THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. PART II OF THISDOCUMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH ARTICLE 126 OF THE
JERSEY COMPANIES LAW.
This document contains a proposal which, if implemented, will result in the cancellation of the listing ofShire Shares on the Official List and of trading of Shire Shares on the London Stock Exchange and of
trading of Shire ADSs on NASDAQ. If you are in any doubt as to what action you should take, you arerecommended to seek your own personal financial advice immediately from your stockbroker, bankmanager, solicitor, accountant or other independent financial adviser authorised under the Financial
Services and Markets Act 2000 if you are in the United Kingdom, or from another appropriately authorised
independent financial adviser if you are taking advice in a territory outside the United Kingdom.
If you sell, have sold or otherwise have transferred all of your Shire Shares or Shire ADSs, please send thisdocument and the accompanying documents (other than documents or forms personal to you) at once to thepurchaser or transferee, or to the bank, stockbroker or other agent through whom the sale or transfer was effected,
for transmission to the purchaser or transferee. These documents must not, however, be forwarded, distributed ortransmitted in, or into, any jurisdiction in which such act would constitute a violation of the relevant laws of suchjurisdiction. If you sell, have sold, or otherwise have transferred only part of your holding of Shire Shares or Shire
ADSs, you should retain these documents and contact the bank, stockbroker or other agent through whom the saleor transfer was effected.
The release, publication or distribution of this document and any accompanying documents (in whole orin part) in or into or from jurisdictions other than Jersey and the United Kingdom may be restricted by thelaws of those jurisdictions and therefore persons into whose possession this document and/or any
accompanying document comes should inform themselves about, and observe, any such restrictions.
Failure to comply with any such restrictions may constitute a violation of the securities laws of any suchjurisdiction.

Recommended cash and share offer
for

Shire plc
byTakeda Pharmaceutical Company Limited
to be effected by means of a Scheme of Arrangement under
Article 125 of the Companies (Jersey) Law 1991, as amended
Neither this document nor any of the accompanying documents do, nor are intended to, constitute or form part ofany offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or
the solicitation of any vote or approval pursuant to the Scheme or otherwise, in any jurisdiction in which such offer,invitation or solicitation is unlawful. This document is not a prospectus.
This document (including all information incorporated into this document by reference to another source) should beread as a whole and in conjunction with the Forms of Proxy (or, if applicable, the ADS Voting Card), Form ofElection and its accompanying notes and any document incorporated by reference. Your attention is drawn to theletter from the Chairman of Shire in Part I of this document, which contains the unanimous recommendation of theShire Directors that you vote in favour of the Scheme at the Court Meeting and the Special Resolution to be
proposed at the Shire General Meeting. A letter from Citigroup Global Markets Limited, Goldman Sachs
International and Morgan Stanley & Co. International plc explaining the Scheme appears in Part II of this document.
Notices of the Court Meeting and the Shire General Meeting, both of which will be held at Block 3, Miesian Plaza,50-58 Baggot Street Lower, Dublin 2, Ireland on December 5, 2018, are set out in Parts XII (Notice of Court
Meeting) and XIII (Notice of Shire General Meeting) of this document, respectively. The Court Meeting will start at
11.15 a.m. (London time) and the Shire General Meeting at 11.30 a.m. (London time) (or as soon thereafter as the
Court Meeting shall have been concluded or adjourned).
Action to be taken by Shire Shareholders and Shire ADS Holders is set out on pages 5 to 18 of thisdocument. Whether or not they intend to attend the Court Meeting or the Shire General Meeting in person,
Shire Shareholders are asked to complete and return the accompanying BLUE and YELLOW Forms of
Proxy (or appoint a proxy, electronically, as referred to in this document) in accordance with the
instructions printed thereon as soon as possible, but in any event so as to be received by Equiniti not later
than 11.15 a.m. (London time) on December 3, 2018 in the case of the Court Meeting and 11.30 a.m.

(London time) on December 3, 2018 in the case of the Shire General Meeting (or, if the Court Meeting or the
Shire General Meeting is adjourned, not later than 48 hours before the time appointed for the adjourned
meeting). Shire Shareholders who hold Shire Shares in CREST may also appoint a proxy through the
CREST electronic proxy appointment service by following the instructions set out on page 6 of thisdocument. If the BLUE Form of Proxy for the Court Meeting is not lodged by the relevant time, it may behanded to Equiniti on behalf of the Chairman of the Court Meeting, or to the Chairman of the Court
Meeting, before the start of the Court Meeting. However, in the case of the Shire General Meeting, if the
YELLOW Form of Proxy is not lodged by the relevant time, it will be invalid. The return of a completed Formof Proxy or the appointment of a proxy electronically or through CREST will not prevent a Shire
Shareholder from attending the Court Meeting or the Shire General Meeting and speaking and voting at therelevant Shire Meeting in person if they are entitled and wish to do so. Registered Shire ADS Holders are
asked to complete and return their ADS Voting Cards in accordance with the instructions on the ADS
Voting Card as soon as possible. If you hold such Shire ADSs indirectly, you must rely on the proceduresof the custodian, broker or other agent through which you hold your Shire ADSs if you wish to provide
voting instructions.
Shire Shareholders (other than Restricted Shire Shareholders) may make certain Elections in relation to the noncash portion of the Consideration and the currency of the cash portion of the Consideration payable to them under
the Scheme by completing and returning a Form of Election or (where applicable) by making a TTE Instruction.
Shire Shareholders should refer to pages 5 to 18 of this document for instructions on how to complete a Form ofElection or (where applicable) make a TTE Instruction.
Certain terms used in this document are defined in Part XI (Definitions).
If you have any questions about this document, the Court Meeting or the Shire General Meeting, or are in any doubt
as to how to complete the Forms of Proxy, lodge a Form of Election or make a TTE Instruction, please call Equiniti
between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday (except public holidays in England and Wales)on 0330 123 5506 (if calling from within the UK) or +44 (0)121 415 0856 (if calling from outside the UK). Calls arecharged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Different charges may apply to calls from mobile telephones. Please note that
calls may be monitored or recorded and Equiniti cannot provide legal, tax or financial advice or advice on the meritsof the Scheme.
Shire ADS Holders should refer to Part X (Further information for Shire ADS Holders) of this document, whichcontains important information relevant to such holders. The helpline for Shire ADS Holders is provided by the Shire
Depositary and is available between 8.30 a.m. and 6.00 p.m. (New York time) Monday to Friday (except public
holidays in the US) toll free from within the US on +1 866 395 6421 or +1 781 575 4555 if calling from outside the
US. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the US will becharged at the applicable international rate.
If you have recently purchased or been transferred Shire ADSs and you are a registered holder of Shire ADSs, you
should contact the helpline for Shire ADS Holders on the number indicated above to obtain an ADS Voting Card.
If you hold such Shire ADSs indirectly, you should contact the custodian, broker or other agent through which you
hold such Shire ADSs for details on how to provide voting instructions. Please note that only Shire ADS Holders
as of the ADS Voting Record Time are entitled to instruct the Shire Depositary on how to vote the Shire Shares
represented by their Shire ADSs.
Citigroup Global Markets Limited, which is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as
financial adviser to Shire and no one else in connection with the Acquisition, the contents of this document and thematters described herein, and shall not be responsible to anyone other than Shire for providing the protections
afforded to clients of Citi or for providing advice in connection with the Acquisition, the contents of this document
or any matter referred to herein. Neither Citi nor any of its subsidiaries, branches or affiliates owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute orotherwise) to any person who is not a client of Citi in connection with the Acquisition, the contents of this document
or any matter referred to herein.
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively as
financial adviser to Shire and no one else in connection with the Acquisition, the contents of this document and thematters described herein, and shall not be responsible to anyone other than Shire for providing the protections
afforded to clients of Goldman Sachs or for providing advice in connection with the Acquisition, the contents of thisdocument or any matter referred to herein. Neither Goldman Sachs nor any of its subsidiaries, branches or affiliates
owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, in contract, in tort, understatute or otherwise) to any person who is not a client of Goldman Sachs in connection with the Acquisition, thecontents of this document or any matter referred to herein.
Morgan Stanley & Co. International plc, which is authorised by the Prudential Regulation Authority and regulatedby the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is actingiiexclusively as financial adviser to Shire and no one else in connection with the Acquisition, the contents of thisdocument and the matters described herein, and shall not be responsible to anyone other than Shire for providing
the protections afforded to clients of Morgan Stanley or for providing advice in connection with the Acquisition, thecontents of this document or any matter referred to herein. Neither Morgan Stanley nor any of its subsidiaries,
branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, incontract, in tort, under statute or otherwise) to any person who is not a client of Morgan Stanley in connection with
the Acquisition, the contents of this document or any matter referred to herein.
Evercore Partners International LLP, which is authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser exclusively to Takeda and no one else in connection with theAcquisition and this document and will not regard any other person as its client in relation to the Acquisition or thisdocument and shall not be responsible to anyone other than Takeda for providing the protections afforded to clientsof Evercore, or for providing advice in connection with the Acquisition, this document or any matter referred toherein. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, in contract, in tort, under statute or otherwise) to any person
who is not a client of Evercore in connection with the Acquisition, this document or any matter referred to herein.
JPMorgan Securities Japan Co., Ltd., together with its affiliate J.P. Morgan Securities plc (which conducts its UK
investment banking business as J.P. Morgan Cazenove and which is authorised in the United Kingdom by the
Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority andthe Financial Conduct Authority), is acting as financial adviser exclusively to Takeda and no one else in connection
with the Acquisition and will not regard any other person as its client in relation to the Acquisition and shall not be
responsible to anyone other than Takeda for providing the protections afforded to clients of J.P. Morgan, or forproviding advice in connection with the Acquisition or any matter referred to herein.
Nomura International plc, which is authorised by the Prudential Regulation Authority and regulated by the
Prudential Regulation Authority and the Financial Conduct Authority in the United Kingdom, is acting as financial
adviser exclusively to Takeda and no one else in connection with the Acquisition and this document and Nomura,its affiliates and its respective officers, employees, agents, representatives and/or associates will not regard anyother person as their client, nor will they be responsible to anyone other than Takeda for providing the protections
afforded to clients of Nomura or for giving advice in relation to the Acquisition, this document or any matter referredto herein. Neither Nomura nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, in contract, in tort, under statute or otherwise) to any person
who is not a client of Nomura in connection with the Acquisition, this document or any matter referred to herein.
No person has been authorised to give any information or make any representations other than those contained inthis document and, if given or made, such information or representations must not be relied upon as having beenauthorised by Shire, the Shire Directors, Takeda, the Takeda Directors or by Citi, Goldman Sachs, Morgan Stanley,Evercore, J.P. Morgan, Nomura or any other person involved in the Acquisition. Neither the delivery of thisdocument nor holding the Shire Meetings, the Court Sanction Hearing, or filing the Court Order shall, under any
circumstances, create any implication that there has been no change in the affairs of the Shire Group or the Takeda
Group since the date of this document or that the information in, or incorporated into, this document is correct as
at any time subsequent to its date.

iii

IMPORTANT NOTICESThis document does not constitute, and may not be used for the purposes of, an offer to sell or aninvitation or the solicitation of an offer to subscribe for or buy any securities by any person in any
jurisdiction: (i) in which such offer or invitation is not authorised; (ii) in which the person making suchoffer or invitation is not qualified to do so; and/or (iii) in which, or to any person to whom, it is unlawful
to make such offer, solicitation or invitation or where the making of such offer, solicitation or invitation
would impose any unfulfilled registration, qualification, publication or approval requirements on Shire,
Takeda or any of their respective directors, officers, agents, affiliates and advisers. No action has beentaken nor will be taken in any jurisdiction by any such person that would permit a public offering of any
securities in any jurisdiction where action for that purpose is required, nor has any such action beentaken with respect to the possession or distribution of this document other than in any jurisdiction where
action for that purpose is required. Neither Shire nor Takeda, nor their respective directors, officers,
agents, affiliates or advisers accepts any responsibility for any violation of any of these restrictions by
any other person.
Notice to Overseas Shareholders
The release, publication or distribution of this document and/or any accompanying documents (in whole
or in part) in, or into, or from jurisdictions other than Jersey and the United Kingdom may be restrictedby the laws of those jurisdictions and therefore persons into whose possession this document and/or
any accompanying document comes should inform themselves about, and observe, any such
restrictions or other applicable requirements. In particular, the ability of persons who are not resident inJersey or the United Kingdom to vote their Shire Shares with respect to the Scheme at the Court
Meeting, to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting on theirbehalf, or to hold or vote Takeda Shares may be affected by the laws of the relevant jurisdiction in which
they are located. Any failure to comply with any such restrictions may constitute a violation of the
securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies
and persons involved in the Acquisition disclaim any responsibility or liability for the violation of such
restrictions by any person.
This document and the accompanying documents have been prepared for the purposes of complying
with Jersey law, the Takeover Code and the Listing Rules and the information disclosed may not be thesame as that which would have been disclosed if this document had been prepared in accordance withthe laws of any other jurisdiction. Nothing in this document or the accompanying documents should be
relied upon for any other reason. This document is not a prospectus for the purposes of the Companies(General Provisions) (Jersey) Order 2002.
Unless otherwise determined by Takeda or required by the Takeover Code, and permitted by applicablelaw and regulation, the Acquisition will not be made available, directly or indirectly, in, into or from a
Restricted Jurisdiction where to do so would violate the laws in that jurisdiction. No person may vote infavour of the Acquisition by any use, means, instrumentality or form, and the Acquisition will not becapable of acceptance, from or within a Restricted Jurisdiction, if to do so would constitute a violationof the laws of that jurisdiction. Accordingly, copies of this document and any accompanying documents
are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded,
distributed or sent in, into or from a Restricted Jurisdiction, where to do so would violate the laws in thatjurisdiction, and persons receiving this document and/or accompanying documents (including
custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from
Restricted Jurisdictions, where to do so would violate the laws in that jurisdiction. Any person (including,
without limitation, any custodian, nominee and trustee) who would, or otherwise intends to, or who may
have a contractual or legal obligation to, forward this document and/or any other related document toany jurisdiction outside Jersey or the United Kingdom should inform themselves of, and observe, any
applicable legal or regulatory requirements of such jurisdiction.
If the Acquisition is implemented by way of a Takeover Offer, then, unless, otherwise permitted byapplicable law and regulation, the Takeover Offer may not be made, directly or indirectly, in or into, oriv

