Shire Share Discussion Threads

[ruethewhirl] 25/5/2018 09:40

Takeda shares have tanked back down to level they were when deal first announced.

If they breach the lows, could get nasty very quickly.

[redtom1] 25/5/2018 08:21

Value of the offer a few minutes ago, based on live fx rates, was 4839p with 2273p in cash and 2566p in shares.
With current share price of 4120p, the share price would need to rise 17.45% to match.
From the original offer value of 4901p, we have lost 263p in value due to fall in value of Takeda shares but gained 201p because of fx gains on the cash and share elements.

[mbmiah] 24/5/2018 18:52

The trade volumes are pretty low. So the mms may just be shaking ppl off.

[montyhedge] 24/5/2018 15:38

It's a shame it's not say GSK saying ok 4700p cash and shares all sterling no problem. Deal done. LolBut its cash component in dollars, paper in yen and Shire quoted in pounds, I don't think big boys like that, may be wrong.

[redtom1] 24/5/2018 15:18

Monty,

Based on share price movements yesterday and today, I am thinking that you might be right. Certainly the percentage of success/fail is moving towards fail. Probably 50:50 now.

It would be hugely disappointing but not the end of the world as Shire is performing well and paying down its debts. But I think it is too early for failure. There is too much time between now and the likely vote time for it to fail now. Weber really has a difficult job to do. Assuming it is Takeda that causes the failure, Shire gets a whopping fee of more than $1bn from memory.

[dwinn78] 24/5/2018 15:17

It'll go through unless takeda share price crumbles . Too much time to think on this one .

[montyhedge] 24/5/2018 15:10

My thoughts are it won't go through. But Shire had good results, don't need Takeda.

[redtom1] 24/5/2018 14:18

Monty, great question and one I've been pondering over.

I personally do not think the share price would fall right back to £30 if the deal fell over. I think that was an artificial low point and only for a very short period of time.
I think there would be an immediate huge fall to low £30s but possibly settling around mid £30s.
So if the deal fails and allowing for the dust to settle, I'm thinking £34-£35?

What are your thoughts?

Given we are broadly at the mid point between the offer value and where it might go if the deal fails, perhaps our success percentage should be 50:50 not 60:40? But if one thinks that £30 could be reached again, our 60:40 is about right!

[romeike] 24/5/2018 14:02

UK headed for recession and BoE know it. Politicians in the UK, EU and Ireland have damaged the UK economy far more with their stupid games than brexit ever could.

[montyhedge] 24/5/2018 13:45

RedtomWhat's the downside if they don't get 75% 25%, upside 17% at the moment?

[dwinn78] 24/5/2018 13:36

The uk mtg market and economy is visibly slowing imo so I dont see a rate hike coming in the near term . I personally think the deal will go through and will be holding longterm . Sold all my clin shares to finance shp purchase and very comfortable holding even if the deal collapses.

[steeplejack] 24/5/2018 11:58

Lot of vagaries here,including currency (a weak pound has been our friend recently).

I don't see much changing here in the next few months to change the markets 'back of the envelope'calculations as to a fair current valuation for Shire.In fact,as pointed out here, we've benefited from sterling weakness which has more than compensated for Takeda falling back.Have sold.Good,sensible comments on this BB,not always the case as we all know! Gl all.

[redtom1] 24/5/2018 10:46

Monty, I'm not saying the deal is a slam dunk. It is anything but. Hence the current share price
I'm saying that as long as the value of the offer remains at £47+ then the shire vote is a slam dunk. The vote won't be until late this year but there will not be much time between the vote and being paid out. So the currency risks and Takeda share price risks that you mention exist between now and the vote. But at the time of vote these factors will be fairly insignificant. So if the pound stays weak such that the offer mains in the £47-49 range at the time of vote, Shire will vote for it. Absolutely slam dunk but if and only if value is still there at time of vote. So no fund manager will commit to voting yes or no now, ie six months in advance. But they will be sounding out their investors as to a cut off point of value come the voting day. Shire shareholders have an easy decision to make. At the time of the vote am I getting good value. Quite a black/white question. £47+ easy. £45-£47, less easy. sub £45, ummm, tricky trending towards a firm 'no'.
But Takeda shareholders have a much, much more difficult decision. Their decision is all about 'jam tomorrow'. They have to buy into the story that Takeda needs Shire and that the financial risks are worth it in terms of delivering increased returns in the future. This is where Weber needs to do his magic. This is probably the major factor for the current Shire share price But I agree with your approximation of a 60/40 likelihood. This feels about right. We just differ in opinion as to the weighting of the voter risks.

