Takeda to Take Ariad for $5.2 Billion

On the rebound from its failed drive to  acquire Salix Pharmaceuticals from Canadian drugmaker Valeant in November 2016 – Valeant decided to keep the company – Japanese pharmaceutical producer Takeda has agreed to acquire US oncology group Ariad Pharmaceuticals for $5.2 billion in an all-cash transaction due to close next month. The acquisition price represents a 75% premium to the US player’s closing share price on Jan. 6.

CEO Christophe Weber said the addition of Ariad’s hematology portfolio will broaden Takeda’s own offering while adding two target therapies for the treatment of solid tumors. Ariad’s chronic myeloid leukemia drug Iclusig (ponatinib) was expected to generate sales of around $170-180 million in 2016, and the US Food and Drug Administration is said to be poised to approve an investigational drug, brigatinib – for which sales of more than $1 billion are forecast – during the first half of this year. Brigatinib is intended to treat a genetic sub-population of non-small cell lung cancer.  

The purchase – expected to be accretive to underlying core earnings by the 2018 final year – is Takeda’s first since 2011, and the company has been targeting a US buy for some time. Before the deal with Valeant collapsed, it had agreed to pay $10 billion for Salix. The British newspaper Financial Times said in September 2016 the Japanese firm had earmarked as much as $15 billion to buy US companies developing drugs for cancer, gastrointestinal conditions and neurological disorders, such as Alzheimer’s. Takeda said it will leverage Ariad’s R&D capabilities and platform and largely absorb its R&D costs within its existing budget.

The transaction, which will be funded by up to $4 billion in new debts and from cash reserves, is subject to the tender of a majority of Ariad’s common stock as well as antirust approval. Management already has received commitments from all of the board of directors in addition to private equity investor Sarissa Capital, which holds 6%.

A French national, who is Takeda’s first non-Japanese chief executive, Weber is seen as being under pressure to rejuvenate the drugmaker, which will see patents for a number of key products expire in 2020. Takeda is Japan’s biggest player by market value, and analysts believe the takeover of Ariad could help the company address one of the areas where it wants to expand. Weber called the acquisition a “unique opportunity.”