by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail orother electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facilityof a national, state or other securities exchange of, any Restricted Jurisdiction and the Takeover Offer
may not be capable of acceptance by any such use, means, instrumentality or facilities.
The availability of the New Takeda Securities under the Acquisition to Shire Shareholders who are on
the register of members of Shire at the Scheme Record Time and who are not resident in Jersey or theUnited Kingdom, or the ability of those persons to continue to hold such securities, may be affected by
the laws or regulatory requirements of the relevant jurisdiction in which they are resident. Persons into
whose possession this document and/or any accompanying document comes who are not resident inJersey or the United Kingdom should inform themselves of, and observe, any applicable requirements.
Shire Shareholders who are in any doubt regarding such matters should consult an appropriate
independent financial adviser in their relevant jurisdiction without delay. Any failure to comply with such
restrictions may constitute a violation of the securities laws of any such jurisdiction.
The New Takeda Securities may not be offered, sold or delivered, directly or indirectly, in, into or fromany Restricted Jurisdiction or to, or for the account or benefit of, any Restricted Shire Shareholder
except pursuant to an applicable exemption from, or in a transaction not subject to, applicable securities
laws of those jurisdictions, or otherwise permitted under applicable securities laws of those jurisdictions.
Additional information for US Shareholders and US ADS Holders
None of the SEC, any state securities commission in the United States or any other US
regulatory authority has passed upon or determined the adequacy or accuracy of thisdocument. Any representation to the contrary is a criminal offence in the United States.
The Acquisition relates to the shares of a Jersey company and is being made by means of a schemeof arrangement provided for under the Jersey Companies Law and, accordingly, is not subject to thetender offer rules or the proxy solicitation rules under the US Exchange Act. The New Takeda Securities
to be issued under the Scheme have not been registered under the US Securities Act, or applicablestate securities laws, and are being issued in reliance on the exemption from registration set forth in
Section 3(a)(10) of the US Securities Act on the basis of the approval of the Court.
For the purpose of qualifying for the exemption provided by Section 3(a)(10) of the US Securities Act,
Shire will advise the Court that its sanctioning of the Scheme will be relied on by Takeda as an approvalof the Scheme following a hearing on its fairness to Shire Shareholders, at which Court hearing all Shire
Shareholders on the register of members at the Voting Record Time are entitled to attend in person or
through counsel to support or oppose the sanctioning of the Scheme and with respect to which
notification will be given to all such holders.
Under US securities laws, persons who are or will be deemed to be affiliates (as defined under the US
Securities Act) of Takeda within 90 calendar days of the Effective Date may not resell the New Takeda
Securities received under the Scheme without registration under the US Securities Act, except pursuant
to an applicable exemption from, or in a transaction not subject to, the registration requirements of the
US Securities Act. Whether a person is an affiliate of a company for such purposes depends upon thecircumstances, but affiliates of a company can include certain officers and directors and significant
shareholders. Shire Shareholders and Shire ADS Holders who believe they may be or become (within
10 calendar days of the Effective Date) affiliates for the purposes of the US Securities Act should
consult their own legal advisers before any resale of New Takeda Securities received under the
Scheme.
The New Takeda Securities generally should not be treated as “restricted securities” within the meaningof Rule 144(a)(3) under the US Securities Act and persons who receive securities under the Scheme(other than “affiliates” as described in the paragraph above) may resell them without restriction under
the US Securities Act.
US Shareholders and US ADS Holders should be aware that the exchange of their Shire Shares orShire ADSs for New Takeda Securities and/or cash as described herein is expected to be a taxablevexchange for US federal income tax purposes. For a general summary of certain material US federal
income tax considerations of exchanging Shire Shares or Shire ADSs for New Takeda Securities and/or
cash pursuant to the Scheme for US Shareholders and US ADS Holders, see Part VII (Taxation) of thisdocument.
US Shareholders and US ADS Holders are advised to consult their own tax advisers to determine theparticular United States tax consequences to them of the Scheme in light of their particular situation, as
well as any tax consequences that may arise under the laws of any other relevant foreign, state, local
or other taxing jurisdiction.
The Acquisition is subject to the disclosure requirements and practices applicable in the United
Kingdom and Jersey to schemes of arrangement which differ from the disclosure requirements of
United States tender offer and proxy solicitation rules and the US Securities Act.
Financial information of Shire included in this document has been prepared in accordance with US
GAAP. Financial information of Takeda included in this document has been prepared in accordance with
IFRS, which may not be comparable to financial information of US companies or companies whose
financial statements are prepared in accordance with US GAAP.
It may be difficult for US Shareholders to enforce their rights and any claim arising out of the US
securities laws against Takeda and Shire, since Takeda and Shire are located primarily in a non-US
jurisdiction, and some or all of their officers and directors may be residents of a non-US jurisdiction. US
Shareholders may not be able to sue a non-US company or its officers or directors in a non-US court
for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its
affiliates to subject themselves to the jurisdiction and judgment of a US court.
If, in the future, Takeda exercises the right to implement the Acquisition by way of a Takeover Offer, theAcquisition will be made in compliance with applicable United States laws and regulations, including
any applicable exemptions under the US Exchange Act.
Further information
This document, including, in particular, the letter from the Chairman of Shire in Part I (Letter from the
Chairman of Shire plc) and the Explanatory Statement in Part II (Explanatory Statement), has been
prepared solely to assist Shire Shareholders and Shire ADS Holders in deciding how to vote on the
Scheme. The summary of the principal provisions of the Scheme contained in this document is qualified
in its entirety by reference to the Scheme itself, the full text of which is set out in Part III (The Schemeof Arrangement) of this document. Shire Shareholders and Shire ADS Holders are urged to read andconsider carefully the text of the Scheme itself.
Shire Shareholders and Shire ADS Holders are urged to read in particular the risk factors set out
in Appendix I (Risk Factors) to this document and the other information relating to the New
Takeda Securities set out in Part V (Takeda Securities) of this document.
Shire Shareholders and Shire ADS Holders should not construe anything contained in this document
as legal, financial or tax advice and should consult their own professional advisers for any such advice.
Medical information
This document contains information about products that may not be available in all countries, or may
be available under different trademarks, for different indications, in different dosages, or in different
strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement forany prescription drugs, including the ones under development.
Forward-looking statements
This document contains certain statements about the Shire Group, Takeda Group and the CombinedGroup that are, or may be, “forward-looking statements”, which are prospective in nature. All statements
other than statements of historical or current fact included in this document and any accompanyingvidocuments are forward-looking statements. Without limitation, forward-looking statements often include
words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “will”,“may”, “should”, “would”, “could”, “anticipates”, “estimates”, “projects” or words or terms of similar
substance or the negative thereof. By their nature, forward-looking statements involve risk anduncertainty, because they relate to events and depend on circumstances that will occur in the future andthe factors described in the context of such forward-looking statements in this document and any
accompanying documents could cause actual results and developments to differ materially from thoseexpressed in or implied by such forward-looking statements. Such risks and uncertainties include, but
are not limited to, the possibility that the Acquisition will not be pursued or consummated, failure toobtain necessary regulatory approvals or to satisfy any of the other Conditions to the Acquisition if it ispursued, adverse effects on the market price of Takeda Shares, Shire Shares, Takeda ADSs or Shire
ADSs and on Takeda’s or Shire’s operating results because of a failure to complete the Acquisition,
failure to realise the expected benefits of the Acquisition, negative effects relating to any further
announcements relating to the Acquisition or the consummation of the Acquisition on the market priceof Takeda Shares, Shire Shares, Takeda ADSs or Shire ADSs, significant transaction costs and/or
unknown liabilities, general economic and business conditions that affect the Combined Group following
the consummation of the Acquisition, changes in global, political, economic, business, competitive,
market and regulatory forces, future exchange and interest rates, changes in tax laws, regulations,rates and policies, future business combinations or disposals and competitive developments. Although
it is believed that the expectations reflected in such forward-looking statements are reasonable, noassurance can be given that such expectations will prove to have been correct and Shire Shareholders
and Shire ADS Holders are therefore cautioned not to place undue reliance on these forward-looking
statements, which speak only as at the date of this document.
Additional information about economic, competitive, governmental, technological and other factors that
may affect future results are contained in: (i) Appendix I (Risk Factors) to this document; and (ii) Shire’s
most recent annual report on Form 10-K and in Shire’s subsequent quarterly reports on Form 10-Q, ineach case including those risks outlined in ‘ITEM1A: Risk Factors’ (available at www.shire.com andwww.sec.gov), the contents of which are not incorporated by reference into, nor do they form part of,this document. These risk factors expressly qualify all forward-looking statements contained in thisdocument and should also be considered by the reader.
All forward-looking statements attributable to Takeda or Shire or any person acting on either company’s
behalf are expressly qualified in their entirety by this cautionary statement. Readers are cautioned not
to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Except to the extent otherwise required by applicable law, neither Takeda nor Shire undertakes any
obligation to update or revise forward-looking statements, whether as a result of new information, future
events or otherwise.
No profit forecasts or estimates or quantified financial benefits statements
Unless expressly stated otherwise, no statement in this document is intended as a profit forecast, profit
estimate or quantified financial benefits statement and no statement in this document should beinterpreted to mean that earnings per Shire Share or Takeda Share for the current or future financial
years would necessarily match or exceed the respective historical published earnings per Shire Shareor Takeda Share or to mean that the Combined Group’s earnings in the first 12 months following
completion of the Acquisition, or in any subsequent period, would necessarily match or be greater thanthose of the Shire Group or the Takeda Group for the relevant preceding financial period or any otherperiod.
Rounding
Certain figures included in this document have been subjected to rounding adjustments. Accordingly,
figures shown for the same category presented in different tables may vary slightly and figures shownas totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

vii

Provision of information
Please be aware that addresses, electronic addresses and certain other information provided by Shire
Shareholders, Shire ADS Holders, persons with information rights and other relevant persons for thereceipt of communications from Shire may be provided to Takeda during the Offer Period as required
under Section 4 of Appendix 4 to the Takeover Code.
Publication on website and availability of hard copies
A copy of this document, together with all information incorporated into this document by reference, will
be made available, subject to certain restrictions relating to persons resident, located or with aregistered address in a jurisdiction where the availability of the Acquisition would breach any applicablelaw, on Shire’s and Takeda’s websites at www.shire.com and www.takeda.com, respectively, by no later
than 12 noon (London time) on the Business Day following the date of publication of this document.
Except as expressly referred to in this document, the contents of the websites referred to in thisdocument are not incorporated into, and do not form part of, this document.
You may request a hard copy of this document and all information incorporated into this document byreference by writing to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA, United Kingdom or by calling them on 0330 123 5506 if calling from within the UK
or +44 (0)121 415 0856 if calling from outside the UK. Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicableinternational rate. Different charges may apply to calls from mobile telephones. The helpline is open
between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday, excluding public holidays in Englandand Wales. Please note that Equiniti cannot provide any financial, legal or tax advice and calls may berecorded and monitored for security and training purposes.
If you hold Shire ADSs, you should instead make the request by writing to the Shire Depositary, c/o
Citibank Shareholder Services, PO Box 43099, Providence, RI 02940-5000, USA. The Shire Depositary
can also be reached by calling them between 8.30 a.m. and 6.00 p.m. (New York time) on +1 866 395
6421 toll free from within the US or +1 781 575 4555 if calling from outside the US. Calls are charged
at the standard geographic rate and will vary by provider. Calls outside the US will be charged at theapplicable international rate.
You may also request that all future documents, announcements and information to be sent to you in
relation to the Acquisition should be in hard copy form.
Disclosure requirements of the Takeover Code
Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent. or more of any
class of relevant securities of an offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be,solely in cash) must make an Opening Position Disclosure following the commencement of the Offer
Period and, if later, following the announcement in which any securities exchange offeror is first
identified. An Opening Position Disclosure must contain details of the person’s interests and shortpositions in, and rights to subscribe for, any relevant securities of each of: (i) the offeree company; and(ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a)applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following thecommencement of the Offer Period and, if appropriate, by no later than 3.30 p.m. (London time) on the10th business day following the announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities
exchange offeror before the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent. or
more of any class of relevant securities of the offeree company or of any securities exchange offeror
must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company
or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealingviii

concerned and of the person’s interests and short positions in, and rights to subscribe for, any relevant
securities of each of: (i) the offeree company; and (ii) any securities exchange offeror, save to the extent
that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person towhom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day
following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding, whether formal orinformal, to acquire or control an interest in relevant securities of an offeree company or a securities
exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by any offeror and
Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position
Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel’s
website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue,
when the Offer Period commenced and when any offeror was first identified. If you are in any doubt as
to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you
should contact the Panel’s Market Surveillance Unit on +44 (0)20 7638 0129.
Date of publication
This document is published on November 12, 2018.

ix

Table of Contents
Page
EXPECTED TIMETABLE OF PRINCIPAL EVENTS

1ACTION TO BE TAKEN: DOCUMENTS AVAILABLE TO SHIRE SHAREHOLDERS

4ACTION TO BE TAKEN: VOTING AT THE SHIRE MEETINGS

5ACTION TO BE TAKEN: MAKING AN ELECTION IN RESPECT OF THE CONSIDERATION

10PART ILETTER FROM THE CHAIRMAN OF SHIRE PLC

19PART II

EXPLANATORY STATEMENT

32

PART IIITHE SCHEME OF ARRANGEMENT

93

PART IV

CONDITIONS TO, AND FURTHER TERMS OF, THE IMPLEMENTATION
OF THE SCHEME AND THE ACQUISITION

114

PART V

TAKEDA SECURITIES

125

PART VI

FINANCIAL AND RATINGS INFORMATION

147

PART VIITAXATION

149

PART VIII

ADDITIONAL INFORMATION

163

PART IXNOTES FOR MAKING ELECTIONS

210

PART XFURTHER INFORMATION FOR SHIRE ADS HOLDERS

222

PART XI

DEFINITIONS

226

PART XIINOTICE OF COURT MEETING

240

PART XIIINOTICE OF SHIRE GENERAL MEETING243

APPENDIX IRISK FACTORS

248

APPENDIX IICORPORATE NOMINEE FACILITY TERMS AND CONDITIONS

272

APPENDIX III STATEMENT ON QUANTIFIED FINANCIAL BENEFITS

282

APPENDIX IV NOTES TO THE UNAUDITED PRO FORMA CONDENSEDCOMBINED FINANCIAL DATA

285

APPENDIX VPROPOSED MEMBERS OF THE FUTURE TAKEDAEXECUTIVE TEAM (POST-EFFECTIVE DATE)APPENDIX VI NON-GAAP RECONCILIATIONS

296
297

x

EXPECTED TIMETABLE OF PRINCIPAL EVENTSAll times shown are London times unless otherwise stated. All dates and times are indicative only, arebased on Shire’s and Takeda’s current expectations and are subject to change (including as a result ofchanges to Court times). If any of the dates and/or times in this expected timetable change, the revised
dates and/or times will be notified to Shire Shareholders and Shire ADS Holders by announcement
through a Regulatory Information Service, which Shire will furnish to the SEC on Form 8-K.
Event

Expected time/date

ADS Voting Record Time

5.00 p.m. (New York time)on November 7, 2018

Latest time for receipt of ADS Voting Cards(or valid telephone or internet voting instructions)for the Court Meeting and the Shire General Meeting

10.00 a.m. (New York time)on November 29, 2018(1)Latest time for receipt of Forms of Proxy for:•Court Meeting (BLUE form)

11.15 a.m. on December 3, 2018(2)•Shire General Meeting (YELLOW form)

11.30 a.m. on December 3, 2018(3)Voting Record Time6.30 p.m. on December 3, 2018(4)Takeda Extraordinary General Meeting

10.00 a.m. (Tokyo time) on December 5, 201811.15 a.m. on December 5, 2018(5)Court Meeting

11.30 a.m. on December 5, 2018(5)(6)

Shire General Meeting

The following dates are indicative only and subject to change; please see note (7) below:
Last time for Shire ADS Holders to present their
Shire ADSs for cancellation and take delivery of
Shire Shares to become Shire Shareholders
before the Scheme Record Time

5.00 p.m. (New York time)on December 26, 2018

Latest time for receipt of Forms of Election

6.00 p.m. on January 2, 2019

Court Sanction Hearing

10.00 a.m. on January 3, 2019

Last time for dealings in Shire Shares on
the London Stock Exchange

4.30 p.m. on January 4, 2019

Latest time for receipt of TTE Instructions anddisablement of Shire Shares in CREST

6.00 p.m. on January 4, 2019

Scheme Record Time

6.00 p.m. on January 4, 2019

Last time for dealings in Shire ADSs on NASDAQ

close of business (New York time)on January 4, 2019

Suspension of dealings in Shire Shares on
the London Stock Exchange

before open of business on January 7, 2019

Halt of dealings in Shire ADSs on NASDAQ

before open of business (New York time)on January 7, 2019

Commencement of “when issued” dealings in
the New Takeda ADSs on the New York Stock Exchange
Effective Date of the Scheme

9.30 a.m. (New York time)on January 7, 2019
January 8, 20191

EventExpected time/date

Effective date of the issue of the New Takeda Shares

January 8, 2019

Cancellation of listing of Shire Shares on the premium
listing segment of the Official List and the main marketof the London Stock Exchange

8.00 a.m. on January 9, 2019

Delisting of Shire ADSs

by 9.30 a.m. (New York time)on January 9, 2019

Settlement Account credited with New Takeda Sharesby 00.01 a.m. (9.01 a.m.
(Tokyo time)) on January 10, 2019

New Takeda Shares transferred from the Settlement
Account to JASDEC Accounts of former Shire
Shareholders

from January 10, 2019, but in any
event not later than 14 calendar days
after the Effective Date(8)Listing of, and commencement of dealings in,
the New Takeda Shares on the Tokyo Stock Exchange
and the Local Japanese Stock Exchanges

January 10, 2019

New Takeda Shares transferred from the Settlement
Account to the Takeda Depositary’s JASDEC AccountJanuary 10, 2019

New Takeda ADSs and CDIs representing New Takeda
ADSs delivered to former Shire Shareholders

from January 10, 2019, but inany event not later than 14 calendar
days after the Effective Date(9)New Takeda ADSs delivered to former Shire ADS Holders

from January 10, 2019(10)Listing of, and commencement of regular-way dealings in,
New Takeda ADSs on the New York Stock Exchange

by 9.30 a.m. (New York time)on January 11, 2019(11)CREST accounts of former Shire Shareholders
credited with cash due under the Scheme and in
relation to fractional entitlements

within 14 calendar days of theEffective Date(12)Processing of electronic BACs transfers to former
Shire Shareholders in respect of cash due under the
Scheme and in relation to fractional entitlements

within 14 calendar days of theEffective Date

Despatch of cheques to former Shire Shareholders forthe cash due under the Scheme and in relation to
fractional entitlements

within 14 calendar days of theEffective Date

Despatch of cheques to former Shire Shareholders in
relation to the New Takeda Shares sold under
the Dealing Facility

within 14 calendar days of theEffective Date

Payment of the cash due to former Shire ADS
Holders by the Shire Depositary

following receipt of funds by
the Shire Depositary(13)Latest date by which Scheme may become Effective

May 8, 2019(14)Notes:(1) In order to validly instruct the Shire Depositary as to voting at the Shire Meetings, the ADS Voting Card must be
received by the Shire Depositary by 10.00 a.m. (New York time) on November 29, 2018 for each Shire Meeting or, ifeither Shire Meeting is adjourned, such later date as may be notified by the Shire Depositary, having consulted with
Shire. Please see “Action to be taken” on pages 5 to 18.
(2) The BLUE Form of Proxy for the Court Meeting, if not received by Equiniti by the time stated above, may be handed
to a representative of Equiniti, on behalf of the Chairman of the Court Meeting, or to the Chairman of the Court
Meeting, before the start of the Court Meeting.

