted to mean that Takeda’s earnings in the full first full year following the Acquisition, or in any subsequent period, would necessarily match or be greater than or be less than those of Takeda and/or Shire for the relevant preceding financial period or any other period. |
3. | Due to the scale of the Combined Group, there may be additional changes to the Combined Group’s operations. As a result, and given the fact that the changes relate to the future, the resulting cost savings may be materially greater or less than those estimated. |
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Part B
Report from Deloitte LLP
The Board of Directors
on behalf of Takeda Pharmaceutical Company Limited
1-1, Doshomachi 4-chome
Chuo-ku
Osaka
540-8645
Japan
Evercore Partners International LLP
15 Stanhope Gate
London
W1K 1LN
UK
J.P. Morgan Securities plc
25 Bank Street
Canary Wharf
London
E14 5JP
UK
Nomura International plc
One Angel Lane
London
EC4R 3AB
UK
8 May 2018
Dear Sirs
RECOMMENDED OFFER FOR SHIRE PLC BY TAKEDA PHARMACEUTICAL COMPANY LIMITED (the “Offeror”)
We report on the statement made by the directors of Takeda Pharmaceutical Company Limited (the “Directors”) of synergy benefits set out in Part A of Appendix IV to the Rule 2.7 Announcement document (the “Announcement”) issued by the Offeror (the “Quantified Financial Benefits Statement” or the “Statement”). The Statement has been made in the context of the disclosures within Part A of Appendix IV setting out, inter alia, the basis of the Directors’ belief (identifying the principal assumptions and sources of information) supporting the Statement and their analysis, explanation and quantification of the constituent elements.
Responsibilities
It is the responsibility of the Directors to prepare the Statement in accordance with Rule 28 of the City Code on Takeovers and Mergers (the “Takeover Code”).
It is our responsibility to form our opinion, as required by Rule 28.1(a) of the Takeover Code, as to whether the Statement has been properly compiled on the basis stated and to report that opinion to you.
This report is given solely for the purposes of complying with Rule 28.1(a)(i) of the Takeover Code and for no other purpose. Therefore, to the fullest extent permitted by law we do not assume any
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other responsibility to any person for any loss suffered by any such person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 23.2 of the Takeover Code, consenting to its inclusion in the Announcement.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom.
Our work included considering whether the Statement has been accurately computed based upon the disclosed bases of belief (including the principal assumptions). Whilst the bases of belief (and the principal assumptions) upon which the Statement is based are solely the responsibility of the Directors, we considered whether anything came to our attention to indicate that any of the bases of belief (or principal assumptions) adopted by the Directors which, in our opinion, are necessary for a proper understanding of the Statement have not been disclosed or if any basis of belief (or principal assumption) made by the Directors appears to us to be unrealistic. Our work did not involve any independent examination of any of the financial or other information underlying the Statement.
We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the Quantified Financial Benefits Statement has been properly compiled on the basis stated.
Since the Statement (and the principal assumptions on which it is based) relates to the future, the actual synergy benefits achieved are likely to be different from those anticipated in the Statement and the differences may be material. Accordingly, we can express no opinion as to the achievability of the synergy benefits identified by the Directors in the Statement.
Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in jurisdictions outside the United Kingdom, including the United States of America, and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices. We have not consented to the inclusion of this report and our opinion in any registration statement filed with the SEC under the US Securities Act of 1933 (either directly or by incorporation by reference) or in any offering document enabling an offering of securities in the United States (whether under Rule 144A or otherwise). We therefore accept no responsibility to, and deny any liability to, any person using this report and opinion in connection with any offering of securities inside the United States of America or who makes a claim on the basis they had acted in reliance on the protections afforded by United States of America law and regulation.
Opinion
In our opinion, based on the foregoing, the Quantified Financial Benefits Statement has been properly compiled on the basis stated.
Yours faithfully
Deloitte LLP
Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NWE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.
