The FINANCIAL — Takeda Pharmaceutical Company Limited on December 15 held a meeting of the Board of Directors and adopted a resolution to sign an agreement with Fujifilm Corporation to transfer its shareholding in Wako Pure Chemical Industries, Ltd., a consolidated subsidiary through the tender offer bid to be launched by Fujifilm in late February. After adopting the resolution, Takeda entered into the Tender Agreement with Fujifilm.
This is a positive strategic move for Fujifilm, Wako Pure Chemical, and Takeda. The sale price is 198.5 billion yen and Takeda expects to post a one-time pre-tax gain of approximately 100 billion yen in its FY2017 consolidated income statement, according to Takeda.
1. Rationale to tender in the TOB
Wako Pure Chemical was established in 1922 with the spin-off of the chemical agent division of Takeda. It has been developing and producing high-grade products as a comprehensive laboratory reagent manufacturer, and addresses needs in cutting-edge research areas under its management philosophy, “We hope to serve the well-being of the public through our efforts to promote the development of scientific technologies and progress of academic research.” At present, by leveraging its core competency of proprietary technological capabilities, Wako Pure Chemical is able to serve the diverse needs of scientists, medical professionals and the industrial world in general through its three key businesses of “Laboratory Chemicals”, “Specialty Chemicals” and “Clinical Diagnostic Reagents”.
In order to achieve sustainable growth as a global pharmaceutical company, Takeda aims to discover and develop innovative drugs by focusing its R&D efforts on the areas of Oncology, Gastroenterology （GI） and Central Nervous System （CNS）, plus Vaccines. After carefully considering and examining options for Wako Pure Chemical’s business, Takeda has concluded that Wako Pure Chemical can better accelerate its development with the support of Fujifilm, which has maintained a long-term capital and business relationship with Wako Pure Chemical and has a mid- to long-term growth strategy centered on the business fields of “Healthcare” and “Highly Functional Materials”. Wako Pure Chemical, at its meeting of the Board of Directors held on December 15, 2016, adopted a resolution to express its supportive opinion for the TOB and to recommend its shareholders to tender their shares.
In the Tender Agreement, Takeda and Fujifilm agreed that, after the completion of the undermentioned Share Repurchase by Wako Pure Chemical, Takeda will tender all of its remaining shareholding in Wako Pure Chemical for the TOB and have Nihon Pharmaceutical Industry Co., Ltd. （“Nihon Pharmaceutical”）, one of Takeda’s subsidiaries, tender all of its remaining shareholding in Wako Pure Chemical. The Tender Agreement also sets the following conditions precedent for Takeda and Nihon Pharmaceutical （“Takeda Group”） to tender: 1） the TOB is legally and effectively commenced and not withdrawn, 2） each of the representations and warranties*1 made by Fujifilm in the Tender Agreement is true and correct in all material respects, 3） there are no laws, regulations and judicial decisions or the like that would restrict or prohibit the consummation of the TOB, 4） Fujifilm has performed or complied with all of its obligations, covenants and conditions*2 required to perform or comply prior to the commencement of the TOB under the Tender Agreement, 5） Fujifilm has completed necessary procedures and formalities under competition law in Japan and overseas and 6） the Share Repurchase has been completed. However, Takeda is not restrained from tendering or having Nihon Pharmaceutical tender for the TOB by waiving all or part of those conditions precedent at its own discretion. Takeda and Fujifilm also agreed that Takeda Group may not tender or may cancel the tender that has been made, in such a case that a third party commences a tender offer bid （the “Counter TOB”） for shares in Wako Pure Chemical with a considerably higher offer price than the TOB price, and that Takeda makes a reasonable decision after receiving a legal opinion letter to the effect that tendering for the TOB is reasonably considered to breach the duty of due care of a prudent manager for Takeda’s directors, and furnishes the letter to Fujifilm.