2

(3) In order to be valid, the YELLOW Form of Proxy must be received by Equiniti not later than 11.30 a.m. on December
3, 2018 (or, if the Shire General Meeting is adjourned, not later than 48 hours before the time appointed for the
adjourned Shire General Meeting).
(4) If either the Court Meeting or the Shire General Meeting is adjourned, the Voting Record Time for the relevant
adjourned Shire Meeting will be 6.30 p.m. (London time) on the date falling two calendar days before the dateappointed for such adjourned Shire Meeting and the ADS Voting Record Time for the relevant adjourned Shire
Meeting will be such later date as may be notified by the Shire Depositary, having consulted with Shire.
(5) In the event that the Takeda Extraordinary General Meeting is postponed or adjourned, the Court Meeting and Shire
General Meeting will be adjourned so that they will take place on the same date as the Takeda Extraordinary General
Meeting.
(6) To commence at 11.30 a.m. (London time) or as soon thereafter as the Court Meeting shall have concluded or been
adjourned.
(7) These times and dates are indicative only and represent the earliest possible dates for the relevant principal events.
These dates will depend, among other things, on the dates upon which: (i) the Conditions are satisfied or (whereapplicable) waived; (ii) the European Commission gives its approval to proceed to completion of the Acquisition (seeparagraph 7 of Part I (Letter from the Chairman of Shire PLC) of this document for further details); (iii) the Court sanctions
the Scheme; and (iv) the Court Order is delivered to the Registrar of Companies. If it becomes necessary to change
any of the dates and/or times in the expected timetable, including as a result of the timing of receipt of approval fromthe European Commission to proceed to completion of the Acquisition, it is intended that the Effective Date will be assoon as practicable after January 8, 2019. Shire will give adequate notice of any changes by issuing an announcement
through a Regulatory Information Service and will furnish such announcement to the SEC on Form 8-K.
(8) In order to avoid a delay in the completion of any such transfer, Shire Shareholders who make a valid JASDEC
Election to deliver their New Takeda Shares into an account with an AMI should contact their AMI to confirm any
necessary steps in order for the AMI to record the delivery of the New Takeda Shares from the Settlement Account.
(9) The date on which New Takeda ADSs will be delivered to Shire Shareholders will depend on the type of ADS Election
made. In order to avoid a delay in receiving their New Takeda ADSs, Shire Shareholders who make a valid ADS
Election to deliver their New Takeda ADSs to their broker or other securities intermediary in DTC should contact theirbroker or other securities intermediary to request that it, or the DTC participant through which it clears, inputs valid
instructions to receive delivery of the New Takeda ADSs free of payment from the Takeda Depositary’s DTC
participant account (account number 2504).
(10) New Takeda ADSs will be delivered to the Shire Depositary from January 10, 2019 (and in any event not later than
14 calendar days after the Effective Date).
The date on which New Takeda ADSs will be delivered to Shire ADS Holders will depend on the way in which such
Shire ADS Holders held their Shire ADSs. It is expected that Shire ADS Holders holding through participants in DTC
will receive delivery shortly after the receipt by the Shire Depositary of the New Takeda ADSs and that registered
Shire ADS Holders holding uncertificated Shire ADSs (that is, Shire ADSs held outside of DTC for which no
certificates have been issued) will be issued New Takeda ADSs in uncertificated form beginning approximately one
week thereafter (and will receive a statement by post reflecting the issuance of New Takeda ADSs in their name).
Registered Shire ADS Holders holding certificates for their Shire ADSs will only receive delivery of their New Takeda
ADSs after they return their signed letter of transmittal and Shire ADS certificate to the Shire Depositary.
(11) The listing of, and commencement of regular-way dealings in, New Takeda ADSs on January 11, 2019 is subject to
DTC having completed its allocation of New Takeda ADSs to former Shire ADS Holders and the Shire Depositary
having made the relevant notification to the New York Stock Exchange in time for the New York Stock Exchange tomake the relevant announcement prior to close of business (New York time) on January 10, 2019.
(12) Shire Shareholders who hold Shire Shares in uncertificated form and receive the cash portion of the Considerationin US Dollars must ensure that an active US Dollar Cash Memorandum Account is in place in CREST by no later thanthe Scheme Record Time. In the absence of a US Dollar Cash Memorandum Account, the payment of the cash
portion of the Consideration will not settle, resulting in a delay and the settlement of the cash portion of theConsideration outside of CREST.
(13) In the case of Shire ADS Holders who hold Shire ADSs in certificated form, subject to presentation by such holdersof their signed letters of transmittal and Shire ADS certificates to the Shire Depositary.
(14) The latest date by which the Scheme may become Effective may be extended by agreement in writing between Shireand Takeda with the prior consent of the Panel and (if required) the approval of the Court.

3

ACTION TO BE TAKEN:
DOCUMENTS AVAILABLE TO SHIRE SHAREHOLDERSAll Shire Shareholders (other than Restricted Shire Shareholders)
Please check that you have received the following hard copy Forms of Proxy with this document:•a BLUE Form of Proxy for use in respect of the Court Meeting on December 5, 2018; and•a YELLOW Form of Proxy for use in respect of the Shire General Meeting on December 5, 2018.

Shire Shareholders (other than Restricted Shire Shareholders) who hold Shire Shares incertificated form
Please check that you have received (in addition to the Forms of Proxy listed above):•a hard copy WHITE Certificated Form of Election (and its accompanying notes on how tocomplete the Certificated Form of Election) for use in connection with the making of a Currency
Election and a Securities Election;•an envelope, for use in the United Kingdom only, for returning the WHITE Certificated Form ofElection; and•if you are considered likely to be eligible to make an election for the Dealing Facility, a hard copyof the Dealing Facility Terms and Conditions.

Shire Shareholders (other than Restricted Shire Shareholders) who hold Shire Shares in
uncertificated form (that is, in CREST)
Please check that you have received (in addition to the Forms of Proxy listed above):•a hard copy GREEN CREST Form of Election (and its accompanying notes on how to complete
the CREST Form of Election) for use in connection with the making of a JASDEC Election,
Corporate Nominee Election or ADS Election (other than an ADS Election to receive CDIs
representing New Takeda ADSs or a Currency Election, which should be made by TTE
Instruction – see paragraph 2.1(c) of Part IX (Notes for making Elections) of this document); and•an envelope, for use in the United Kingdom only, for returning the GREEN CREST Form ofElection.

Shire ADS Holders
Please check that you have received a copy of the following:•

an ADS Voting Card in respect of Shire ADSs; and•the Notice of Court Meeting and Extraordinary General Meeting document issued by the Shire
Depositary.

If you have not received all applicable documents, please contact the relevant helpline on the number
indicated below or your financial intermediary.
Helplines
The helpline for Shire Shareholders is available between 8.30 a.m. and 5.30 p.m. (London time)
Monday to Friday (except public holidays in England and Wales) on 0330 123 5506 if calling from within
the UK or +44 (0)121 415 0856 if calling from outside the UK. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at theapplicable international rate. Different charges may apply to calls from mobile telephones. Please notethat calls may be recorded or monitored.
The helpline for Shire ADS Holders is provided by the Shire Depositary and is available between
8.30 a.m. and 6.00 p.m. (New York time) Monday to Friday (except public holidays in the US) on +1 866
395 6421 from within the US or +1 781 575 4555 if calling from outside the US. Calls are charged at
the standard geographic rate and will vary by provider. Calls outside the US will be charged at theapplicable international rate.
Neither the Shire Shareholder Helpline nor the Shire ADS Holder Helpline can provide advice on the
merits of the Acquisition or give any financial, legal or tax advice.
4

ACTION TO BE TAKEN:
VOTING AT THE SHIRE MEETINGS
This section should be read in conjunction with the rest of this document, the accompanying Forms of
Proxy and Form of Election (including the accompanying notes on how to complete the relevant Formof Election) and any document incorporated by reference.
The Shire Board considers the Acquisition to be in the best interests of the Shire Shareholders
taken as a whole. For the reasons set out in this document, the Shire Board unanimously
recommends that you vote in favour of the Scheme at the Court Meeting and the Special
Resolution relating to the Acquisition to be proposed at the Shire General Meeting, as the Shire
Directors who hold Shire Shares and/or Shire ADSs (as applicable) have irrevocably undertaken
to do in respect of their own beneficial holdings of Shire Shares (including such Shire Shares
underlying Shire ADSs). The Shire Board therefore unanimously recommends that you take theaction described below.
IT IS IMPORTANT THAT, FOR THE COURT MEETING, AS MANY VOTES AS POSSIBLE ARE CAST
SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR AND REASONABLE
REPRESENTATION OF SHIRE SHAREHOLDER OPINION. YOU ARE THEREFORE STRONGLY
URGED TO COMPLETE, SIGN AND RETURN YOUR FORMS OF PROXY (OR APPOINT A PROXYONLINE OR THROUGH THE CREST ELECTRONIC PROXY APPOINTMENT SERVICE) OR ADS
VOTING CARD AS SOON AS POSSIBLE.
The Scheme will require approval at a meeting of Shire Shareholders entitled to vote which is being
convened with the permission of the Court and is to be held at Block 3, Miesian Plaza, 50-58 Baggot
Street Lower, Dublin 2, Ireland at 11.15 a.m. (London time) on December 5, 2018. Implementation of
the Scheme will also require approval by Shire Shareholders of the Special Resolution relating to theAcquisition to be proposed at the Shire General Meeting. The Shire General Meeting will be held at thesame place as the Court Meeting on December 5, 2018 at 11.30 a.m. (London time) (or as soon
thereafter as the Court Meeting shall have concluded or been adjourned).
Proxy appointment
Shire Shareholders entitled to attend and vote at the Shire Meetings are entitled to appoint a proxy to
exercise all or any of their rights to attend, speak and vote at the Court Meeting and/or Shire General
Meeting. A proxy need not be a Shire Shareholder. The completion and return of a Form of Proxy or theappointment of a proxy or proxies through CREST or www.sharevote.co.uk shall not prevent a Shire
Shareholder from attending and voting in person at either Shire Meeting or any adjournment thereof, if
a Shire Shareholder so wishes and is so entitled. In the event of a poll on which a Shire Shareholder
votes in person, their proxy votes previously lodged with Equiniti, Shire or www.sharevote.co.uk will be
excluded.
Please note that the appointment of a proxy or proxies is separate for each of the Court Meeting and
the Shire General Meeting.
A person who has been nominated under article 59 of the Shire Articles to enjoy information rights (a“Nominated Person”) may have a right under an agreement between him/her and the member bywhom he/she was nominated to be appointed, or to have someone else appointed, as a proxy for eachof the Court Meeting and the Shire General Meeting. If a Nominated Person has no such proxyappointment right or does not wish to exercise it, he/she may have a right under such an agreement togive instructions to the member as to the exercise of voting rights. The statement of the rights ofmembers to appoint proxies above does not apply to a Nominated Person. The rights described above
can only be exercised by Shire Shareholders. Nominated Persons are reminded that they should
contact the registered shareholder (and not Shire) on matters relating to the Shire Shares.

5

(a)

Sending Forms of Proxy by post or by hand
Please complete and sign the Forms of Proxy in accordance with the instructions printed on themand return them (together, if appropriate, with the power of attorney or other written authority
under which the Form of Proxy is signed or a certified copy of such power or authority), either:(i) by post; or (ii) during normal business hours only, by hand, to Equiniti (Jersey) Limited, c/o
Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, United
Kingdom, so as to be received as soon as possible and in any event not later than the relevanttime set out below:
BLUE Forms of Proxy for the Court Meeting

11.15 a.m. (London time) on
December 3, 2018

YELLOW Forms of Proxy for the Shire General Meeting

11.30 a.m. (London time) on
December 3, 2018

or, if in either case the relevant Shire Meeting is adjourned, the relevant Form of Proxy should bereceived not later than 48 hours before the time appointed for the adjourned Shire Meeting.
If the BLUE Form of Proxy for the Court Meeting is not returned by such time, it may be handed
to a representative of Equiniti, on behalf of the Chairman of the Court Meeting, or to the Chairmanof the Court Meeting, before the start of the Court Meeting. However, in the case of the Shire
General Meeting, the YELLOW Form of Proxy must be received by Equiniti by the time
mentioned above, or it will be invalid. Such invalidity will not, however, prevent a Shire
Shareholder from attending the Shire General Meeting and speaking and voting at the Shire
General Meeting in person if they are entitled and wish to do so.
Shire Shareholders are entitled to appoint a proxy in respect of some or all of their Shire Sharesand may also appoint more than one proxy, provided that each proxy is appointed to exercise therights attached to a different share or shares held by such holder. Shire Shareholders who wish
to appoint more than one proxy in respect of their holding of Shire Shares should contact Equiniti
for further Forms of Proxy or photocopy the Forms of Proxy as required.

(b)

Online appointment of proxies
As an alternative to completing and returning the printed Forms of Proxy, proxies may be
appointed electronically by logging on to the following website: www.sharevote.co.uk andfollowing the instructions there. For an electronic proxy appointment to be valid, the appointment
must be received by Equiniti no later than 11.15 a.m. (London time) on December 3, 2018 for the
Court Meeting and 11.30 a.m. (London time) on December 3, 2018 for the Shire General Meeting(or, in the case of adjournment(s), not later than 48 hours before the time appointed for the
adjourned Shire Meeting(s)). Full details of the procedure to be followed to appoint a proxyelectronically are given on the website.
In the case of the Court Meeting only, if you have not appointed a proxy electronically by suchtime, you may complete the BLUE Form of Proxy and hand it to a representative of Equiniti, or
the Chairman of the Court Meeting, before the start of the Court Meeting.

(c)Electronic appointment of proxies through CREST
If you hold Shire Shares in uncertificated form – that is, in CREST – and wish to appoint a proxyor proxies for the Shire Meetings (or any adjourned Shire Meeting) by using the CREST
electronic proxy appointment service, you may do so by using the procedures described in the
CREST Manual (please also refer to the accompanying notes to the notices of the Shire Meetings
set out in Part XII (Notice of Court Meeting) and Part XIII (Notice of Shire General Meeting) of
this document). CREST personal members or other CREST sponsored members, and those
CREST members who have appointed any voting service provider(s), should refer to their
CREST sponsor or voting service provider(s), who will be able to take the appropriate action on
their behalf.

6In order for a proxy appointment or instruction made using the CREST service to be valid, theappropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated inaccordance with the specifications of Euroclear and must contain the information required forsuch instructions as described in the CREST Manual. The message (regardless of whether it
constitutes the appointment of a proxy or an amendment to the instructions given to a previously
appointed proxy) must, in order to be valid, be transmitted so as to be received by Equiniti(ID 7RA01) not later than 48 hours before the time appointed for the Court Meeting or Shire
General Meeting (or adjourned Shire Meeting), as applicable. For this purpose, the time of receipt
will be taken to be the time (as determined by the time stamp applied to the message by the
CREST Application Host (as defined in the CREST Manual)) from which Equiniti is able toretrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time,
any change of instructions to proxies appointed through CREST should be communicated to theappointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers
should note that Euroclear does not make available special procedures in CREST for any
particular messages. Normal system timings and limitations will therefore apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned totake (or, if the CREST member is a CREST personal member or sponsored member or has
appointed any voting service provider(s), to procure that their CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted bymeans of the CREST system by any particular time. In this connection, CREST members and,
where applicable, their CREST sponsors or voting service providers are referred, in particular, tothose sections of the CREST Manual concerning practical limitations of the CREST system andtimings.
Shire may treat as invalid a CREST Proxy Instruction in the circumstances set out in the CREST
Regulations.
Voting on the Acquisition if you are a Shire ADS Holder
A Shire ADS Holder can vote, or direct the voting of, the Shire Shares represented by its Shire ADSs ina number of ways as further described in Part X (Further information for Shire ADS Holders) of thisdocument.