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Part C
Report from Evercore, J.P. Morgan Cazenove and Nomura
The Board of Directors
Takeda Pharmaceutical Company Limited
1-1, Doshomachi 4-chome
Chuo-ku
Osaka
540-8645
Japan
8 May 2018
Dear Sirs,
Recommended offer by Takeda Limited (“Takeda”) for Shire plc (“Shire”)
We refer to the quantified financial benefits statement (the “Statement”) made by Takeda set out in Appendix IV to the Rule 2.7 announcement dated 8 May 2018 (the “Announcement”), for which the board of directors of Takeda (the “Takeda Directors”) are solely responsible under Rule 28.3 of the UK City Code on Takeovers and Mergers (the “Code”).
We have discussed the Statement (including the assumptions, bases of calculation and sources of information referred to therein) with the Takeda Directors and those officers and employees of Takeda who developed the underlying plans as well as with Deloitte LLP (“Deloitte”) as reporting accountants. The Statement is subject to uncertainty as described in the Announcement and our work did not involve an independent examination, or verification, of any of the financial or other information underlying the Statement.
We have relied upon the accuracy and completeness of all the financial and other information provided to us by or on behalf of Takeda and/or Shire, or otherwise discussed with or reviewed by us, in connection with the Statement, and we have assumed such accuracy and completeness for the purposes of providing this letter.
We do not express any view as to the achievability of the quantified financial benefits, whether on the basis identified by the Takeda Directors in the Statement, or otherwise.
We have also reviewed the work carried out by Deloitte and have discussed with Deloitte its opinion addressed to you and us on this matter and which is set out in Part B of Appendix IV of the Announcement, and the accounting policies and bases of calculation for the Statement.
This letter is provided to you solely having regard to the requirements of, and in connection with, Rule 28.1(a)(ii) of the Code and for no other purpose. We accept no responsibility to Takeda, Shire or their shareholders or any person other than the Takeda Directors in respect of the contents of this letter. We are acting exclusively as financial advisers to Takeda and no one else in connection with the offer by Takeda for Shire and it was for the purpose of complying with Rule 28.1(a)(ii) of the Code that Takeda requested Evercore Partners International LLP, J.P. Morgan Securities plc and Nomura International plc to prepare this letter relating to the Statement. No person other than the Takeda Directors can rely on the contents of this letter, and to the fullest extent permitted by law, we expressly exclude and disclaim all liability (whether in contract, tort or otherwise) to any other person, in respect of this letter, its contents or the work undertaken in connection with this letter or any of the results or conclusions that may be derived from this letter or any written or oral information
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provided in connection with this letter, and any such liability is expressly disclaimed except to the extent that such liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statement, for which you as the Takeda Directors are solely responsible, has been prepared with due care and consideration.
