Blackstone has paid $ 242bn ($ 2.3 billion) to buy Takeda Consumer Healthcare in what the U.S. private equity group hopes to boost a series of similar asset sales, eventually making it a Japanese national champion in over-the-counter drugs .
The acquisition of TCHC will give Blackstone control over the Alinamin range of vitamin supplements and Benza Block cold medicine. Critically, Blackstone said, the sale puts down a price mark because Daiichi Sankyo, Eisai and others are also considering the sale of their OTC companies.
“Everyone was waiting for Takeda to do this as a benchmark,” said Atsuhiko Sakamoto, senior manager of PE’s company in Blackstone, Japan. He described TCHC as a platform to grow through more OTC acquisitions ahead of a stock market listing within the next five years.
But the financing of the deal, which allowed Blackstone coordinating leverage from at least five different banks, points to growing obstacles for both foreign and domestic PE groups as they seek to take advantage of growing opportunities in Japan as large companies sell of non-core assets.
Until the beginning of this year, one banker who had worked on several recent PE transactions said dealers could make on “empty checks” of Japan’s three megabanks – Mizuho, MUFG and Sumitomo Mitsui. But as bankers have become much more selective about which sector a deal is made, PE funds have found themselves in favor of a wider selection of lenders.
The outcome of the TCHC deal, which has been the subject of on-off negotiations since the beginning of 2020, was also directly affected by the Covid-19 pandemic, Mr Sakamoto said.
Blackstone faced competition for TCHC from other PE companies and the Japanese pharmaceutical group Taisho, but global travel deals prevented a number of potential traders in Europe and the US from sending large teams to Japan to perform due diligence.
Takeda was, according to people involved in the deal, likely to complete the sale of its OTC subsidiary by the end of the year, as the company reorganizes its portfolio and jettisons non-core companies. Takeda’s recent asset sale has been aimed at cutting its debt after it paid 6.2tn to buy Shire in early 2019. That acquisition – the largest share ever cross-border by a Japanese company – has refined Takeda’s focus on areas including rare diseases, oncology and neurosciences.
Blackstone is of the opinion that Takeda has underinvested a TCHC in recent years, putting its market share in jeopardy. Mr. Sakamoto’s plans include focusing on building his company in Taiwan, where its products are popular, and collaborating alongside state-conglomerate China Resources to grow into the world’s second largest economy.