(a)Voting via the Shire Depositary
Shire ADS Holders as at the ADS Voting Record Time of 5.00 p.m. (New York time) on
November 7, 2018 should, if they wish to direct the voting of the Shire Shares represented bytheir Shire ADSs that are held by the Shire Depositary (or its nominee), sign, complete and return
the ADS Voting Card in accordance with the instructions printed thereon and in the Notice of
Court Meeting and Extraordinary General Meeting received from the Shire Depositary in order to
instruct the Shire Depositary how to vote the Shire Shares represented by their Shire ADSs on
their behalf at the Court Meeting and the Shire General Meeting. The ADS Voting Card should
be returned by mail to Shire plc, c/o Citibank Shareholder Services, PO Box 43099, Providence
RI 02940-5000, USA, as soon as possible and, in any event, so as to be received no later than
10.00 a.m. (New York time) on November 29, 2018 or if either the Court Meeting or the Shire
General Meeting is adjourned, such later date as may be notified by the Shire Depositary, having
consulted with Shire. Alternatively, Shire ADS Holders as at the ADS Voting Record Time of
5.00 p.m. (New York time) on November 7, 2018 may instruct the Shire Depositary with voting
instructions by internet or telephone, as set out in the instructions printed on the ADS Voting Cardand in the Notice of Court Meeting and Extraordinary General Meeting received from the Shire
Depositary.
Shire ADS Holders who hold their Shire ADSs indirectly must follow the instructions from theircustodian, broker or other agent through which they hold their Shire ADSs if they wish to givevoting instructions to the Shire Depositary. Providing voting instructions via a custodian, broker7or other agent may require the provision of information by a particular deadline, well in advanceof the deadline to give the Shire Depositary voting instructions, and therefore you are encouraged
to reach out to such custodian, broker or other agent for any such deadline as quickly as
possible.
Following timely receipt of a signed and completed ADS Voting Card (or instructions by internetor telephone) from a Shire ADS Holder, the Shire Depositary shall endeavour, insofar aspracticable and permitted under the provisions of, or governing, the Shire Shares represented by
Shire ADSs, to vote or cause its nominee to vote (by means of the appointment of a proxy orotherwise) such Shire Shares represented by the Shire ADSs in respect of which instructions
have been received in accordance with those instructions.
The Shire Deposit Agreement provides that the Shire Depositary will not exercise any voting
discretion in respect of the Shire Shares represented by Shire ADSs. If the Shire Depositary does
not receive an ADS Voting Card (or instructions by internet or telephone) from a Shire ADS
Holder before 10.00 a.m. (New York time) on November 29, 2018 in respect of their entire holdingof Shire ADSs, then:

(b)

(i)

in respect of the Shire General Meeting only, subject to the terms of the Shire Deposit
Agreement, such Shire ADS Holder shall be deemed to have instructed the Shire
Depositary to give a person designated by Shire a discretionary proxy to vote the Shire
Shares represented by the Shire ADSs in respect of which the Shire Depositary has notreceived voting instructions. Any such Shire ADS Holder may be required, in accordancewith DTR 5 of the Disclosure Guidance and Transparency Rules, to notify Shire of theirrelevant holding of Shire ADSs if the percentage of their voting rights falls below a
notifiable threshold as a result of a person designated by Shire having been so appointed.
In the event that a person designated by Shire is given such a discretionary proxy, it is theintention of the Shire Board to direct such person to exercise such votes in line with thevoting recommendation of the Shire Board for each of the resolutions to be proposed at
the Shire General Meeting; and(ii)

in respect of the Court Meeting, such Shire ADS Holder shall not be deemed to have
instructed the Shire Depositary to give a person designated by Shire a discretionary proxy
to vote the Shire Shares represented by the Shire ADSs in respect of which the Shire
Depositary has not received voting instructions. Accordingly, the Shire Shares represented
by the Shire ADSs in respect of which the Shire Depositary has not received voting
instructions will not be represented at the Court Meeting and will not be voted at the Court
Meeting.

Cancellation of Shire ADSs so as to become a Shire Shareholder
Shire ADS Holders who wish to attend the Court Meeting and/or the Shire General Meeting musttake steps to present their Shire ADSs (and, to the extent that such Shire ADSs are certificated,the certificates evidencing such Shire ADSs) to the Shire Depositary for cancellation before 5.00
p.m. (New York time) on November 23, 2018 (subject to the relevant Shire ADS Holder’scompliance with the terms of the Shire Deposit Agreement and payment of the Shire Depositary’sfees), together with: (i) delivery instructions for the Shire Shares represented by such Shire ADSs
(including, if applicable, the name and address of the person who will be the registered holder ofsuch Shire Shares); and (ii) if the cancellation is to take place before the Shire Meetings, a
certification that the Shire ADS Holder: (x) beneficially owned the relevant Shire ADSs as at the
ADS Voting Record Time and has not given, and will not give, voting instructions to the Shire
Depositary in respect of such Shire ADSs in relation to the Shire Meetings (or has cancelled all
voting instructions previously given); (y) beneficially owned the relevant Shire ADSs as at the
ADS Voting Record Time and has given voting instructions to the Shire Depositary in respect ofsuch Shire ADSs in relation to the Shire Meetings, but undertakes not to vote the Shire Shares
represented by such Shire ADSs at the Shire Meetings; or (z) did not beneficially own therelevant Shire ADSs as at the ADS Voting Record Time, but undertakes not to vote the Shire8

Shares represented by such Shire ADSs at the Shire Meetings. Shire ADS Holders who hold their
Shire ADSs in a brokerage, bank, custodian or other nominee account should promptly contact
their broker, bank or other nominee to find out what actions are required to instruct the broker,
bank or other nominee to cancel the Shire ADSs on their behalf. Shire ADS Holders who present
their Shire ADSs to the Shire Depositary for cancellation prior to 5.00 p.m. (New York time) on
November 23, 2018 in order to take delivery of Shire Shares will be responsible for the paymentof the Shire Depositary’s fees associated with such cancellation.
Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m. (NewYork time) on November 23, 2018 until 8.00 a.m. (New York time) on December 4, 2018.
Shire ADS Holders who take steps (as described in the paragraphs above) to cancel their Shire
ADSs before 5.00 p.m. (New York time) on November 23, 2018 and become Shire Shareholders
before the Voting Record Time will also have the right to attend the Court Sanction Hearing inperson and be represented by counsel to support or oppose the sanctioning of the Scheme.
Further details are set out in Part X (Further information for Shire ADS Holders) of this document.

9

ACTION TO BE TAKEN:
MAKING AN ELECTION IN RESPECT OF THE CONSIDERATIONThis section should be read in conjunction with the rest of this document, the accompanying Forms of
Proxy and Form of Election (including the accompanying notes on how to complete the relevant Formof Election) and any document incorporated by reference.
FLOWCHARTS HAVE BEEN INCLUDED ON PAGES 16 TO 18 IN ORDER TO ASSISTYOU IN MAKING AN ELECTION IN RESPECT OF THE CONSIDERATION.

Background
Under the terms of the Acquisition, the holders of Shire Shares whose names appear on the register ofmembers of Shire at the Scheme Record Time will be entitled to receive for each Shire Share: (i) $30.33
in cash; and (ii) either 0.839 New Takeda Shares or 1.678 New Takeda ADSs in accordance with theterms of the Scheme.
The New Takeda Shares will be listed and traded on the Tokyo Stock Exchange and the Local Japanese
Stock Exchanges. All shares of Japanese listed companies, including those of Takeda, aredematerialised and are held in uncertificated form through an entry in the record maintained by Japan
Securities Depository Center, Inc. (“JASDEC”). In order to hold and trade listed Japanese shares,
investors must have an account with either JASDEC or an account management institution (“AMI”) thathas been admitted to JASDEC pursuant to Japanese law. Further details are set out in paragraph 19.1
of Part II (Explanatory Statement) of this document.
New Takeda Shares are not capable of being held in certificated form, or transferred or settled directly
through the CREST settlement system. For this reason, Shire Shareholders have a number of options
to hold their New Takeda Shares indirectly.
Each Shire Shareholder (other than a Restricted Shire Shareholder) who holds Shire Shares incertificated form at the Scheme Record Time, in respect of each Shire Share which they hold:(a)

may make a Currency Election in respect of the cash portion of the Consideration payable tothem under the Scheme; and(b)should make at least one of four possible Securities Elections in respect of the non-cash portionof the Consideration which they are entitled to receive under the Scheme.

Each Shire Shareholder (other than a Restricted Shire Shareholder) who holds Shire Shares in
uncertificated form (that is, in CREST) at the Scheme Record Time, in respect of each Shire Sharewhich they hold:(a)

may make a Currency Election in respect of the cash portion of the Consideration payable tothem under the Scheme; and(b)should make at least one of three possible Securities Elections in respect of the non-cash portionof the Consideration which they are entitled to receive under the Scheme.

In certain cases, Shire Shareholders are permitted to split their holding of Shire Shares such that they
may make multiple Securities Elections in relation to their holding. Further details are set out inparagraph 5 of Part IX (Notes for making Elections) of this document.
Elections by Shire Shareholders holding Shire Shares in certificated form(a)Currency Election
Shire Shareholders who hold Shire Shares in certificated form and have a registeredaddress in the United Kingdom, Channel Islands or Isle of Man as at the Scheme Record
10Time will be deemed to have elected for the Currency Conversion Facility and will receive
the entire cash portion of the Consideration payable to them under the Scheme in pounds
Sterling (net of any applicable customary transaction and dealing costs associated withthe conversion) at the applicable market exchange rate on the latest reasonably
practicable date for fixing such rate before the relevant payment date under the Currency
Conversion Facility. Such Shire Shareholders may opt out of the Currency Conversion Facility,
which would result in such Shire Shareholders receiving the cash portion of the Consideration in
US Dollars, by completing and returning an Opt-out Form (a copy of which may be obtained bycontacting the Shareholder Helpline).
Unless they elect otherwise, each Shire Shareholder who holds Shire Shares incertificated form and does not have a registered address in the United Kingdom, Channel
Islands or Isle of Man as at the Scheme Record Time will receive the cash portion of theConsideration which is payable to them under the Scheme in US Dollars. Such Shire
Shareholders may elect to have the US Dollar cash portion of the Consideration which is payable
to them under the Scheme instead paid in pounds Sterling (net of any applicable customarytransaction and dealing costs associated with the conversion) at the applicable market exchange
rate on the latest reasonably practicable date for fixing such rate before the relevant payment
date under the Currency Conversion Facility (by completing Part 3 on the WHITE CertificatedForm of Election).
Each Shire Shareholder who has set up a standing electronic payment mandate with the Shire
Registrar for the purpose of receiving dividend payments from Shire in pounds Sterling will,
subject to such Shire Shareholder having made (or being deemed to have made) a valid
Currency Election to receive the cash portion of their Consideration in pounds Sterling, receive
the cash portion of the Consideration payable to them pursuant to the Scheme by way of anelectronic BACs transfer to the account indicated in such mandate. In the absence of a standing
electronic payment mandate held by the Shire Registrar for receiving dividend payments from
Shire in pounds Sterling, a cheque will be issued and despatched to each relevant Shire
Shareholder at their registered address.

(b)

Securities Election
Subject to the terms and conditions set out in this document, each Shire Shareholder (other thana Restricted Shire Shareholder) who holds Shire Shares in certificated form at the Scheme
Record Time may, in relation to their holding of Shire Shares, make at least one of the following
Elections (each a “Securities Election”):(a)elect to hold the New Takeda Shares which they are entitled to receive pursuant to the
Scheme in their own JASDEC Account (by completing Part 4A on the WHITE CertificatedForm of Election) (a “JASDEC Election”). Please refer to paragraphs 19.1 and 19.3(a) ofPart II (Explanatory Statement) of this document for a summary of the background to
holding New Takeda Shares through a JASDEC Account and for further information
concerning the making of a JASDEC Election;(b)in the case of a Shire Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to havethe New Takeda Shares which they are entitled to receive pursuant to the Scheme held on
their behalf through the Corporate Nominee Facility, subject to the Corporate Nominee
Facility Terms and Conditions (by completing Part 4B on the WHITE Certificated Form ofElection) (a “Corporate Nominee Election”). Please refer to paragraph 19.3(b) of Part II(Explanatory Statement) of this document for further information concerning the making ofa Corporate Nominee Election and to paragraph 21 Part II (Explanatory Statement) of thisdocument for summary details of the Corporate Nominee Facility;(c)elect to receive 1.678 New Takeda ADSs (each New Takeda ADS representing 0.5 New
Takeda Shares) for each Shire Share they hold instead of the 0.839 New Takeda Shares

11per Shire Share they would otherwise have been entitled to receive pursuant to the
Scheme, subject to the terms and conditions applicable to the New Takeda ADSs (bycompleting Part 4C on the WHITE Certificated Form of Election) (an “ADS Election”).
Please refer to paragraph 19.3(c) of Part II (Explanatory Statement) of this document for
further information concerning the making of an ADS Election and to paragraph 5 of Part
V (Takeda Securities) of this document for summary details of the New Takeda ADSs; or(d)in the case of a Shire Shareholder who holds 200 or fewer Shire Shares in certificated form
as at the Scheme Record Time and has a registered address in the EEA, Channel Islands,
Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to have all (butnot some only) of the New Takeda Shares which they are entitled to receive pursuant to
the Scheme sold on their behalf under the Dealing Facility and to have the net proceedsof such sale (after deduction of all expenses and commissions incurred in connection withsuch sale) remitted to them in pounds Sterling (by completing Part 4D on the WHITE
Certificated Form of Election) (a “Dealing Facility Election”). Please refer to paragraph19.3(d) of Part II (Explanatory Statement) of this document for further information
concerning the making of a Dealing Facility Election.

Each Shire Shareholder who does not make a valid Securities Election in respect of all of
their Shire Shares will receive 0.839 New Takeda Shares for each Shire Share they hold at
the Scheme Record Time in respect of which no such Securities Election has been made.
Such New Takeda Shares will be held in the name of the Representative as bare trustee for such
Shire Shareholder until the earlier of: (i) the delivery of a valid Securities Election by such Shire
Shareholder to Equiniti in relation to the action which should be taken in respect of the New
Takeda Shares (in which case the Representative will procure that such action is taken as isrequired in order to give effect to such Securities Election); and (ii) the date which falls threemonths from the Effective Date (in which case the Representative will procure that such New
Takeda Shares are sold in the market in accordance with the Sales Policy and that the net
proceeds of sale (after the deductions specified in the Sales Policy) are paid to such Shire
Shareholder).
Flowcharts explaining the availability of the above Elections are included on pages 16 to 18 anddetails of how to complete the Certificated Form of Election are included in the notes whichaccompany the Certificated Form of Election.
Elections by Shire Shareholders holding Shire Shares in uncertificated form (that is, in CREST)(a)

Currency Election
Unless they elect otherwise, each Shire Shareholder who holds Shire Shares in
uncertificated form (that is, in CREST) at the Scheme Record Time and does not make avalid Currency Election will receive the cash portion of the Consideration which is payable
to them under the Scheme in US Dollars. Such Shire Shareholders may elect to have the US
Dollar cash portion of the Consideration which is payable to them under the Scheme instead paidin pounds Sterling (net of any applicable customary transaction and dealing costs associated withthe conversion) at the applicable market exchange rate on the latest reasonably practicable date
for fixing such rate before the relevant payment date under the Currency Conversion Facility (bymaking the relevant TTE Instruction through CREST).
Each Shire Shareholder who holds Shire Shares in uncertificated form at the Scheme
Record Time and does not make a valid Currency Election must ensure that an active US
Dollar Cash Memorandum Account is in place in CREST by no later than the Scheme
Record Time. In the absence of a US Dollar Cash Memorandum Account, the payment of the
cash portion of the Consideration will not settle, resulting in a delay and the settlement of the
cash portion of the Consideration outside of CREST.

12

(b)

Securities Election
Subject to the terms and conditions set out in this document, each Shire Shareholder (other thana Restricted Shire Shareholder) who holds Shire Shares in uncertificated form (that is, in CREST)at the Scheme Record Time may, in relation to their holding of Shire Shares, make at least oneof the following Elections (each a “Securities Election”):(a)elect to hold the New Takeda Shares which they are entitled to receive pursuant to the
Scheme in their own JASDEC Account (by completing Part 4A on the GREEN CREST
Form of Election) (a “JASDEC Election”). Please refer to paragraphs 19.1 and 19.3(a) ofPart II (Explanatory Statement) of this document for a summary of the background to
holding New Takeda Shares through a JASDEC Account and for further information
concerning the making of a JASDEC Election;(b)in the case of a Shire Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to havethe New Takeda Shares which they are entitled to receive pursuant to the Scheme held on
their behalf through the Corporate Nominee Facility, subject to the Corporate Nominee
Facility Terms and Conditions (by completing Part 4B on the GREEN CREST Form ofElection) (a “Corporate Nominee Election”). Please refer to paragraph 19.3(b) of Part II(Explanatory Statement) of this document for further information concerning the making ofa Corporate Nominee Election and to paragraph 21 Part II (Explanatory Statement) of thisdocument for summary details of the Corporate Nominee Facility; or(c)elect to receive 1.678 New Takeda ADSs (each New Takeda ADS representing 0.5 New
Takeda Shares) for each Shire Share they hold instead of the 0.839 New Takeda Shares
per Shire Share which they would otherwise have been entitled to receive pursuant to the
Scheme, subject to the terms and conditions applicable to the New Takeda ADSs (an “ADSElection”). Shire Shareholders may make an ADS Election: (i) by completing Part 4C on
the GREEN CREST Form of Election, so as to receive New Takeda ADSs through DTC or
through the direct registration system; or (ii) by making the relevant TTE Instruction
through CREST, so as to receive CDIs representing New Takeda ADSs (in respect ofwhich please see paragraphs 2.1(b) and 2.1(c) of Part IX (Notes for making Elections) of
this document). Please refer to paragraph 19.3(c) of Part II (Explanatory Statement) of thisdocument for further information concerning the making of an ADS Election and toparagraphs 5 and 6 of Part V (Takeda Securities) of this document for summary details of
the New Takeda ADSs and CDIs representing New Takeda ADSs.