Yours faithfully,
Evercore Partners International LLP, J.P. Morgan Securities plc and Nomura International plc
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APPENDIX V
DEFINITIONS
The following definitions apply throughout this Announcement unless the context requires otherwise:
“Acquisition” | the proposed acquisition by Takeda of the entire issued and to be issued ordinary share capital of Shire, to be effected by means of the Scheme or, should Takeda so elect and subject to the consent of the Panel and the terms of the Co-operation Agreement, by means of a Takeover Offer and, where the context admits, any subsequent revision, variation, extension or renewal thereof |
“ADR” | American Depositary Receipt evidencing American Depositary Shares |
“ADS” | American Depositary Share |
“Announcement” | this announcement made pursuant to Rule 2.7 of the Takeover Code |
“Authorisations” | regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals |
“Brazil” | the Federative Republic of Brazil |
“Business Day” | a day (other than a Saturday, Sunday or public holiday in London, Jersey, New York or Tokyo) on which banks are open for business in London, Jersey, New York and Tokyo |
“China” | the People’s Republic of China |
“Citi” | Citigroup Global Markets Limited |
“Clean Team Confidentiality Agreement” | the clean team agreement described in paragraph 11 of this Announcement |
“Combined Group” | the enlarged group comprising the Shire Group and the Takeda Group following completion of the Acquisition |
“Competition and Markets Authority” or “CMA” | the competent UK authority, department of the government of the United Kingdom, responsible for competition |
“Conditions” | the conditions to the implementation of the Acquisition, as set out in Appendix I to this Announcement and to be set out in the Scheme Document |
“Confidentiality Agreement” | the confidentiality agreement described in paragraph 11 of this Announcement |
“Confidentiality and Joint Defense Agreement” | the joint defense agreement described in paragraph 11 of this Announcement |
“Consideration” | the consideration payable to Shire Shareholders pursuant to the Acquisition, comprising $30.33 in cash and either 0.839 New Takeda Shares or 1.678 Takeda ADSs per Shire Share, as more fully set out in paragraph 2 of this Announcement |
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“Court” | the Royal Court of Jersey |
“Court Meeting” | the meeting or meetings of Shire Shareholders or any class or classes thereof to be convened by order of the Court pursuant to Article 125(1) of the Jersey Companies Law (notice of which will be set out in the Scheme Document) for the purpose of considering and, if thought fit, approving the Scheme, including any adjournment thereof |
“Court Order” | the Act of the Court sanctioning the Scheme under Article 125 of the Jersey Companies Law |
“Court Sanction Hearing” | the hearing of the Court to sanction the Scheme under Article 125 of the Jersey Companies Law |
“Co-operation Agreement” | the agreement dated May 8, 2018 between Takeda and Shire relating, among other things, to the implementation of the Acquisition |
“Dealing Disclosure” | has the same meaning as in Rule 8 of the Takeover Code |
“Deloitte LLP” | Deloitte LLP, the United Kingdom member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, whose member firms are legally separate and independent entities |
“Disclosed” | the information fairly disclosed by or on behalf of Shire: (i) in the annual report and accounts of the Shire Group for the financial year ended 31 December 2017; (ii) in this Announcement; (iii) in any other announcement to a Regulatory Information Service by, or on behalf of Shire prior to the publication of this Announcement; (iv) in writing prior to the date of this Announcement to Takeda or Takeda’s financial, accounting, tax or legal advisers (in their capacity as such); or (v) as otherwise fairly disclosed to Takeda (or its respective officers, employees, agents or advisers) prior to the date of this Announcement |
“Disclosure and Transparency Rules” | the disclosure rules made by the FCA and forming part of the FCA’s handbook of rules and guidance, as amended from time to time |
“Effective Date” | the date on which either (i) the Scheme becomes effective pursuant to its terms; or (ii) if Takeda elects, in accordance with the provisions of the Co-operation Agreement to implement the Acquisition, by means of a Takeover Offer, the date on which the Takeover Offer becomes or is declared wholly unconditional in all respects in accordance with the requirements of the Takeover Code |
“Evercore” | Evercore Partners International LLP |
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“FCA” or “Financial Conduct Authority” | the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the UK Financial Services and Markets Act 2000 |
