After Japan's Takeda Pharmaceutical Industry (Takeda Pharmaceutical Co., 4502.TO) proposed to buy drugmaker Shire PLC for 42.3 billion pounds ($60 billion), US rival Allergan Inc., AGN also said on Thursday that it was considering making its own takeover proposal, sparking a potential bidding war over Shire.

Shire has rejected Takeda's offer, saying it underestimated itself, but said negotiations were ongoing.

The Japanese company has made three bids, the latest of which values Shire at £46.50 a share, including slightly less than 40 per cent in cash and the rest in newly issued shares in Takeda. The offer represents a premium of more than 50 per cent to the value of Shire before Takeda's intended acquisition was first revealed at the end of last month.

About two hours after Takeda disclosed its offer, Erjian said it was initially considering a bid for Shire.

Shire shares rose nearly 9 per cent to £40.81 at one point after news of Elgin's intention to buy. Investors and analysts have questioned Takeda's approach to the acquisition, worried about how the Japanese company will finance the deal.

Shire issued a statement saying that Takeda Pharmaceutical's offer significantly underestimated the company, its growth prospects and the drugs it was developing.

Takeda Pharmaceutical said last month that it was considering buying Shire to strengthen its portfolio of new drugs and expand its international market. If the acquisition goes through, it will create a pharmaceutical giant with annual sales of more than $30 billion.

But the move is a bit inadequate for the Takeda pharmaceutical industry. The company's shares closed down 0.1% in Tokyo on Thursday, with a market capitalization of about $38 billion, about $10 billion below the market capitalization of its target Shire.

By Noemie Bisserbe; Write to Noemie Bisserbe at noemie.bisserbe@wsj.com


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