Shire Shareholders who hold their Shire Shares in uncertificated form are not eligible to make an
Election for the Dealing Facility.
The CDIs representing New Takeda ADSs will not carry any voting rights in Takeda (unlessand to the extent such CDIs are cancelled such that the Takeda ADSs are held through DTC
by settling a cross-border delivery transaction in respect of the underlying New Takeda
ADSs through CREST to a DTC participant).
Furthermore, the holders of CDIs representing New Takeda ADSs may not be able to claim
either: (i) a reduction, pursuant to a double taxation convention, of the rate of 15.315 percent. at which it is expected that tax will be withheld under Japanese law from dividends(or other distributions deemed to be dividends for Japanese tax purposes) made or paidby Takeda in respect of New Takeda Shares underlying New Takeda ADSs represented by
CDIs; or (ii) a refund of such tax withheld in excess of the rate provided for in a double
taxation convention. If holders of CDIs representing New Takeda ADSs intend to claim thebenefit of any applicable double taxation convention, they may wish to cancel their CDIs as soon
as practicable after the Effective Date so as to receive the underlying New Takeda ADSs. Yourattention is drawn to paragraph 3.2(a) of Part VII (Taxation) of this document, which contains
certain general comments on the Japanese tax treatment of dividends (or other distributions
deemed to be dividends for Japanese tax purposes) made or paid by Takeda.
13

Each Shire Shareholder who does not make a valid Securities Election in respect of all of
their Shire Shares will receive 0.839 New Takeda Shares for each Shire Share they hold at
the Scheme Record Time in respect of which no such Securities Election has been made.
Such New Takeda Shares will be held in the name of the Representative as bare trustee for such
Shire Shareholder until the earlier of: (i) the delivery of a valid Securities Election by such Shire
Shareholder to Equiniti in relation to the action which should be taken in respect of the New
Takeda Shares (in which case the Representative will procure that such action is taken as isrequired in order to give effect to such Securities Election); and (ii) the date which falls threemonths from the Effective Date (in which case the Representative will procure that such New
Takeda Shares are sold in the market in accordance with the Sales Policy and that the net
proceeds of sale (after the deductions specified in the Sales Policy) are paid to such Shire
Shareholder).
Flowcharts explaining the availability of the above Elections are included on pages 16 to 18 anddetails of how to complete the CREST Form of Election are included in the notes whichaccompany the CREST Form of Election.
Deadline for submission
The last time for Equiniti to receive your Form of Election will be 6.00 p.m. (London time)on January 2, 2019. You should allow sufficient time for posting for your Form of Election to bereceived on time.
The last time for receipt of a TTE Instruction through CREST (applicable only for Shire
Shareholders who hold their Shire Shares in uncertificated form and who wish to make anelection: (i) under the Currency Conversion Facility; and/or (ii) to receive CDIs
representing New Takeda ADSs), will be 6.00 p.m. (London time) on January 4, 2019.
Any changes to the Election Return Time (the last time for Equiniti to receive your Form ofElection or for a TTE Instruction to be received) will be announced by Shire through a Regulatory
Information Service, with such announcement being made available on Shire’s and Takeda’s
websites at www.shire.com and www.takeda.com, respectively, and communicated to Shire
Shareholders at around the same date as such announcement.
Further details about how to submit your Form of Election or make your TTE Instruction are set
out in Part IX (Notes for making Elections) of this document.
Shire ADS Holders
The Shire Depositary will make an ADS Election in respect of its entire holding of Shire Shares
underlying the Shire ADSs as at the Scheme Record Time. Consequently, as each Shire ADS
represents three Shire Shares, Shire ADS Holders will receive $90.99 in cash and 5.034
New Takeda ADSs (upon surrender of their certificated Shire ADSs (if applicable) to theShire Depositary after the Scheme Effective Time) for every Shire ADS which they hold at
the ADS Effective Date, subject to any deductions in respect of US backup withholding(see paragraph 5 of Part X (Further information for Shire ADS Holders)).
Shire ADS Holders are not entitled to make Elections in respect of their Shire ADSs. If a ShireADS Holder does not wish to receive the Consideration in US Dollars and New Takeda ADSs,
and instead wishes to make an Election, Shire ADS Holders must take delivery of Shire Shares
directly. In order to do so, Shire ADS Holders must take steps to present their Shire ADSs to theShire Depositary for cancellation before 5.00 p.m. (New York time) on December 26, 2018(subject to the relevant Shire ADS Holder’s compliance with the terms of the Shire Deposit
Agreement and payment of the Shire Depositary’s fees for Shire ADSs that are presented forcancellation prior to 5.00 p.m. on November 23, 2018) and take delivery of Shire Shares so as
to become Shire Shareholders before the Scheme Record Time.

14

Shire ADS Holders should note that the last time for Equiniti to receive Forms of Election from
Shire Shareholders is 6.00 p.m. (London time) on January 2, 2019 and the last time for receipt
of TTE Instructions is 6.00 p.m. (London time) on January 4, 2019. Accordingly, Shire ADS
Holders who wish to present their Shire ADSs to the Shire Depositary for cancellation are advised
to do so well in advance of 5.00 p.m. (New York time) on December 26, 2018 in order to allow
themselves sufficient time to submit a valid Election in respect of their Shire Shares.
Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m. (NewYork time) on November 23, 2018 until 8.00 a.m. (New York time) on December 4, 2018.
Shire ADS Holders who present their Shire ADSs to the Shire Depositary for cancellation prior to
5.00 p.m. (New York time) on November 23, 2018 in order to take delivery of Shire Shares will
be responsible for the payment of the Shire Depositary’s fees associated with such cancellation.
However, Shire ADS Holders who present their Shire ADSs to the Shire Depositary forcancellation between 8:00 a.m. (New York time) on December 4, 2018 and 5.00 p.m. (New Yorktime) on December 26, 2018 in order to take delivery of Shire Shares will not be responsible forthe payment of the Shire Depositary’s fees associated with such cancellation.
Further details are set out in Part X (Further information for Shire ADS Holders) of this document.
Overseas Shareholders
Further details about the availability of the Scheme and the Acquisition to Overseas
Shareholders are set out in paragraph 27 of Part II (Explanatory Statement) of thisdocument.
If you are a Restricted Shire Shareholder, you will not be sent a WHITE Certificated Formof Election or a GREEN CREST Form of Election and will not be entitled to make any
Elections under such forms or by TTE Instruction.
Further information
Shire Shareholders are advised to review this document in full before making any Election.
Further details of the Currency Conversion Facility, the Corporate Nominee Facility, the ADS
Election Facility and the Dealing Facility (including the terms and conditions governing each such
facility) are set out in paragraphs 19.3, 20.3 and 21 of Part II (Explanatory Statement).
Further details on how to make an Election are included at Part IX (Notes for making Elections)of this document. Flowcharts have also been included on pages 16 to 18 in order to assist you
in making an Election in respect of the Consideration.

15

USE THIS FLOWCHART IF YOU HOLD SHIRE SHARESIN CERTIFICATED FORM
STEP 1 – Currency Election

Will you have aregistered address in
the UK, Channel
Islands or Isle of Man
as at the Scheme
Record Time?

Yes

You will be deemed to haveelected under the Currency
Conversion Facility to receive theentire cash portion of theConsideration payable to you inpounds Sterling (net of any
applicable customary transaction
and dealing costs associated withthe conversion). Do you wish toreceive US Dollars instead?
No

No

You will receive the
cash portion of theConsideration payable
to you in US Dollars.
Do you wish to receive
pounds Sterlinginstead?

Do not complete Part 3 of theCertificated Form of Election.
Continue to STEP 2.

Yes

Make a Currency Election bycompleting Part 3 of theCertificated Form of Election.
Then continue to STEP 2.

No
Do not complete Part 3of the CertificatedForm of Election.
Continue to STEP 2.

16

Yes

Contact the
Shareholder Helpline
to request an Opt-out
Form. Then continue
to STEP 2.

STEP 2 – Securities Election
You will receive the non-cash portion of
the Consideration payable to you in theform of New Takeda Shares. Do you wish
to receive New Takeda ADSs instead?

Yes

Complete Part 4C of the CertificatedForm of Election. Do not complete
Parts 4A, 4B or 4D.*

Yes

Complete Part 4A of the CertificatedForm of Election. Do not complete
Parts 4B, 4C or 4D.*No
Do you wish to hold the New Takeda
Shares which you are entitled to receive
under the Scheme in either your own
JASDEC Account or the JASDEC
Account of a person nominated by you?
No
Will you have aregistered address in the
EEA, Channel Islands,
Isle of Man, Switzerland
or Gibraltar as at the
Scheme Record Time?
NoYes

Do you wish for the New Takeda Shares
which you are entitled to receive under the
Scheme to be transferred to, and held on
your behalf by, the Fiduciary for up to two
years?

Yes

Complete Part 4B of theCertificated Form ofElection. Do not complete
Parts 4A, 4C or 4D.*

No
No

Will you hold 200 or fewer
Scheme Shares as at the
Scheme Record Time?
Yes

Do you wish for the New Takeda Shares
which you are entitled to receive under the
Scheme to be sold on your behalf by the
Fiduciary and for the net proceeds to beremitted to you in pounds Sterling?

Yes

Complete Part 4D of theCertificated Form ofElection. Do not complete
Parts 4A, 4B or 4C.

No
Please reconsider. If you do not validly complete and return any of Parts 4A,
4B, 4C or 4D of the Certificated Form of Election, you will receive 0.839 New
Takeda Shares for each Shire Share you hold at the Scheme Record Time andsuch New Takeda Shares will be held in the name of the Representative asbare trustee for you for three months from the Effective Date. If, within that
period, you do not make a valid election using the Certificated Form of Election
in relation to the action which should be taken in respect of the New Takeda
Shares, the Representative will procure that the New Takeda Shares which it
holds for you are sold and the net proceeds are remitted to you in cash.

*

Unless you wish to split your holding and make multiple Securities Elections in relation to your holding of Shire
Shares, in which case, please see paragraph 5 of Part IX (Notes for making Elections) of this document.
Remember to complete, sign and return the Certificated Form of Election (together with any applicable
Customer Identification Documents specified in the notes to the form (if required)) to Equiniti inaccordance with the instructions printed thereon.

17

USE THIS FLOWCHART IF YOU HOLD SHIRE SHARESIN UNCERTIFICATED FORM
STEP 1 – Currency Election
You will receive the cash portion of theConsideration payable to you in US Dollars. Do
you wish to receive some or all of the cash
consideration in pounds Sterling (net of any
applicable customary transaction and dealing
costs associated with the conversion) instead?

Yes

Make a Currency Election by making a
TTE Instruction through CREST. Thencontinue to STEP 2.

No
Continue to STEP 2.

STEP 2 – Securities Election
You will receive the non-cash portionof the Consideration payable to you in
the form of New Takeda Shares. Do
you wish to receive New Takeda
ADSs instead?

Yes

Do you wish to receive
New Takeda ADSs
through DTC or throughthe direct registration
system?

Yes

Complete Part 4C of the
CREST Form ofElection. Do notcomplete Parts 4A
or 4B.*

No
Do you wish to receive
CDIs representing New
Takeda ADSs?

No

Do you wish to hold the New Takeda
Shares which you are entitled to receive
under the Scheme in either your own
JASDEC Account or the JASDEC
Account of a person nominated by you?
No
Will you have a registeredaddress in the EEA, Channel
Islands, Isle of Man, Switzerland
or Gibraltar as at the Scheme
Record Time?
No

Yes

Yes

Yes

Make the relevant
TTE Instruction
through CREST. Do
not complete the
CREST Form ofElection.*

Complete Part 4A of the
CREST Form ofElection. Do notcomplete Parts
4B or 4C.*

Do you wish for the New
Takeda Shares which you areentitled to receive under the
Scheme to be transferred to,and held on your behalf
by, the Fiduciary for up to
two years?

Yes

Complete Part 4B of
the CREST Form ofElection. Do notcomplete Parts 4A
or 4C.*

No

Please reconsider. If you do not validly complete and return any of Parts 4A,
4B or 4C of the CREST Form of Election or make a TTE Instruction to receive
CDIs representing New Takeda ADSs, you will receive 0.839 New Takeda
Shares for each Shire Share you hold at the Scheme Record Time and such
New Takeda Shares will be held in the name of the Representative as baretrustee for you for three months from the Effective Date. If, within that period,
you do not make a valid election using the CREST Form of Election in relation
to the action which should be taken in respect of the New Takeda Shares, theRepresentative will procure that the New Takeda Shares which it holds for you
are sold and the net proceeds are remitted to you in cash.
*

Unless you wish to split your holding and make multiple Securities Elections in relation to your holding of Shire
Shares, in which case, please see paragraph 5 of Part IX (Notes for making Elections) of this document.
Remember to complete, sign and return the CREST Form of Election (together with any applicable Customer
Identification Documents specified in the notes to the form (if required)) to Equiniti in accordance with the
instructions printed thereon.

18

PART ILETTER FROM THE CHAIRMAN OF SHIRE PLC(Incorporated in Jersey with registered number 99854)
Registered Office
22 Grenville Street
St HelierJersey JE4 8PX
Directors:
Susan Kilsby (Non-Executive Director, Chairman)
Flemming Ornskov, MD, MPH (Chief Executive
Officer and Executive Director)
Thomas Dittrich (Chief Financial Officer and Executive Director)
Olivier Bohuon (Senior Non-Executive Independent Director)
Ian Clark (Non-Executive Director)
Gail Fosler (Non-Executive Director)
Steven Gillis, PhD (Non-Executive Director)
David Ginsburg, MD (Non-Executive Director)
Sara Mathew (Non-Executive Director)
Albert Stroucken (Non-Executive Director)
November 12, 2018
To all Shire Shareholders and Shire ADS Holders and, for information only, to participants in the Shire
Share Plans and persons with information rights
Dear Shire Shareholder and/or Shire ADS Holder,
RECOMMENDED CASH AND SHARE OFFER
FOR SHIRE PLC (“SHIRE”) BY TAKEDA PHARMACEUTICAL COMPANY LIMITED(“TAKEDA”) TO BE EFFECTED BY WAY OF A SCHEME OF ARRANGEMENT
1.

Introduction

On May 8, 2018, the Shire Board and the Takeda Board announced that they had reached agreementon the terms of a recommended cash and share offer by Takeda for the entire issued and to be issued
ordinary share capital of Shire.
The Acquisition is to be implemented by way of a Court-sanctioned scheme of arrangement of Shireunder Article 125 of the Jersey Companies Law. The Acquisition is subject to a number of Conditions
which are set out at Part IV (Conditions to, and further terms of, the implementation of the Scheme andthe Acquisition) of this document. These include certain approvals by Shire Shareholders and Takeda
Shareholders, and the sanction of the Scheme by the Court.
I am writing to you on behalf of the Shire Board to explain the background to and reasons forrecommending the Acquisition, to encourage you to vote at the Shire Meetings to be held on December
5, 2018 to consider the Acquisition, and to explain why the Shire Board is unanimously recommendingthat Shire Shareholders and Shire ADS Holders vote (or procure votes) in favour of the Scheme at the
Court Meeting and the Special Resolution to be proposed at the Shire General Meeting.

19

I also wish to draw to your attention that the Takeda Board is unanimously recommending that Takeda
Shareholders vote in favour of the resolutions to be proposed at the Takeda Extraordinary General
Meeting in connection with the Acquisition.
2.

Summary of the terms of the Acquisition

Under the terms of the Acquisition, the holders of Shire Shares (other than the Excluded Shares) whosenames appear on the register of members of Shire at the Scheme Record Time will be entitled toreceive:for each Shire Share$30.33 in cash
and either
0.839 New Takeda Sharesor
1.678 New Takeda ADSs

If the Scheme becomes Effective, it will be binding on all holders of Shire Shares (other than the
Excluded Shares) at the Scheme Record Time, irrespective of whether or not they attend or voteto approve the Scheme at the Court Meeting and/or the Special Resolution at the Shire General
Meeting. As a result, all of the Shire Shares at the Scheme Record Time will be transferred to
Takeda (or such other nominee(s) of Takeda as are agreed between Takeda and Shire) and Shire
will therefore become a wholly owned subsidiary of Takeda with effect from the Effective Date.
The Consideration implies an equivalent value of:(a)£49.01 per Shire Share based on the closing price of ¥4,923 per Takeda Share and the exchange
rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018 (being the day before theannouncement that the Shire Board would, in principle, be willing to recommend theConsideration); and(b)£49.22 per Shire Share based on the closing price of ¥4,647 per Takeda Share and the exchange
rates of £:¥ of 1:149.05 and £:$ of 1:1.3152 on the Latest Practicable Date.

The equivalent value of £49.01 per Shire Share values the entire issued and to be issued ordinary sharecapital of Shire at approximately £45.6 billion as at the Latest Practicable Date and represents anillustrative premium of approximately:(a)64.4 per cent. to the closing price of £29.81 per Shire Share on March 23, 2018 (being the lastBusiness Day before rumours of Takeda’s possible interest in an offer for Shire);(b)

56.2 per cent. to the 30 trading day volume weighted average price of £31.37 per Shire Share forthe 30 Shire trading days ending March 23, 2018 (being the last Business Day before rumoursof Takeda’s possible interest in an offer for Shire);(c)59.6 per cent. to the closing price of £30.70 per Shire Share on March 27, 2018 (being the lastBusiness Day before the commencement of the Offer Period); and(d)56.7 per cent. to the 30 trading day volume weighted average price of £31.28 per Shire Share forthe 30 Shire trading days ending March 27, 2018 (being the last Business Day before thecommencement of the Offer Period).

In addition, Shire Shareholders are entitled to receive any dividends announced, declared, made or paidby Shire in the ordinary course before the Effective Date without any consequential reduction in theConsideration, subject to, and on the terms, set out in paragraph 10.1 of Part II (Explanatory Statement).
The Acquisition is subject to the Conditions and certain further terms that are set out in Part IV(Conditions to, and further terms of, the implementation of the Scheme and the Acquisition) of this20

document. The terms of the Scheme are set out in full in Part III (The Scheme of Arrangement) of thisdocument.
Further details of the Acquisition, including the arrangements for settlement of the Consideration, are
set out in Part II (Explanatory Statement) of this document and the expected Acquisition timetable is set
out on pages 1 to 3 of this document.
3.