“FDA” | the United States Food and Drug Administration |
“FIEA” | the Japanese Financial Instruments and Exchange Act (Act No. 25 1948) (and any amendments thereto) |
“Forms of Proxy” | the forms of proxy for use in connection with the Court Meeting and the Shire General Meeting (as applicable) which shall accompany the Scheme Document |
“Goldman Sachs” | Goldman Sachs International |
“IFRS” | International Financial Reporting Standards |
“Japan” | Japan, its cities, prefectures, territories and possessions and all areas subject to its jurisdiction and any political sub-division thereof |
“Japanese Companies Act” | the Japanese Companies Act (Act No. 86 2005) (kaisha hou) |
“Jersey” | the Bailiwick of Jersey |
“Jersey Companies Law” | the Companies (Jersey) Law 1991, as amended from time to time |
“J.P. Morgan” | JPMorgan Securities Japan Co., Ltd., together with its affiliate J.P. Morgan Cazenove |
“J.P. Morgan Cazenove” | J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove |
“Latest Practicable Date” | has the meaning given in paragraph (i) of Appendix II to this Announcement |
“Listing Rules” | the rules and regulations made by the Financial Conduct Authority in its capacity as the UKLA under the Financial Services and Markets Act 2000, and contained in the UKLA’s publication of the same name |
“Local Japanese Stock Exchanges” | Nagoya Stock Exchange, Fukuoka Stock Exchange and Sapporo Stock Exchange |
“London Stock Exchange” | London Stock Exchange plc |
“Long Stop Date” | May 8, 2019 (or such later date as may be agreed in writing by Takeda and Shire (with the Panel’s consent and as the Court may approve (if such approval(s) is or are required)) |
“Market Abuse Regulation” | Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 |
“Member State” | one of the 28 states of the European Union |
“Morgan Stanley” | Morgan Stanley & Co. International plc |
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“National Competition Authority” | the competent competition authority of any Member State other than the UK, as defined in paragraph 4(c)(ii) of Part A of Appendix I to this Announcement |
“New Takeda Securities” | the New Takeda Shares or, as the case may be, the Takeda ADSs proposed to be issued to Shire Shareholders in connection with the Acquisition or in consideration for the transfer to Takeda of Shire Shares pursuant to the articles of association of Shire as amended by the Shire Resolutions |
“New Takeda Shares” | the new Takeda Shares proposed to be issued to Shire Shareholders in connection with the Acquisition or in consideration for the transfer to Takeda of Shire Shares pursuant to the articles of association of Shire as amended by the Shire Resolutions |
“Nomura” | Nomura International plc |
“NYSE” | the New York Stock Exchange |
“Offer Document” | should the Acquisition be implemented by way of a Takeover Offer, the offer document published by or on behalf of Takeda in connection with the Takeover Offer containing, inter alia, the terms and conditions of the Takeover Offer |
“Offer Period” | the Offer Period (as defined by the Takeover Code) relating to Shire, which commenced on March 28, 2018 |
“Official List” | the Official List maintained by the UKLA |
“Opening Position Disclosure” | has the same meaning as in Rule 8 of the Takeover Code |
“Panel” | the Panel on Takeovers and Mergers |
“Permitted Dividend” | has the meaning given to it in paragraphs 2 and 18.1 of this Announcement |
“PRC Anti-Monopoly Law” | the Anti-Monopoly Law of the People’s Republic of China |
“Quantified Financial Benefits Statement” | the statements of estimated cost savings and synergies arising out of the Acquisition set out in Appendix IV to this Announcement |
“Registrar of Companies” | the Registrar of Companies in Jersey |
“Regulation” | has the meaning given to it in paragraph 4(c) of Part A of Appendix I to this Announcement |
“Regulatory Conditions” | means the Conditions set out in paragraphs 4(c) to 4(i) (inclusive) and 4(l) of Part A of Appendix I to this Announcement (if and to the extent that, in the case of paragraphs 4(h), 4(i) and 4(l), the relevant “Third Party” under the Conditions is a Relevant Authority |
“Regulatory Information Service” | any of the services set out in Appendix 1 to the Listing Rules |
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“Relevant Authority” | means any central bank, ministry, governmental, quasi-governmental (including the European Union), supranational, statutory, regulatory or investigative body or authority (including any national or supranational anti-trust or merger control authority, any sectoral ministry or regulator and any foreign investment review body), national, state, municipal or local government (including any subdivision, court, administrative agency or commission or other authority thereof), any entity owned or controlled by them, any private body exercising any regulatory, taxing, importing or other authority, trade agency, association, institution or professional or environmental body in any jurisdiction |
