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Takeda begins tender offer for ARIAD shares
OSAKA, Japan & CAMBRIDGE, Mass.—On Jan. 19 or 20, depending on their respective time zones, Takeda Pharmaceutical Co. Ltd. and ARIAD Pharmaceuticals Inc. announced the commencement of the cash tender offer by Takeda’s wholly owned indirect subsidiary, Kiku Merger Co. Inc., for all outstanding shares of the common stock of ARIAD at $24 per share. The tender offer is being made in connection with a merger plan which Takeda and ARIAD announced on Jan. 9 and which is expected to total $5.4 billion and be completed by the end of February (the tender offer itself expires the middle of that month).
Following the purchase of shares in the tender offer, ARIAD will become an indirect wholly owned subsidiary of Takeda.
“This transaction is a great outcome for ARIAD shareholders and brings hope to improve the lives of many cancer patients. It has been a pleasure to work with our outstanding management team and, on behalf of the board of directors, I extend our deepest gratitude to everyone at ARIAD for their unrelenting dedication.” stated Dr. Alexander J. Denner, chairman of the ARIAD board of directors, adding: “The transaction also underscores the tremendous value that shareholder activism can create for shareholders, patients and society. While ARIAD’s stock price was collapsing and many investors were abandoning the company, Sarissa Capital saw a company with important drugs and innovation and stepped in to become one of ARIAD’s largest shareholders. However, many things needed to be fixed before the value could be realized. With a new board and management team, ARIAD was able to focus on optimal capital allocation and operational excellence. As a result, the company created meaningful shareholder value and advance the options for those suffering from rare cancers.”
Among the rationales for the deal:
“The acquisition of ARIAD is a unique opportunity that will enable us to positively impact the lives of more patients worldwide, advance our strategic priorities and generate attractive returns for our shareholders,” said Christophe Weber, president and CEOof Takeda. “This is a very exciting time for Takeda as we will broaden our hematology portfolio and transform our global solid tumor franchise through the addition of two innovative targeted therapies. Opportunities to acquire such high-quality, complementary targeted therapies do not come often, and we are very excited about the potential for this transaction to benefit patients, our shareholders and other stakeholders.”
Paris Panayiotopoulos, president and CEO of ARIAD, added: “We are very pleased to combine with Takeda, which will allow us to not only accelerate our mission to discover, develop and deliver precision therapies to patients with rare cancers, but also deliver immediate and meaningful value to our shareholders through a substantial cash premium. This exciting transaction is a testament to the hard work and dedication of ARIAD’s talented team of employees. We have tremendous respect for Takeda, and I believe our shared commitment to innovation and research-driven cultures will provide for a smooth transition.”
Zacks Investment Research noted in the days between the initial announcement and the start of the tender offer that ARIAD had enjoyed a notable boost to its stock price because of the deal, also noting some other aspects of the company’s progress, including: “Notably, Iclusig was granted orphan drug designation by the FDA for the indication. ARIAD is also working on expanding Iclusig’s label especially into earlier lines of treatment which will expand the market significantly ... Meanwhile, ARIAD has entered into many deals for the development and commercialization of Iclusig in different territories. We are also positive on ARIAD’s non-dilutive synthetic-royalty financing deal with PDL BioPharma. Moreover, ARIAD’s deal with Incyte Corporation will allow it to penetrate the U.S. market.”
And while Iclusig offers potential in the chronic myeloid leukemia (CML) market, Zacks warns that, “On the flip side, even though the CML market represents significant potential, Iclusig faces intense competition due to the presence of established players such as Novartis AG’s Gleevec, Bristol-Myers Squibb Company’s Sprycel and Pfizer Inc.’s Bosulif. All of these drugs are approved for the treatment of CML in patients who are either resistant or intolerant to prior TKI therapies.”
Analysts at Morningstar noted of the deal after the announcement, “Takeda’s pending acquisition of Ariad Pharmaceuticals looks like a strong strategic fit with the firm’s oncology portfolio, but we’re wary of the peak sales potential of key pipeline drug brigatinib and are not planning any major changes to our Takeda fair value estimate.”