Background to, and reasons for, the recommendation

Shire has a long-term track record of delivering growth and returns for Shire Shareholders. Between thefinancial years ended December 31, 2013 and December 31, 2017, Shire’s revenues and non-GAAP
EBITDA more than tripled, and non-GAAP diluted earnings per Shire ADS nearly doubled. Since
January 1, 2013, Shire has also delivered ordinary share price appreciation of 104 per cent. and a total
shareholder return of 110 per cent., compared to appreciation in the FTSE 100 of 28 per cent. and total
shareholder return of 57 per cent. in the period up to December 31, 2017.
This financial and shareholder value performance has been driven by Shire’s pursuit of a strategy totransform itself into the leader in treating rare diseases through organic growth and a series ofsignificant acquisitions, including ViroPharma Inc. in 2014, NPS Pharmaceuticals Inc. in 2015, Dyax
Corp. in 2016 and Baxalta Inc. in 2016. This transformation, in particular the acquisition of Baxalta, hasresulted in Shire’s Rare Disease business accounting for approximately 70 per cent. of the Shire
Group’s total sales in the financial year ended December 31, 2017, versus approximately 33 per cent.
of total sales in the financial year ended December 31, 2013. Over the same period, Shire hasenhanced its product pipeline significantly, almost doubling the number of pipeline projects from 20 toapproximately 40.
As part of this transformation process, Shire has continued to assess and optimise the structure of theShire Group in order to maximise value for Shire Shareholders, including by unlocking embedded value
in the business. Most recently, this process led to the sale of Shire’s Oncology business to Servier
S.A.S. for a total consideration of $2.4 billion, which allowed Shire to continue to sharpen its focus onrare disease leadership.
As a result, Shire is now focused around attractive, core therapeutic areas (including Immunology,
Hematology, Genetic Diseases, Internal Medicine and Neuroscience with growing therapeutic areas in
Ophthalmics) and is guided by the clear strategic goal to be the leading global biotechnology company
delivering innovative medicines to patients with rare diseases. The Shire Board believes that Shire iswell positioned to generate long-term growth and create value for Shire Shareholders, as a leader inrare diseases.
However, the Shire Board recognises that the Acquisition represents an opportunity to create a global,
values-based, R&D driven biopharmaceutical leader, and to realise commercial and financial benefits.
The Acquisition will bring together Takeda’s and Shire’s complementary therapeutic positions in internal
medicine and neuroscience, with growth pillars in rare diseases, which will create an attractive global
geographic footprint.
As part of the Combined Group, Shire’s existing businesses will have the opportunity to benefit fromenhanced scale and financial resources within its R&D platform, which should enable further innovation
to address unmet needs for patients. The Acquisition will combine Shire’s strong late-stage pipeline andexpertise in R&D with Takeda’s early development and research-orientated R&D programme. This will
yield a robust, diverse pipeline for the Combined Group.
In assessing the terms of the Acquisition, the Shire Board has taken into account a number of factors,
including:(a)that based on an equivalent value of £49.22 per Shire Share1, the terms of the Acquisition
represent a premium of approximately 65.1 per cent. to the closing price of £29.81 per Shire1

Based on the closing price of ¥4,647 per Takeda Share and the exchange rates of £:¥ of 1:149.05 and £:$ of 1:1.3152
on the Latest Practicable Date.

21

Share on March 23, 2018 (being the last Business Day before rumours of Takeda’s possible
interest in an offer for Shire) and 7.0 per cent. to the closing price per Shire Share of £45.99 on
the Latest Practicable Date;(b)that the Consideration comprises a significant cash component of $30.33 (£23.06)2 for each
Shire Share;(c)that Shire Shareholders have the opportunity to participate in future value creation arising fromthe financial benefits of the Combined Group, through their aggregate shareholding ofapproximately 50 per cent. in the Combined Group; and(d)an assessment of the value delivered as a result of the Acquisition and the value delivered instandalone and certain other strategic options.

Following careful consideration of the above factors, the Shire Board believes that the terms of theAcquisition substantially recognise Shire’s growth potential and longer-term prospects and theAcquisition is in the best interests of Shire Shareholders as a whole.
4.

Takeda’s intentions and strategic plans for the Combined GroupYour attention is drawn to the statement of Takeda’s intentions and strategic plans for Shire and the
Combined Group on completion of the Acquisition, as set out in paragraph 6 of Part II (Explanatory
Statement) of this document.
The Shire Board welcomes the Takeda Board’s statement that Takeda attaches great importance to theskills, experience and market knowledge of the existing employees of Shire and that Takeda intends toapproach the employee and management integration process with the aim of retaining and motivating
the best talent across the Combined Group.
Takeda has stated that it expects to generate at least $1.4 billion recurring annual pre-tax synergies as adirect result of the Acquisition by the end of the third fiscal year following completion of the Acquisition.3
In order to achieve these synergies, Takeda has stated that it expects to remove duplication between thetwo businesses across manufacturing and supply, R&D and sales, marketing and administration
functions and that, as a result, it expects a potential reduction in headcount of between six and sevenper cent. of the total Combined Group. In addition, Takeda has stated its intention, following completionof the Acquisition, to evaluate the consolidation of certain of Shire’s operations in the US, Europe andAsia into Takeda’s and to review the functions to be undertaken at Shire’s current headquarters in Dublin.
While Takeda has stated that formulation of comprehensive plans regarding the impact of the Acquisition
on Shire will not take place until post completion and that any headcount reductions will be partly
mitigated by further job opportunities, in order to achieve the stated pre-tax synergies the Shire Board
believes that it will be necessary for headcount reductions to take place.
Over the past number of years, Shire has grown through a number of acquisitions and has benefited
from the combined experience and expertise of the employees at the many companies that have been
integrated into the Shire Group. As such, the Shire Board believes that the integration planning shouldtake into account not only the considerable knowledge and expertise that the Shire management andemployees have of the Shire business, but also their expertise and experience of successfully
integrating businesses. The Shire Board notes Takeda’s confirmation that, other than as a result of the
anticipated headcount reductions, Takeda has no intention to make any changes to the continuing
employment of Shire Group employees or any material changes to their conditions of employment or
their balance of skills and functions. The Shire Board also welcomes the confirmation from Takeda thatthe existing contractual and employment rights, including pension rights, of all Shire Group employees
will be fully safeguarded following completion of the Acquisition.

2

Based on the exchange rate of £:$ of 1:1.3152 on the Latest Practicable Date.

3

This statement includes a quantified financial benefits statement which has been reported on for the purposes of the
Takeover Code (see Appendix III (Statement on quantified financial benefits) of this document).

22

Finally, the Shire Board supports Takeda’s statement that it wishes to ensure strong businessmomentum through retention and to ensure that employees are fairly treated. The Shire Board has
communicated to Takeda that it believes that it is critical to the success of the integration process that
Shire Group employees who remain with the Combined Group are provided with certainty as to thecontinuing terms of their employment and, as such, welcomes Takeda’s agreement to put in placeretention arrangements for key employees who have been identified by Shire in consultation with
Takeda.
As detailed steps for the integration of the Shire Group into Takeda will only be developed further
following completion of the Acquisition, the Shire Board is unable to express a more detailed opinion on
the impact of the Acquisition on Shire’s management, employees and offices.
Information relating to the Takeda Group can be found in paragraph 9 of the letter from Citi, Goldman
Sachs and Morgan Stanley set out in Part II (Explanatory Statement) and Part VIII (Additional
Information) of this document.
5.

Current trading and prospects

5.1

Shire’s Third Quarter Results 2018
On November 1, 2018, Shire published its third quarter update in respect of the period from
July 1, 2018 to September 30, 2018 (the “Shire Third Quarter Results 2018”) and theinformation set out in this paragraph 5.1 of this Part II reflects those results.
Revenues
The Shire Group delivered total revenues of $3,872 million representing growth of 5 per cent.
Product sales increased 6 per cent. to $3,753 million (Q3 2017: $3,534 million), driven by
Immunology, up 12 per cent., Neuroscience, up 6 per cent., Genetic Diseases, up 6 per cent.,
Internal Medicine, up 10 per cent., and Ophthalmics, up 21 per cent.
Royalties and other revenues decreased 27 per cent. to $119 million (Q3 2017: $164 million),primarily due to certain royalty expirations, the reclassification of ADDERALL XR from royalty
revenue to product sales, and other changes as required under the new revenue accounting
standard.
Operating results
Operating income increased 35 per cent. to $956 million (Q3 2017: $709 million), due to the gainon the sale of Shire’s Oncology franchise and lower integration and acquisition costs, partially
offset by increased reorganization costs.
Non GAAP operating income decreased 2 per cent. to $1,475 million (Q3 2017: $1,498 million),primarily due to lower gross margins as Q3 2017 reflected favourability from the timing ofchanges in the costs to manufacture certain products.
Non GAAP EBITDA margin was slightly down to 42 per cent. (Q3 2017: 44 per cent.), primarily
due to lower gross margins partially offset by ongoing cost discipline and operating expensesynergies.
Earnings per share (EPS)
Diluted earnings per Shire ADS decreased 3 per cent. to $1.75 (Q3 2017: $1.81), primarily due
to increased reorganization costs and income taxes, offset by the gain on the sale of Shire’s
Oncology franchise.
Non GAAP diluted earnings per Shire ADS decreased 4 per cent. to $3.64 (Q3 2017: $3.81) as
product sales growth and operating expense discipline were offset by unfavourable foreignexchange, lower gross margins, and unrealized losses on equity investments.

23

Cash flows
Net cash provided by operating activities decreased 19 per cent. to $858 million (Q3 2017:$1,055 million), driven by a $251 million contingent consideration payment to former
shareholders of Dyax Corp. due to the approval of TAKHZYRO.
Non GAAP free cash flow increased 8 per cent. to $971 million (Q3 2017: $901 million). Non GAAP
free cash flow includes capital expenditures of $203 million (Q3 2017: $174 million) and excludes
payments relating to milestone and license arrangements of $316 million (Q3 2017: $20 million).
Debt
Non GAAP net debt as of September 30, 2018 decreased $3,915 million since December 31,
2017, to $15,154 million (December 31, 2017: $19,069 million). A combination of proceeds fromthe sale of Shire’s Oncology franchise, Non GAAP free cash flow, and existing cash balanceswere utilized to repay debt during the year. Non GAAP net debt represents aggregate long andshort term borrowings of $14,980 million, and capital leases of $367 million, partially offset bycash and cash equivalents of $193 million.
Recent developments
Sale of Oncology franchise
On August 31, 2018, Shire announced it had completed the sale of its Oncology franchise toServier S.A.S. (Servier) for $2.4 billion. The franchise included the global rights to ONCASPAR
and ex-U.S. and ex-Taiwan rights to ONIVYDE, as well as Oncology pipeline assets.
TAKHZYRO, a first-of-its-kind monoclonal antibody (mAb) preventive treatment for HAE
On August 23, 2018, Shire announced that the U.S. Food and Drug Administration (FDA) had
approved TAKHZYRO injection, for prophylaxis to prevent attacks of HAE in patients 12 years ofage and older.
On September 20, 2018, Shire announced that Health Canada had authorized TAKHZYRO for
routine prevention of attacks of HAE in patients 12 years of age and older.
On October 19, 2018, Shire announced that the CHMP of the European Medicines Agency(EMA) had issued a positive opinion recommending the granting of marketing authorization in theEuropean Union (EU) for lanadelumab for the prevention of HAE attacks
Prucalopride (SHP555) for the treatment of chronic idiopathic constipation (CIC)
On October 18, 2018, Shire announced that the FDA Gastrointestinal Drugs Advisory Committee
voted unanimously that the risk-benefit profile of prucalopride supports the approval of this NDA,
which has a Prescription Drug User Fee Act (PDUFA) date of December 21, 2018.
Facilities
On October 25, 2018, Shire announced it had filed a second submission to the US Food andDrug Administration for approval to manufacture albumin therapy at its new plasma
manufacturing facility near Covington, Georgia.
Outlook
The following update on outlook has been extracted from Shire’s Third Quarter Results 2018:“Our 2018 guidance, presented in the table below, has been updated to adjust for the sale of our
Oncology franchise, which closed on August 31, 2018. Similarly, our projected 2020 revenue
target has been updated to $16.5 – $17.5 billion4, reflecting the removal of $0.5 billion of

4This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.

24Oncology sales in our original projection. We continue to expect to achieve mid-forties Non GAAPEBITDA margin by 20205, which remains unchanged after considering the impact of the sale of
our Oncology franchise.
Our Non GAAP diluted earnings per ADS outlook assumes a weighted average number of
917 million fully diluted ordinary shares outstanding for 2018.
Our U.S. GAAP diluted earnings per ADS outlook reflects anticipated amortization, integration,acquisition, and reorganization costs, as well as the gain on sale of our Oncology franchise andthe impact from debt repurchase.
Risks associated with this outlook include the potential uncertainty resulting from theannouncement by Takeda Pharmaceutical Company Limited (Takeda) on May 8, 2018 of arecommended offer for Shire under the U.K. Takeover Code.
Full Year 2018

U.S. GAAP Outlook–––––––––
Total revenue(2)Diluted earnings per ADS(3)–––––––––––––$15.3 – $15.8 billion*$7.17 – $7.7*

Non GAAP Outlook(1)–––––––––––––$15.3 – $15.8 billion*$14.77 – $15.37*

Notes:(1) For a list of items excluded from Non GAAP Outlook, please refer to Part A of Appendix VI (Non-GAAP
Reconciliations).
(2) Management is providing guidance for total revenue. Total revenue is comprised of total product sales androyalties & other revenues. Pursuant to a change in U.S. GAAP related to accounting for revenue, certain
revenue formerly classified as royalties is now recorded as product sales.
(3) See Part A of Appendix VI (Non GAAP Reconciliations) for a reconciliation between U.S. GAAP diluted
earnings per ADS and Non GAAP diluted earnings per ADS.”*This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.

Shire Shareholders and Shire ADS Holders are referred to the full text of the Shire’s Third Quarter
Results 2018, which is incorporated into this document by reference. A copy of Shire’s Third
Quarter Results 2018 can also be found on Shire’s website at www.shire.com.
5.2

Takeda’s Second Quarter Results 2018
On October 31, 2018, Takeda published its results for the six months to September 30, 2018 (the“Takeda Q2 Results”) and the information set out in this paragraph 5.2 of this Part II reflects
those results.
Reported Results for H1 (April – September) FY2018
Billion JPY–––––––
RevenueCore Earnings(2)Operating Profit
Net Profit(3)EPS

FY2017 H1––––––––
881.4
187.1
234.3
172.8
221 JPY

FY2018 H1––––––––
880.6
212.0
172.0
126.7
162 JPY% Growth vs Prior Year
Reported
Underlying(1)–––––––––0.1%+13.3%–26.6%–26.7%–26.9%––––––––+4.2%+31.8%––+32.7%As reflected in the table above, Takeda reported strong underlying growth6, with underlying
revenue growth remaining solid at 4.2 per cent., driven by continued strong momentum fromTakeda’s Growth Drivers (GI, Oncology, Neuroscience and Emerging Markets) as well as
Takeda’s key growth products (ENTYVIO and NINLARO). Takeda’s underlying core earnings also
grew by 31.8 per cent.7, reflecting revenue growth and a margin step-up of 5.1 percentage points,
5This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.

6

As compared with the three months ended July 31, 2018.

7

As compared with the three months ended July 31, 2018.

25

of which two-thirds was driven by OPEX improvements. Takeda’s reported operating profit
decreased by 26.6 per cent.8, being impacted by two large one-time gains recorded in the fiscal
year ended March 31, 2018, being (i) the sale of Wako Pure Chemical Industries, Ltd. for JPY
106.3 billion; and (ii) the sale of additional products to Takeda’s joint venture with Teva
Pharmaceutical Industries Ltd. Furthermore, Takeda recorded one-time expenses in the six
months ended September 30, 2018 related to the Acquisition. Excluding these major one-time
items, Takeda’s operating profit would have grown by 64.5 per cent.9
Takeda also achieved several important pipeline milestones in the six months ended
September 30, 2018, with NINLARO post-stem cell transplant multiple myeloma maintenance(TOURMALINE-MM3 study), ALUNBRIG first line ALK+ non small cell lung cancer (ALTA-1L
study), ADCETRIS frontline CD30+ peripheral T-cell lymphoma (ECHELON-2 study), and
ENTYVIO subcutaneous formulation in ulcerative colitis (VISIBLE 1 study) all meeting theirprimary endpoints. Since April 2018, seven new molecular entities have also entered the Phase 1
pipeline.
Finally, Takeda confirmed that it is on track with its plan to divest non-core assets, with the saleof real estate and marketable securities generating an additional JPY 44.2 billion of cash, and thesale of non-core businesses Guangdong Techpool Bio-Pharma Co., Ltd. and Multilab Indústria eComércio de Produtos Farmacêuticos Ltda. generating a further JPY 27.2 billion. Takeda’s net
debt to EBITDA ratio at September 30, 2018 was 1.7x, improved from 1.8x at March 31, 2018and 2.7x at March 31, 2017.
Outlook
On May 14, 2018, Takeda published its results for the fiscal year ended March 31, 2018 which
included a full year forecast for Takeda’s consolidated reported results (the “Original Takeda
Profit Forecast”). As published in the Takeda Q2 Results, the revised full year forecast for
Takeda’s consolidated reported results for the fiscal year ending March 31, 2019 (the “Takeda
Profit Forecast”) is set out in paragraphs (a) to (c) below.
(a)Full year reported forecast for the fiscal year ending March 31, 2019
Forecast as at
October 31, 2018

Billion JPY–––––––
RevenueCore Earnings(2)Operating Profit
Profit before tax
Net Profit(3)Earnings per Share (JPY)–––––––––––
1,750.0(4)330.0(4)268.9(4)245.2(4)
189.5(4)241.82(4)vs. fiscal
year ended
March 31, 2018––––––––––
–1.2%
+2.3%
+11.2%+12.9%+1.4%+1.0%

The forecast in the table above includes the costs incurred in the first half of the fiscal year ending
March 31, 2019 related to the Acquisition (profit before tax impact: JPY 19.8 billion, net profit for
the year impact: JPY 16.5 billion); however, it does not include any Shire-related costs
anticipated to be incurred in the second half of the fiscal year ending March 31, 2019.
Furthermore, the forecast does not include any projected earnings from Shire should completionof the Acquisition occur within the fiscal year ending March 31, 2019.
Takeda estimates the Shire-related costs to be incurred in the fiscal year ending March 31, 2019
to be between JPY 40.0 billion and JPY 60.0 billion. This does not include integration costs, debt
interest and other financial expenses, as the amount of these expenses will change dependingon the timing of the completion of the Acquisition.