“Restricted Jurisdiction” | any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if information concerning the Acquisition is sent or made available to Shire Shareholders in that jurisdiction |
“Restricted Overseas Person” | Shire Shareholders resident in, or nationals or citizens of, a Restricted Jurisdiction or who are nominees or custodians, trustees or guardians for, citizens, residents or nationals of a Restricted Jurisdiction |
“Scheme” | the proposed scheme of arrangement under Article 125 of the Jersey Companies Law between Shire and the Shire Shareholders to implement the acquisition of Shire by Takeda, with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Shire and Takeda |
“Scheme Court Sanction Hearing” | the hearing of the Court to sanction the Scheme pursuant to Article 125 of the Jersey Companies Law and any adjournment, postponement or reconvening thereof |
“Scheme Document” | the document to be dispatched to Shire Shareholders and persons with information rights setting out, among other things, the details of the Acquisition, the explanatory statement required under Article 126 of the Jersey Companies Law, the full terms and conditions of the Scheme and containing the notices convening the Court Meeting and the Shire General Meeting (including any supplementary scheme document) |
“Scheme Record Time” | the time and date specified as such in the Scheme Document |
“Scheme Shareholder” | a holder of Scheme Shares |
“Scheme Shares” | (i) the Shire Shares in issue at the date of the Scheme Document; |
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(ii) any Shire Shares issued after the date of the Scheme Document and prior to the Scheme Voting Record Time; and
(iii) any Shire Shares issued at, or after, the Scheme Voting Record Time and prior to the Scheme Record Time in respect of which the original or any subsequent holder thereof is bound by the Scheme, or shall by such time have agreed in writing to be bound by the Scheme,
in each case excluding any Shire Shares held in treasury and any Shire Shares beneficially held by Takeda or any other member of the Takeda Group
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“Scheme Voting Record Time” | the date and time specified in the Scheme Document by reference to which entitlement to vote at the Court Meeting will be determined, expected to be 6.00 pm on the day which is two days before the Court Meeting or, if the Court Meeting is adjourned, 6.00 pm on the day which is two days before the date of such adjourned Court Meeting |
“Settlement Date” | the date which will be specified as such in the Scheme Document, or such other date as may be agreed between Takeda and Shire, being no later than 14 days after the Effective Date |
“Shire” | Shire plc |
“Shire ADSs” | American Depositary Shares, each of which represents three Shire Shares |
“Shire Board” | the Shire Directors collectively |
“Shire Deposit Agreement” | the deposit agreement, including the form of American Depositary Receipt for American Depositary Shares representing Shire Shares attached thereto, setting forth the terms of the Shire ADSs |
“Shire Depositary” | Citibank, NA, or the depositary from time to time for the Shire ADSs pursuant to the Shire Deposit Agreement |
“Shire Directors” | the directors of Shire as at the date of this Announcement or, where the context requires, the directors of Shire from time to time |
“Shire General Meeting” | the general meeting of Shire Shareholders (including any adjournment thereof) to be convened in connection with the Scheme for the purpose of considering, and, if thought fit, approving, the Shire Resolutions |
“Shire Group” | Shire and its subsidiaries and subsidiary undertakings from time to time and, where the context permits, each of them |
“Shire Meetings” | the Court Meeting and the Shire General Meeting |
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“Shire Share Plans” | the Shire Long Term Incentive Plan 2015, the Shire Global Employee Stock Purchase Plan, the Shire Sharesave Scheme 2008, the Shire UK Sharesave Plan 2015, the Shire Irish Employee Stock Purchase Plan 2008, the Shire Irish Sharesave Plan 2015, the Shire Deferred Bonus Plan 2015, the Shire Portfolio Share Plan and the options and restricted stock units over ADSs and Shire Shares that were originally granted over shares in Baxalta Inc and are governed by the rules of the Baxalta Incorporated 2015 Incentive Plan and the Governing Terms of the Substitute Awards |
