Takeda Pharmaceutical has agreed to buy London-listed Shire for £45.3 billion pounds (€51.5 billion) after the Japanese company raised the amount of cash in its offer to $30.33 to secure a recommendation.
Shire investors will receive $30.33 in cash and either 0.839 new Takeda shares or 1.678 Takeda ADSs for each share, the companies said, valuing the offer at 48.17 pounds a share based on the latest price and exchange rate.
Shire's shares, which had been trading about 10 pounds below the value of Takeda's offer, opened up 5.5 percent at 40.65 pounds, still well below the agreed price and indicating that shareholders still have reservations.
The deal - assuming it wins backing of shareholders - will be the largest overseas acquisition by a Japanese company and propel Takeda, led by Frenchman Christophe Weber, into the top ranks of global drugmakers.
"Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies," he said.
Weber became Takeda's first non-Japanese CEO in 2015 and has been hunting for acquisitions to make the company more global and reduce its exposure to a mature Japanese pharmaceutical market.
Buying Shire is a big financial stretch for Takeda but Weber believes it will generate substantial cash flow, enabling the enlarged group to pay down its borrowings quickly.
Takeda expects substantial cost synergies of at least $1.4 billion.
Takeda said it intended to maintain its investment grade credit rating with a target of achieving a net debt to EBITDA ratio of 2.0 times or less in the medium term.
The tie-up is also one of the largest ever in the pharmaceuticals sector, crowning a hectic few months of deal-making as large players look to improve their pipelines.
Shire said last month it would be willing to recommend an offer from Takeda after it rejected four previous approaches.
Shire shareholders will own about half of the combined group after the deal.