8

As compared with the three months ended July 31, 20189

As compared with the three months ended July 31, 2018.

26

(b)

Profit Forecast – excluding Shire-related costs

A revised financial forecast for the fiscal year ending March 31, 2019 that excludes the costs
incurred in the first half of the fiscal year related to the Acquisition is shown below. The Original
Takeda Profit Forecast also did not include any Shire-related expenses. As the below forecast
does not include any Shire-related expenses, the below shows Takeda’s ongoing businessmomentum on a like-for-like basis.
Forecast as at
October 31,
2018 (excluding
Shire-related costs)

Billion JPY–––––––
RevenueCore Earnings(2)Operating Profit
Profit before tax
Net Profit(3)EPS (JPY)––––––––––––
1,750.0(4)330.0(4)280.0(4)265.0(4)206.0(4)262.85(4)vs Original
Takeda Profit
Forecast––––––––
+0.7%
+6.6%
+39.3%+44.8%+48.2%+47.7%In the Takeda Profit Forecast that excludes Shire-related costs, the revenue projection has been
increased by JPY 13.0 billion (+0.7 per cent.) to JPY 1,750.0 billion.10 The positive revenue
impact from a revised outlook on launch timing of additional competitors to multiple myeloma
product VELCADE in the U.S. combined with growth driver momentum is expected to offset
factors including no longer booking revenue from divested former subsidiary Guangdong
Techpool Bio-Pharma Co. Ltd. and negative foreign currency effect.
Considering the strong business performance in the first half of the fiscal year, Takeda has raised
its core earnings forecast by JPY 20.5 billion (+6.6 per cent.) to JPY 330.0 billion.11 The operating
profit forecast has also been increased by JPY 79.0 billion (+39.3 per cent.) to JPY 280.0 billion.12
Although Takeda expects R&D expenses to increase, its operating profit margin is expected to
improve through Takeda’s global cost reduction initiatives and growth driver momentum.
Net profit for the year (attributable to owners of Takeda) and earnings per share forecasts havebeen increased by 48.2 per cent. and 47.7 per cent., respectively.13(c)Management guidance – underlying growth(1)Previous Guidance(growth %)(May 14, 2018)––––––––––––
Low single digit
High single digit
Low teens
JPY 180

Underlying Revenue
Underlying Core Earnings(2)Underlying Core EPS
Annual Dividend per Share

Revised Guidance(growth %)(October 31, 2018)––––––––––––
Low single digit(4)High teen(4)Mid twenties(4)JPY 180

Considering the strong business performance in the first half of the fiscal year ending March 31,
2019, Takeda has upwardly revised its guidance for underlying core earnings and underlying coreearnings per share. The underlying core earnings margin is now expected to expand versus theprior year at the higher end of the 100 to 200 basis points range.14
10 This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Please seeparagraph 16 of Part VIII (Additional Information) for further details.
11 This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.
12 This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.
13 This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.
14 This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Pleasesee paragraph 16 of Part VIII (Additional Information) for further details.

27Notes:(1) Underlying Growth compares two periods (quarters or years) of financial results under a common basis andis used by management to assess the business. These financial results are calculated on a constant currency
basis and excluding the impacts of divestitures and other amounts that are unusual, non-recurring items or
unrelated to our ongoing operations.
(2) Core Earnings represents net profit adjusted to exclude income tax expenses, our share of profit or loss ofinvestments accounted for using the equity method, finance expenses and income, other operating expenses
and income, amortization and impairment losses on intangible assets associated with products and otheritems that management believes are unrelated to our core operations, such as purchase accounting effects
and transaction related costs.
(3) Attributable to the owners of Takeda.
(4) This statement constitutes a profit forecast for the purposes of Rule 28.1(a) of the Takeover Code. Please seeparagraph 16 of Part VIII (Additional Information) for further details.

Takeda Shareholders are referred to the full text of the Takeda Q2 Results, which is incorporated
into this document by reference. A copy of the Takeda Q2 Results can also be found on Takeda’s
website at www.takeda.com.
6.

Takeda dividend policy and Permitted Dividends

6.1

Takeda dividend policy
Takeda’s dividend policy has remained consistent over the past nine years, with an annual
dividend of JPY 180 per share having been paid to Takeda Shareholders. The Shire Board notes
that, following completion of the Acquisition, Takeda has stated that its well-established dividend
policy will continue to be a key component of future shareholder returns.

6.2

Permitted Dividends
As described in more detail in paragraph 10.1 of Part II (Explanatory Statement) of thisdocument, Shire Shareholders will be entitled to receive and retain certain dividends ifannounced, declared, made or paid by Shire before the Effective Date (referred to in thisdocument as “Permitted Dividends”) without any consequent reduction in the Consideration
payable by Takeda.

7.

Regulatory approvals and other Conditions

As at the Latest Practicable Date, relevant clearances have been received from (among others) thecompetition authorities in the United States, China, Japan and Brazil. Accordingly, all Regulatory
Conditions set out in paragraphs 4(d)-(g) in Part A of Part IV (Conditions to, and further terms of, theimplementation of the Scheme and the Acquisition) of this document have been satisfied.
In relation to the Regulatory Condition set out in paragraph 4(c) in Part A of Part IV of this document,
Takeda and Shire have held discussions with the European Commission in relation to the future
potential overlap in the area of inflammatory bowel disease between Takeda’s marketed productEntyvio (vedolizumab) and Shire’s pipeline compound SHP647, which is currently in Phase III clinical
trials. As a result of those discussions, Takeda has offered commitments to divest SHP647 and certain
associated rights, with a view to the European Commission granting a Phase I conditional clearance for
the Acquisition and not initiating proceedings under Article 6(1)(c) of Council Regulation (EC) 139/2004.
The European Commission will issue its decision in relation to the Acquisition on or before November
20, 2018 and an announcement containing the substance of that decision will be made in due course
by Shire and Takeda through a Regulatory Information Service (with such announcement being madeavailable on Shire’s and Takeda’s websites at www.shire.com and www.takeda.com respectively).
Neither the Takeda Board nor the Shire Board considers SHP647 and the relevant associated rights to
be material to the business, operations or prospects of the Combined Group (taken as a whole).
If the European Commission’s decision were to result in a delay to the expected timetable of principal
events set out on pages 1 to 3 of this document, it is intended that the Effective Date would be as soon28

as practicable after January 8, 2019. If it becomes necessary to change any of the dates and/or times
in the expected timetable, the revised dates and/or times will be notified to Shire Shareholders andShire ADS Holders by announcement through a Regulatory Information Service, which Shire will furnish
to the SEC on Form 8-K.
Other Conditions
The Acquisition remains subject to the other Conditions and certain further terms as set out in Part IV(Conditions to, and further terms of, the implementation of the Scheme and the Acquisition) of thisdocument.
Break fee
Under the terms of the Co-operation Agreement (further details of which are set out in paragraph 9.1 ofPart VIII (Additional Information) of this document), Takeda has agreed to pay a break fee in theamount(s) described in paragraph 11.4 of Part II (Explanatory Statement) of this document to Shire incertain circumstances, including in the event that (at or before termination of the Co-operation
Agreement): (i) on or before the Long Stop Date, Takeda invokes (and is permitted by the Panel toinvoke) any Regulatory Condition so as to cause the Acquisition to lapse, to be withdrawn or not toproceed; or (ii) a Regulatory Condition has not been satisfied or waived by Takeda at 11.59 p.m.
(London time) on the Long Stop Date resulting in the Acquisition lapsing, terminating or being
withdrawn.
8.

Takeda shareholder approval

Takeda is seeking the approval of Takeda Shareholders for the Takeda Resolutions (relating to the issue
and allotment of the New Takeda Shares and the appointment of three current Shire Directors (Olivier
Bohuon, Ian Clark and Steven Gillis) as new Takeda Directors with effect from the Effective Date) at the
Takeda Extraordinary General Meeting, which has been convened for 10.00 a.m. (Tokyo time) on
December 5, 2018 at INTEX Osaka, Hall 6B Zone, Osaka, Japan.
The Takeda Extraordinary General Meeting will take place before the Shire General Meeting and the
Court Meeting.
The Takeda Directors have recommended unanimously that Takeda Shareholders vote in favour of theTakeda Resolutions to be proposed at the Takeda Extraordinary General Meeting to approve the issue
and allotment of the New Takeda Shares and the appointment of three current Shire Directors referred
to above as new Takeda Directors with effect from the Effective Date.
Under the terms of the Co-operation Agreement (further details of which are set out in paragraph 9.1 ofPart VIII (Additional Information) of this document), Takeda has agreed to pay a break fee in theamount(s) described in paragraph 11.4 of Part II (Explanatory Statement) of this document to Shire incertain circumstances, including in the event that the Takeda Board withdraws or adversely modifies,
adversely qualifies or fails to provide, or fails to reaffirm (or reissue a statement of intention to make)(when reasonably requested by Shire to do so) its recommendation that the Takeda Shareholders votein favour of the New Takeda Share Resolution or the New Takeda Share Resolution is not passed at
the Takeda Extraordinary General Meeting, and either Takeda or Shire serves notice to terminate the
Co-operation Agreement.
9.

Elections

Shire Shareholders may make certain Elections in respect of the Consideration they wish to receive
under the Scheme. Further information regarding these Elections (including the terms and conditions
governing each) is set out in paragraphs 19.3, 20.3 and 21 of Part II (Explanatory Statement) of thisdocument.
Details of how to make such Elections are included at pages 10 to 15 and at Part IX (Notes for making
Elections) of this document. Flowcharts have also been included on pages 16 to 18 in order to assist
you in making an Election in respect of the Consideration.
29

Shire ADS Holders are not eligible to make an Election. Further details are included at Part X (Further
information for Shire ADS Holders) of this document.
10.

TaxationYour attention is drawn to Part VII (Taxation) of this document, which contains a generaldescription of certain United Kingdom, United States, Japanese, Jersey and Irish tax
consequences of the Acquisition. The description is intended as a general guide only and if you
are in any doubt as to your tax position, or if you are subject to taxation in any jurisdiction otherthan the United Kingdom or the United States, you should consult an appropriately qualified
independent professional tax adviser immediately.
11.

Cancellation of listing of Shire Shares and Shire ADSsYour attention is drawn to paragraph 23.2 of Part II (Explanatory Statement) of this document in relation
to Takeda’s intentions regarding the delisting and cancellation of trading in Shire Shares and Shire
ADSs following the Effective Date.
12.

Shire Share Plans

Further details of the arrangements proposed to be implemented in relation to the Shire Share Plans inconnection with the Acquisition are set out in paragraph 12 of Part II (Explanatory Statement) of thisdocument.
13.

Shire ADS Holders

Shire ADS Holders should refer to paragraph 15.9 of Part II (Explanatory Statement) and Part X(Further information for Shire ADS Holders) of this document.
14.

Overseas Shareholders

Overseas Shareholders should refer to paragraph 27 of Part II (Explanatory Statement) of thisdocument.
15.

Action to be taken

Your attention is drawn to pages 5 to 9 and paragraph 28 of Part II (Explanatory Statement) of thisdocument, which set out in detail the action you should take in relation to the Acquisition in respect ofvoting at the Shire Meetings.
You should also refer to pages 10 to 15, including the flowcharts on pages 16 to 18, and to Part IX(Notes for making Elections) of this document, which set out in detail how to make Elections in respectof the Consideration.
Shire ADS Holders should refer to pages 5 to 9 and paragraph 28 of Part II (Explanatory Statement) of
this document.
16.

Irrevocable undertakings

Takeda has received irrevocable undertakings from each of the Shire Directors to vote in favour of the
Scheme at the Court Meeting and the Special Resolution to be proposed at the Shire General Meetingin respect of a total of 371,599 Shire Shares (including such Shire Shares underlying Shire ADSs),
representing approximately 0.041 per cent. of the issued ordinary share capital of Shire in issue on theLatest Practicable Date.
Shire has received irrevocable undertakings from each of the Takeda Directors who hold Takeda Sharesto vote in favour of the Takeda Resolutions at the Takeda Extraordinary General Meeting in respect ofa total of 185,896 Takeda Shares, representing approximately 0.02 per cent. of the issued ordinary
share capital of Takeda on the Takeda Voting Record Date.

30

Further details of these undertakings, including details of the circumstances in which they will cease to
be binding, are set out in paragraph 6 of Part VIII (Additional Information) of this document.
17.

Recommendation

The Shire Directors, who have been so advised by Citi, Goldman Sachs and Morgan Stanley (asthe independent advisers for the purposes of Rule 3 of the Takeover Code) as to the financial
terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In
providing their financial advice to the Shire Directors, each of Citi, Goldman Sachs and Morgan
Stanley has taken into account the commercial assessments of the Shire Directors.
The Shire Board believes that the terms of the Acquisition are in the best interests of the Shire
Shareholders taken as a whole. Accordingly, the Shire Directors recommend unanimously that
Shire Shareholders and Shire ADS Holders vote (or procure votes) in favour of the Scheme at
the Court Meeting and the Special Resolution to be proposed at the Shire General Meeting, as
all Shire Directors who hold interests in Shire Shares and/or Shire ADSs (as applicable) haveirrevocably undertaken to do in respect of their own beneficial holdings of 371,599 Shire Shares(including such Shire Shares underlying Shire ADSs).
Yours faithfully,

Susan Kilsby
Chairman
Shire plc

31

PART II
EXPLANATORY STATEMENT(in compliance with Article 126 of the Jersey Companies Law)

November 12, 2018
To all Shire Shareholders and Shire ADS Holders and, for information only, to participants in the Shire
Share Plans and persons with information rights
Dear Shire Shareholder and/or Shire ADS Holder,
RECOMMENDED CASH AND SHARE OFFER
FOR SHIRE PLC (“SHIRE”) BY TAKEDA PHARMACEUTICAL COMPANY LIMITED(“TAKEDA”) TO BE EFFECTED BY MEANS OF A SCHEME OF ARRANGEMENT
1.

Introduction

On May 8, 2018, the Shire Board and the Takeda Board announced that they had reached agreementon the terms of a recommended cash and share offer by Takeda for the entire issued and to be issued
ordinary share capital of Shire.
The Shire Directors have been advised by Citi, Goldman Sachs and Morgan Stanley as to the financial
terms of the Acquisition. Citi, Goldman Sachs and Morgan Stanley have been authorised by the Shire
Board to write to you for information purposes on behalf of the Shire Board to set out the terms of theAcquisition and to provide you with other relevant information.
The terms of the Scheme are set out in full in Part III (The Scheme of Arrangement) of this document.
Your attention is drawn to the letter from the Chairman of Shire plc set out in Part I (Letter fromthe Chairman of Shire plc) of this document, which forms part of this Explanatory Statement.
That letter contains, among other things, the unanimous recommendation by the Shire Directors
to Shire Shareholders and Shire ADS Holders to vote (or procure votes) in favour of the Schemeat the Court Meeting and the Special Resolution to be proposed at the Shire General Meeting,
together with an explanation of the background to and reasons for recommending theAcquisition.
Statements made or referred to in this Explanatory Statement regarding: (i) Takeda’s reasons for theAcquisition; (ii) information concerning the business of the Takeda Group; (iii) the financial effects of theAcquisition on Takeda and/or the Combined Group; and/or (iv) intentions or expectations of, orconcerning, the Takeda Group and/or Combined Group, reflect the views of the Takeda Board (and not
those of the Shire Board). Statements made or referred to in this Explanatory Statement regarding: (i)the background to, and reasons for, the recommendation of the Shire Directors; (ii) information
concerning the business of the Shire Group; and/or (iii) intentions or expectations of, or concerning, theShire Group, reflect the views of the Shire Board (and not those of the Takeda Board).
2.