“Shire Resolutions” | such shareholder resolutions of Shire as are necessary to enable Shire to approve, implement and effect the Scheme and the Acquisition, including (without limitation) a resolution to amend the articles of association of Shire by the adoption of a new article under which any Shire Shares issued or transferred after the Shire General Meeting shall either be subject to the Scheme or (after the Effective Date) shall be immediately transferred to Takeda (or as it may direct) in exchange for the same consideration as is due under the Scheme |
“Shire Shareholders” | the holders of Shire Shares, which shall include if the context requires, holders of Shire ADSs |
“Shire Shares” | the existing unconditionally allotted or issued and fully paid ordinary shares of 5 pence each in the capital of Shire and any further such ordinary shares which are unconditionally allotted or issued before the Scheme becomes effective |
“Significant Interest” | in relation to an undertaking, a direct or indirect interest of 20 per cent. or more of the total voting rights conferred by the equity share capital of such undertaking |
“Takeda” | Takeda Pharmaceutical Company Limited |
“Takeda ADSs” | American Depositary Shares, each of which will represent 0.5 Takeda Shares |
“Takeda Board” | the board of directors of Takeda or the directors of Takeda collectively, as the context requires |
“Takeda Directors” | the directors of Takeda as at the date of this Announcement or, where the context requires, the directors of Takeda from time to time |
“Takeda Extraordinary General Meeting” | the extraordinary general meeting of Takeda to be convened in connection with the Acquisition, notice of which will be sent out in the Takeda Shareholder Documents, including any adjournment thereof |
“Takeda Group” | Takeda and its subsidiaries and subsidiary undertakings from time to time and, where the context permits, each of them |
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“Takeda Resolutions” | the resolutions to be tabled at the Takeda Extraordinary General Meeting in order to approve, implement and effect the Acquisition and the issue of the New Takeda Shares |
“Takeda Shareholders” | the holders of Takeda Shares, which shall include if the context requires, holders of Takeda ADSs |
“Takeda Shareholder Documents” | the convocation of meeting, and its supporting attachments, relating to the issue of New Takeda Shares to be sent to the Takeda Shareholders and made available to Shire Shareholders and containing amongst other things, the notice convening the Takeda Extraordinary General Meeting and information on Takeda, the Combined Group and the New Takeda Securities |
“Takeda Shares” | the allotted and issued and fully paid ordinary shares in the capital of Takeda |
“Takeover Code” | the City Code on Takeovers and Mergers |
“Takeover Offer” | if, subject to the consent of the Panel and the terms of the Co-operation Agreement, the Acquisition is implemented by way of a takeover offer as defined in Article 116 of the Jersey Companies Law, the offer to be made by or on behalf of Takeda to acquire the entire issued and to be issued ordinary share capital of Shire and, where the context admits, any subsequent revision, variation, extension or renewal of such offer |
“Tokyo Stock Exchange” or “TSE” | Tokyo Stock Exchange, Inc. |
“Third Party” | each of a central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any jurisdiction |
“Transaction Documents” | the Scheme Document and the Takeda Shareholder Documents |
“UKLA” | the UK Listing Authority, being the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 |
“United Kingdom” or “UK” | the United Kingdom of Great Britain and Northern Ireland |
“United States” or “US” | the United States of America, its territories and possessions, any state of the United States of America, the District of Columbia and all other areas subject to its jurisdiction and any political sub-division thereof |
“US Exchange Act” | the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder |
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“US GAAP” | Generally Accepted Accounting Principles (United States) |
“US Securities Act” | the United States Securities Act of 1933, and the rules and regulations promulgated thereunder |
“Wider Shire Group” | Shire and its subsidiaries, subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which Shire and/or such subsidiaries or undertakings (aggregating their interests) have a Significant Interest |
“Wider Takeda Group” | Takeda and its subsidiaries, subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which Takeda and/or such subsidiaries or undertakings (aggregating their interests) have a Significant Interest |
For the purposes of this Announcement, “subsidiary”, “subsidiary undertaking”, “undertaking” and “associated undertaking” have the respective meanings given thereto by the UK Companies Act 2006 (as amended from time to time).
