Will Shire close the gap with Takeda’s £49 offer price as the deal nears completion?

• The chart shows the Shire share price movements since March 2017
• 12 Nov: Takeda expects Shire merger to complete ~8 Jan;
• 12 Nov: Takeda sets shareholder approval meeting for 5 Dec
• 12 Nov: Takeda agrees to divestments; expects EU approval of merger ~20 Nov
• 12 Nov: Takeda expects pre-tax cost synergies of >$1.4B/year after three years
• Takeda is offering Shire shareholders £49/share (shares and cash)
• Implied offer £49.7/share, using latest Takeda share price and actual FX rates
• Shares now 4723p (at time of writing)
• Will the shares close the gap with the offer/implied offer, or will the deal hit hurdles?

Click to enlarge

Trading Shire – An Example

Let’s say you think Shire shares are likely to rise further as the deal nears completion, towards the £49/share offer, or implied offer of £49.7/share. You decide to buy exposure to £10,000 worth of Shire using a CFD, at the current price of 4723p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Shire share price rises by 3.7% to £49 or by 5.2% to £49.7. Your profit would be £370/£520, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. The deal hits a hurdle, sentiment sours and Shire shares fall 5% and hit your stop-loss. Your loss would be £500.

This is provided for information purposes only. It should not be taken as a recommendation.