On October 28, 2021 Takeda Pharmaceutical Company Limited (TOKYO:4502/NYSE:TAK) ("Takeda") reported that its Board of Directors resolved today to engage in the acquisition of its own shares pursuant to the provision of its Articles of Incorporation in accordance with Article 459, paragraph 1 of the Companies Act of Japan, as detailed below (Press release, Takeda, OCT 28, 2021, View Source [SID1234592132]).
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"At our current share price, we see an opportunity to buy back our shares at a substantial discount to what we perceive is their underlying value," said Costa Saroukos, director and Chief Financial Officer of Takeda. "We expect that this share buyback of up to 100B yen will not impact our deleveraging plans, and that we will remain firmly on track to deliver on our target for 2x (‘low twos’) net debt to Adjusted EBITDA by the end of FY23. We are also maintaining our existing dividend policy and updating our capital allocation policy to allow for share buybacks in the future when appropriate. This underscores our business’ strong cash generation ability, our confidence in our fundamental growth driven by the 14 global brands, and our belief that the R&D strategy with ~40 new molecular entities in the pipeline, will deliver for the long term."
This buyback of shares will be funded by Takeda’s operating cash flow driven by growth in our 14 global brands and working capital improvements.
1. Reason for acquisition of its own shares
To enhance capital efficiency and improve shareholder returns.
2. Details of acquisition
(1) Class of shares to be acquired:
Shares of common stock
(2) Number of shares to be acquired:
Up to 35 million shares
(equivalent to 2.23% of the total number of shares outstanding excluding treasury shares)
(3) Total amount of shares to be acquired:
Up to JPY 100 billion
(4) Schedule of acquisition:
From November 2, 2021 to April 29, 2022
(5) Method of acquisition:
Open-market repurchase through a trust bank
(Reference)
Treasury shares held by Takeda as of September 30, 2021
Aggregate number of issued shares (excluding treasury shares)
1,572,829,854 shares
Number of treasury shares
9,422,671 shares
Updated Capital Allocation Policy
Takeda is delivering on its financial commitments and has a strong cash flow outlook driven by business momentum, cost synergies, and non-core asset divestitures. Guided by our values and our commitment to Patients, People and Planet, we will allocate capital to maximize value for patients and shareholders.
Takeda’s policy in the allocation of capital is as follows:
• Invest in growth drivers;
• Deleverage rapidly; and
• Shareholder returns.
In respect of "Invest in growth drivers", Takeda makes disciplined and focused investments in value-creating business opportunities including R&D, new product launches, including in China, and plasma-derived therapies. With regards to "Deleverage rapidly", Takeda is targeting a 2x (i.e. "low-twos") net debt/adjusted EBITDA ratio within fiscal years ending March 2022 – March 2024 and has committed to maintaining solid investment grade credit ratings. In respect of "Shareholder returns", Takeda maintains its well-established dividend policy of 180 yen per share annually, alongside share buybacks when appropriate. We expect underlying growth momentum to continue over the mid-term.