All references to “pounds”, “pounds Sterling”, “Sterling”, “£”, “pence”, “penny” and “p” are to the lawful currency of the United Kingdom.
All reference to “JPY”, “JP¥”, “¥” and “Japanese Yen” are to the lawful currency of Japan.
All references to “US$”, “$” and “US Dollars” are to the lawful currency of the United States.
All the times referred to in this Announcement are London times unless otherwise stated.
References to the singular include the plural and vice versa.
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Exhibit 99.2
NON GAAP MEASURES
Shire reports certain financial measures not prepared in accordance with U.S. GAAP. These measures are referred to as “Non GAAP” measures and include: Non GAAP total revenues; Non GAAP operating income; Non GAAP income tax expense; Non GAAP net income; Non GAAP diluted earnings per ADS; Non GAAP effective tax rate; Non GAAP CER; Non GAAP cost of sales; Non GAAP gross margin; Non GAAP R&D; Non GAAP SG&A; Non GAAP other expense, net; Non GAAP tax adjustments; Non GAAP free cash flow; Non GAAP net debt; Non GAAP EBITDA; and Non GAAP EBITDA margin.
The Non GAAP measures exclude the impact of certain specified items that are highly variable, difficult to predict, and of a size that may substantially impact Shire’s operations. Upfront and milestone payments related to in-licensing and acquired products that have been expensed as R&D are also excluded as specified items as they are generally uncertain and often result in a different payment and expense recognition pattern than ongoing internal R&D activities. Intangible asset amortization has been excluded from certain measures to facilitate an evaluation of current and past operating performance, particularly in terms of cash returns, and is similar to how management internally assesses performance. The Non GAAP financial measures are presented as Shire’s management believes that they will provide investors with an additional analysis of Shire’s results of operations, particularly in evaluating performance from one period to another.
Shire’s management uses Non GAAP financial measures to make operating decisions as they facilitate additional internal comparisons of Shire’s performance to historical results and to competitors' results, and provides them to investors as a supplement to Shire’s reported results to provide additional insight into Shire’s operating performance. Shire’s Remuneration Committee uses certain key Non GAAP measures when assessing the performance and compensation of employees, including Shire’s executive directors.
The Non GAAP financial measures used by Shire may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies - refer to the section “Non GAAP Financial Measure Descriptions” below for additional information. In addition, these Non GAAP financial measures should not be considered in isolation as a substitute for, or as superior to, financial measures calculated in accordance with U.S. GAAP, and Shire’s financial results calculated in accordance with U.S. GAAP and reconciliations to those financial statements should be carefully evaluated.
Non GAAP Financial Measure Descriptions
Where applicable, the following items, including their tax effect, have been excluded when calculating the relevant Non GAAP financial measures:
Amortization and asset impairments:
• | Intangible asset amortization and impairment charges; and |
• | Other than temporary impairment of investments. |
Acquisitions and integration activities:
• | Up-front payments and milestones in respect of in-licensed and acquired products; |
• | Costs associated with acquisitions, including transaction costs, fair value adjustments on contingent consideration and acquired inventory; |
• | Costs associated with the integration of companies; and |
• | Non-controlling interests in consolidated variable interest entities. |
Out-license, divestments, reorganizations and discontinued operations:
• | Revenue from up-front and milestone receipts from out-license arrangements; |
• | Gains and losses on the sale of non-core assets; |
• | Costs associated with restructuring and reorganization activities; |
• | Termination costs; and |
• | Income/(losses) from discontinued operations. |
Legal and litigation costs:
Registered in Jersey, No. 99854, 22 Grenville Street, St Helier, Jersey JE4 8PX
• | Net legal costs related to the settlement of litigation, government investigations, and other disputes (excluding internal legal team costs). |
Additionally, in any given period Shire may have significant, unusual, or non-recurring gains or losses, which it may exclude from its Non GAAP earnings for that period. When applicable, these items would be fully disclosed and incorporated into the required reconciliations from U.S. GAAP to Non GAAP measures.