[ruethewhirl] 24/5/2018 09:18

Pete, sounds like you're doing fine on your own.

I'll be in cash for a brief time, I feel like getting away to clear my head, then plug back in and do some research and find a new position.

Might open up a new position in about three or four weeks.

[suffersnofools] 24/5/2018 09:15

I sold yesterday, having bought at £37. It could go higher but with funds tied up the risk of holding was too much against the potential upside. I'll keep on my watchlist and might be tempted back in if it drifts back under £40.

[montyhedge] 24/5/2018 08:51

Like you said he does not own Shire, one fund manager who owns the shares said multi-factorial exchange risks: the cash component paid in dollars, the share component paid in yen and Shire quoted in pounds. My own view is, I would think all the stars have to align for this deal to get done. I think 60/40 it will complete not a slam dunk.Shareprice telling you that.

[redtom1] 24/5/2018 08:30

I was up in Town yesterday and had a chat with a fund manager friend of mine. His fund does not include Shire mind. I questioned him about the voting process and he implied that there would have to be a very strong justification not to vote for a takeover. He said that if he held Shire there would be no justifiable explanation to give to his investors as to why he could turn down a significant increase in the fund value with a promise of possibly more in the distant future. Essentially almost every fund manager will take jam today rather than the possibility of more jam many years down the line. Whilst he didn't really like my comment 'so this is a slam dunk', he agreed that as long as the value stays in the current ballpark then there would be no issue for the Shire vote. He estimated a 90%+ vote in favour.
As I have said before, the Shire vote is a slam dunk whilst we are £47+. Luckily the fx rates are continuing to be our saviour. The fund manager also implied that he though Sterling will remain weak for a while as 2018 interest rate rises are looking much more unlikely given the current weak economic data. If rate rises are put off until 2019, then a weak pound will help offset Takeda share price weakness. A few minutes ago the deal was still worth 4851p with 2271p in cash and 2580p in Takeda paper.

The risk is with the Takeda vote. Luckily that only requires 67%. Weber needs to sell the deal very hard. There has been a few reports implying that Takeda needs Shire more than the other way around but a Takeda shareholder has lost 19% since announcing the deal. He/she will not vote 'yes' easily in the knowledge that a 'no' vote would give him an immediate gain. With the Takeda share price down another 2% today the risk of a 'no' vote increases as reflected in the Shire share price The next 6 months are going to be interesting. Weber, we need you to weave your magic with the Takeda shareholders. You don't need to worry about the Shire shareholders.

[pete160] 24/5/2018 08:27

Ruethewhirl - just out of interest do you mind me asking what you've invested in next?

I'm in a similar place having made a good return at SHP thus far, but is this going to move up appreciably relative to something else? am in two minds whether to stay, increase or reduce my SHP.

A fortnight ago I moved a chunk to Vod and also BVIC and TATE - which thus far has been a good move. Am now thinking about moving another chunk into BARC and whether those funds should come from SHP.

[dwinn78] 24/5/2018 07:55

Takeda down another 2% .

[ruethewhirl] 23/5/2018 22:21

Unloaded a third of my holding at around 4200.

Disappointed with the share price action after the takeover announcement.

Made a nice profit, but not really commensurate with the stomach churning that's gone on over the past year, and the fact that we are being acquired.

My profit should have been way bigger, but I'm not complaining really, a profit's a profit.

[montyhedge] 23/5/2018 19:34

All you need is a big fund to say its not interested in Takeda offer. Could hurt sentiment. But they again if a big fund said yes, shares would go higher.Hard one to call 75% needed.

[pete160] 23/5/2018 19:07

The SHP ADR's appear to be getting a hammering stateside this evening. This morning I was thinking of loading up again on SHP.l ready for another leg up but maybe not (already 20% of my pot)

[scfc1] 23/5/2018 17:02

Very true Tom, it is interesting that the 2 key (risk) factors have gone in the opposite direction and by broadly the same amounts. Who knows where they will both be in c6 months or so time! The offer could be worth well over £50 or well under £45! Scfc1

[redtom1] 23/5/2018 15:59

Dwinn,

I think it is likely to be around Oct/Nov/Dec but nothing announced yet.

Tom