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Non GAAP reconciliations
(in millions)
Non GAAP EBITDA (Q1 2018 and Q1 2017)
The following table reconciles U.S. GAAP net income to Non GAAP EBITDA for Q1 2018 and Q1 2017:
3 months ended March 31, | ||||||||
2018 | 2017 | |||||||
U.S. GAAP Net income | $ | 550.6 | $ | 375.0 | ||||
Add back/(deduct): | ||||||||
Gain from discontinued operations, net of taxes | — | (20.2 | ) | |||||
Equity in (earnings)/losses of equity method investees, net of taxes | (0.8 | ) | 0.8 | |||||
Income taxes | 43.3 | 6.8 | ||||||
Other expense, net | 101.2 | 134.7 | ||||||
U.S. GAAP Operating income from continuing operations | 694.3 | 497.1 | ||||||
Add back/(deduct) Non GAAP adjustments: | ||||||||
Expense related to the unwind of inventory fair value adjustments | 33.5 | 480.4 | ||||||
One-time employee related costs | — | (4.0 | ) | |||||
Costs relating to license arrangements | 10.0 | — | ||||||
Amortization of acquired intangible assets | 484.0 | 364.0 | ||||||
Integration and acquisition costs | 239.7 | 116.0 | ||||||
Reorganization costs | 5.3 | 5.5 | ||||||
Gain on sale of product rights | — | (5.5 | ) | |||||
Depreciation | 140.2 | 122.9 | ||||||
Non GAAP EBITDA | $ | 1,607.0 | $ | 1,576.4 |
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Non GAAP reconciliations
(in millions)
Non GAAP EBITDA (2017 and 2016)
The following table reconciles U.S. GAAP net income to Non GAAP EBITDA for the years ended December 31, 2017 and 2016:
12 months ended December 31, | ||||||||
2017 | 2016 | |||||||
U.S. GAAP net income | $ | 4,271.5 | $ | 327.4 | ||||
Add back/(deduct): | ||||||||
(Gain)/loss from discontinued operations, net of taxes | (18.0 | ) | 276.1 | |||||
Equity in (earnings)/losses of equity method investees, net of taxes | (2.5 | ) | 8.7 | |||||
Income taxes | (2,357.6 | ) | (126.1 | ) | ||||
Other expense, net | 561.8 | 476.8 | ||||||
U.S. GAAP operating income from continuing operations | 2,455.2 | 962.9 | ||||||
Add back/(deduct) Non GAAP adjustments: | ||||||||
Revenue from upfront license fee | (74.6 | ) | — | |||||
Expense related to the unwind of inventory fair value adjustments | 747.8 | 1,118.0 | ||||||
Inventory write down related to U.S. manufacturing site closure | — | 18.9 | ||||||
One-time employee related costs | (4.0 | ) | 20.0 | |||||
Impairment of acquired intangible assets | 20.0 | 8.9 | ||||||
Costs relating to license arrangements | 131.2 | 110.0 | ||||||
Legal and litigation costs | 10.6 | 16.3 | ||||||
Amortization of acquired intangible assets | 1,768.4 | 1,173.4 | ||||||
Integration and acquisition costs | 894.5 | 883.9 | ||||||
Reorganization costs | 47.9 | 121.4 | ||||||
Gain on sale of product rights | (0.4 | ) | (16.5 | ) | ||||
Depreciation | 495.8 | 292.9 | ||||||
Non GAAP EBITDA | $ | 6,492.4 | $ | 4,710.1 |
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