Summary of the terms of the Acquisition

Under the terms of the Acquisition, which is subject to the satisfaction (or, where applicable, waiver) of
the Conditions and certain further terms that are set out in Part IV (Conditions to, and further terms of,32the implementation of the Scheme and the Acquisition) of this document and to the further terms set out
in Part III (The Scheme of Arrangement) of this document, holders of Shire Shares (other than the
Excluded Shares) on the register of members of Shire at the Scheme Record Time will be entitled toreceive:for each Shire Share$30.33 in cash
and either
0.839 New Takeda Sharesor
1.678 New Takeda ADSs

The Consideration implies an equivalent value of:(a)£49.01 per Shire Share based on the closing price of ¥4,923 per Takeda Share and the exchange
rates of £:¥ of 1:151.51 and £:$ of 1:1.3945 on April 23, 2018 (being the day before
the announcement that the Shire Board would, in principle, be willing to recommend
the Consideration); and(b)£49.22 per Shire Share based on the closing price of ¥4,647 per Takeda Share and the exchange
rates of £:¥ of 1:149.05 and £:$ of 1:1.3152 on the Latest Practicable Date.

The equivalent value of £49.01 per Shire Share values the entire issued and to be issued ordinary sharecapital of Shire at approximately £45.6 billion as at the Latest Practicable Date and represents anillustrative premium of approximately:(i)64.4 per cent. to the closing price of £29.81 per Shire Share on March 23, 2018 (being the lastBusiness Day before rumours of Takeda’s possible interest in an offer for Shire);(ii)

56.2 per cent. to the 30 trading day volume weighted average price of £31.37 per Shire Share forthe 30 Shire trading days ending March 23, 2018 (being the last Business Day before rumoursof Takeda’s possible interest in an offer for Shire);(iii)

59.6 per cent. to the closing price of £30.70 per Shire Share on March 27, 2018 (being the lastBusiness Day before the commencement of the Offer Period);(iv)

56.7 per cent. to the 30 trading day volume weighted average price of £31.28 per Shire Share forthe 30 Shire trading days ending March 27, 2018 (being the last Business Day before thecommencement of the Offer Period);(v)

6.6 per cent. to the closing price of £45.99 per Shire Share on the Latest Practicable Date; and(vi)

9.0 per cent. to the 30 trading day volume weighted average price of £44.98 per Shire Share forthe 30 Shire trading days ending on the Latest Practicable Date.

The Acquisition is being implemented by way of a Court-sanctioned scheme of arrangement of Shireunder Article 125 of the Jersey Companies Law. The provisions of the Scheme are set out in Part III(The Scheme of Arrangement) of this document. The Scheme is a legal process under the Jersey
Companies Law, the purpose of which is to enable Takeda to become the owner of the entire issued
and to be issued ordinary share capital of Shire (other than the Excluded Shares). In order to achievethis, it is proposed that all such Shire Shares at the Scheme Record Time will be transferred to Takeda,
in consideration for which the holders of such Shire Shares whose names appear on the register ofmembers of Shire at the Scheme Record Time will be entitled (subject to certain terms and conditions)
to receive the Consideration.
Implementation of the Scheme requires the approval of the Scheme by the Shire Shareholders entitledto vote at the Court Meeting and the approval of the Special Resolution by Shire Shareholders at theShire General Meeting. The Scheme also requires the sanction of the Court. The New Takeda Share33

Resolution must also be approved at the Takeda Extraordinary General Meeting for the Acquisition toproceed. The Takeda Extraordinary General Meeting will take place before the Shire General Meetingand the Court Meeting.
Subject to the above, the Scheme will become Effective upon the delivery of the Court Order to theRegistrar of Companies for registration. If the Scheme becomes Effective, it will be binding on all
holders of Shire Shares (other than the Excluded Shares) at the Scheme Record Time, irrespective ofwhether or not they attend or vote to approve the Scheme at the Court Meeting and/or the Special
Resolution at the Shire General Meeting. As a result, all of the Shire Shares at the Scheme Record Timewill be transferred to Takeda (or such other nominee(s) of Takeda as are agreed between Takeda andShire) with effect from the Effective Date by means of a form of transfer or other instrument of transfer,or, if applicable, by means of CREST. Shire will therefore become a wholly owned subsidiary of Takeda
with effect from the Effective Date.
As a result of the Scheme becoming Effective, the New Takeda Shares and New Takeda ADSs (asapplicable) will be issued to Shire Shareholders on the register of members of Shire at the Scheme
Record Time in accordance with the terms of the Scheme. This will result in Shire Shareholders owning
approximately 50 per cent. of the share capital of the Combined Group (based on the existing ordinary
issued share capital of Takeda and the fully diluted share capital of Shire as at the Latest PracticableDate).
The New Takeda Shares will be listed on the Tokyo Stock Exchange and the Local Japanese Stock
Exchanges and the New Takeda ADSs will be listed on the NYSE, in each case effective upon, or
shortly after, the Effective Date. Neither the New Takeda Shares nor the New Takeda ADSs will be listed
on any stock exchange in the United Kingdom. The New Takeda Shares will rank equally in all respects
with the existing Takeda Shares and will be entitled to receive any dividends and/or other distributions
announced, declared, made or paid by Takeda in respect of Takeda Shares with a record date on orafter the date of their issue. The New Takeda ADSs will rank equally in all respects with the existing
Takeda ADSs (save that CDIs representing New Takeda ADSs will not carry any voting rights in Takeda(further detail on which can be found in paragraph 19.3(c)(ii) of Part II (Explanatory Statement) of thisdocument)).
3.

Background to, and Takeda’s reasons for, the Acquisition

3.1

Background to the Acquisition – the growth and transformation of Takeda
Founded in 1781 in Osaka, Japan, Takeda is a global pharmaceutical company with aninnovative portfolio. With its strong values, Takeda is committed to bringing better health and abrighter future to people globally.
Over the past four years, Takeda has been on a transformation journey, focused on becoming an
agile, R&D driven, global biopharmaceutical company that is well positioned to deliver highly
innovative medicines and transformative care to patients around the world. Takeda has continued
to strengthen its reputation through world-class products and innovation, while remaining true toits values.
Takeda has built a distinct research and development strategy based on therapeutic area focus,
a robust research engine and a comprehensive, differentiated partnership model. Takeda’s
research and development programme aims to leverage a combination of internal and external
expertise to deliver a sustainable pipeline. Takeda currently has approximately 180 active
partnerships, helping it actively pursue additional innovation. Takeda will remain committed todeveloping highly-innovative new medicines following completion of the Acquisition and intends
to continue its strategy of building reciprocally advantageous external partnerships globally.
As part of its transformation journey, Takeda has focused on developing and commercialising
innovative therapies that address unmet clinical needs in gastroenterology (GI), oncology andneuroscience plus vaccines. Rare disease is an evolving focus of Takeda’s R&D development

34

strategy with more than one-third of its clinical research and development programmes targetingrare diseases.
Takeda has a strong track record of successful cross-border M&A and post-acquisition
integration, including the acquisition of ARIAD Pharmaceuticals in 2017, Nycomed in 2011 andMillennium Pharmaceuticals in 2008. In July 2018, Takeda acquired TiGenix NV, an advanced
biopharmaceutical company developing novel stem cell therapies for serious medical conditions,with the aim to bring new treatment options to patients with gastrointestinal disorders. Takeda has
also entered into more than 50 collaborations with third parties during the fiscal year ended
March 31, 2018 to help strengthen its pipeline.
Takeda’s management team is highly experienced and diverse and has a proven track record of
executing complex business integrations and large-scale transformations. Takeda is dedicated tocarrying out integration efforts in a manner consistent with Takeda’s core values of integrity,
fairness, honesty and perseverance, building on the expertise of employees of both companies
and ensuring it focuses on its principles of: (i) putting patients at the centre; (ii) building trust withsociety; (iii) reinforcing its reputation; and (iv) developing business performance. The
combination of Takeda’s and Shire’s patient focus together with Takeda’s values will guidethe Combined Group as it creates an environment that inspires, enables collaboration and moves
the Combined Group forward.
3.2

Reasons for the Acquisition
The Takeda Directors believe that the Acquisition is a unique opportunity and that there is acompelling strategic and financial rationale for undertaking the Acquisition, which will deliver thefollowing benefits:
Creates a global, values-based, R&D driven biopharmaceutical company incorporated andheadquartered in Japan, with an attractive geographic footprint and provides the scale to drive
future development•

The Acquisition will result in a Combined Group with an attractive geographic footprint andleading positions in Japan and the US, respectively the third and first largest
pharmaceutical markets globally. China, the second largest market in the world, is, and willbe, a key priority for Takeda with Takeda planning to launch seven new medicines there in
the next five years.

•

The geographic footprint of the Combined Group following completion of the Acquisition
will allow Takeda to take advantage of expected growth opportunities in the pharmaceuticalindustry. Takeda’s current presence in the US, an important and innovation-driven market,
will increase significantly, while Shire’s portfolio will benefit from Takeda’s strong
international presence in key markets like Russia and Brazil, as well as Japan. On a
combined historical pro forma basis, the Combined Group would have generated
approximately 49 per cent. of sales in the US, 18 per cent. in Japan and 33 per cent. in therest of the world in the fiscal year ended March 31, 2018, and it is expected that the US
will account for close to 50 per cent. of the combined revenues of the Combined Group in
the future. Shire’s portfolio will also benefit from Takeda’s strong international presence inemerging markets and Japan.

•

Takeda also believes that R&D will be a key driver of growth of the Combined Group.
Takeda’s R&D expense totalled ¥325.4 billion in the fiscal year ended March 31, 2018,
while Shire’s totalled $1,763.3 million in the fiscal year ended December 31, 2017.
Following the integration of Shire’s business into Takeda, including rationalization
initiatives, it is expected that the Combined Group will have total R&D expenditures ofapproximately 1.5 times that of Takeda in the fiscal year ended March 31, 2018. Takeda’s

35greater than ¥400 billion initial R&D global annual budget15 is highly competitive, especiallywhen considering the budget allocated to pipeline development.
•

As a result of greater scale and efficiencies in its commercial activities, the Acquisition will
enable the Combined Group to further fuel its productive R&D engine, better positioning
Takeda to deliver highly-innovative medicines and transformative care to patients aroundthe world. While it is expected that future pricing pressure will increase everywhere,
including in the US, Takeda is confident that the innovative nature of its portfolio andpipeline, as well as the strong margin profile of the Combined Group, will position it very
well.

Strengthens Takeda’s presence across two of its three core therapeutic areas, and provides
leading positions in rare diseases and plasma-derived therapies•

The Acquisition will significantly accelerate Takeda’s transformation by bringing together
Takeda’s and Shire’s complementary positions in gastroenterology (GI) and neuroscience.
It will also provide the Combined Group with leading positions in rare diseases andplasma-derived therapies. Following completion of the Acquisition, the Combined Group is
expected to become a values-based, science-driven, global biopharmaceutical company
with a distinctive focus in four core therapeutic areas; GI, oncology, neuroscience and rarediseases and additional strength in plasma-derived therapies and vaccines.

•

Following completion of the Acquisition, Takeda will continue to focus on the accelerationof its oncology business, following its recent acquisition of ARIAD Pharmaceuticals. In
addition, Takeda’s vaccines business will continue to address the world’s most pressing
public health needs.

•

Takeda expects that the Combined Group will derive approximately 75 per cent. of sales
from five areas: gastroenterology (GI), oncology, neuroscience and rare diseases, plus
plasma-derived therapies. While Takeda is fully aware of and has factored in thecompetitive pressure in these fields, including in hemophilia, Takeda believes that the
Combined Group will bring unique growth opportunities in the future and is very confident
that the assumptions and forecasts it has used to value the Combined Group remain valid.

The Acquisition creates a highly complementary, robust, modality-diverse pipeline and astrengthened R&D engine focused on breakthrough innovation•

Takeda and Shire have highly complementary pipelines. Shire has strong expertise in rarediseases, an attractive modality diverse mid- and late-stage pipeline enriched withlarge-molecule programmes, as well as cutting-edge technologies in gene therapy andrecombinant proteins, and Takeda has a productive early stage development andresearch-orientated R&D programme with particular strength in small molecules.

•

The Combined Group will benefit from a strong product portfolio, with recently launched
products in particular driving growth. Takeda’s products NINLARO, ALUNBRIG,ADCETRIS, ENTYVIO, TAKECAB and TRINTELLIX, and Shire’s products VYVANSE,TAKHZYRO and its various immunoglobulin products accounted for a total of ¥886.7 billionof combined revenue in the fiscal year ended March 31, 2018 (for Takeda products) and
December 31, 2017 (for Shire products), and for total revenue growth of 25.4 per cent.
compared to the previous fiscal year. Most of these products were launched in key regions
within the last five years (in the case of ADCETRIS, in the early 2010s) and Takeda
expects the continued performance of these recently-launched products to drive growth of
the Combined Group in the future.

15 The greater than 400 billion JPY initial R&D budget is a reference to the combined historical R&D spend for the period
ending March 31, 2017 for Takeda and December 31, 2017 for Shire, less the expected R&D cost synergies.

36•Both Takeda and Shire have focused R&D efforts in the Boston area, a well-establishedcentre of innovation in the US. This is further supported by Takeda’s Shonan HealthInnovation Park, which is the first health innovation ecosystem in Japan.

•

Over the past four years, Takeda has transformed its R&D engine to drive productivity andhas begun to realise the value of the therapeutic area focus and increased external
partnerships as evidenced by the enrichment of its early stage pipeline. The Acquisition will
accelerate this transformation and will provide additional cash flow to continue to invest in
its R&D engine and have a broader patient reach. Takeda believes that its R&D model isunique in the industry and that the Combined Group’s R&D productivity will be best-inclass in the long term.

Delivers compelling financial benefits for the Combined Group – enhancing Takeda’s cash flow
profile, with management committed to delivering substantial synergies and generating attractive
returns for shareholders•

The Acquisition is expected to deliver substantial annual cost synergies of at least$1.4 billion by the end of the third fiscal year following completion of the Acquisition (witha one-off cost of $2.4 billion), with the potential for additional revenue synergies from thecomplementary geographic and therapeutic focus.

•

The Acquisition is expected to be significantly accretive to underlying earnings per Takeda
Share from the first full fiscal year following completion of the Acquisition16 and to produce
strong combined cashflows. The Acquisition is also expected to be earnings accretive per
Takeda Share on a reported basis17 within three fiscal years following completion of theAcquisition.18•

The Acquisition is expected to result in attractive returns for Takeda Shareholders, with thereturn on invested capital (ROIC)19 expected to exceed Takeda’s cost of capital20 within thefirst full fiscal year following completion of the Acquisition.

•

The substantial cash flow generation expected to result from the Acquisition will enable the
Combined Group to de-lever quickly following completion of the Acquisition. Takeda isconfident that it will maintain its investment grade credit rating, with a target net debt toAdjusted EBITDA ratio of 2.0x or less within three to five years following completion of theAcquisition, without the need to issue new shares. To help accelerate the de-leveraging
process and ensure an optimal business mix, Takeda will consider selected disposals of
non-core assets.

•

Starting with a projected net debt to Adjusted EBITDA ratio of 4.8x (as at March 31, 2019),
Takeda intends to reduce this to between 2.9x and 3.3x by March 31, 2021, and between
1.7x and 2.1x by March 31, 2023 (the lower of such numbers taking into account thepotential divestiture of non-core assets of up to approximately $10 billion).

•

An enlarged and well-positioned combined portfolio will strengthen the Combined Group’s
ability to invest in the business and deliver returns to Takeda Shareholders. Takeda’s

16 Excludes the impacts of divestitures, foreign exchange rates, and other amounts that are unusual, non-recurring
items or unrelated to Takeda’s core operations.
17 Earnings per share as derived from IFRS.
18 The statements that the Acquisition is earnings accretive is not intended as a profit forecast, should not be construed
as such and is not subject to the rules on profit forecasts under the Takeover Code. These statements should not beinterpreted to mean that the earnings per share in any future fiscal period will necessarily match or be greater thanthose for the relevant preceding financial period.
19 Shire’s annual tax-effected core earnings including synergies and excluding cost to achieve synergies andtransaction-related costs, as a percentage of the purchase price, or total enterprise value.
20 Takeda’s weighted average cost of capital representing its blended cost of capital including equity and debt.

37

dividend policy has remained consistent over the past nine years, with an annual dividendof JPY 180 per Takeda Share having been paid to Takeda Shareholders. Takeda hasremained disciplined with respect to the terms of the Acquisition and intends to maintainits well-established dividend policy of JPY 180 per Takeda Share.

4.

•

The Acquisition is expected to result in Takeda being the only pharmaceutical company
listed on both the Tokyo Stock Exchange in Japan, where it will continue to have its primarylisting, and the NYSE in the US, enabling it to access two of the world’s largest capital
markets.

•

In addition to Takeda continuing to be the largest pharmaceutical company listed on theTokyo Stock Exchange, the Acquisition will result in Takeda becoming the 8th largest
company listed on the Tokyo Stock Exchange by reference to pro forma market
capitalisation as at the Latest Practicable Date.

•

Takeda generated consolidated revenue for the fiscal year ended March 31, 2018 of¥1,770.5 billion, while Shire generated revenue of $15,160.6 million in the year ended
December 31, 2017. Excluding sales of non-prescription drug products, a combination of
Takeda’s total sales in the fiscal year ended March 31, 2018 and Shire’s total sales in thefiscal year ended December 31, 2017 of ¥3,214.0 billion would have placed the CombinedGroup within the top ten pharmaceutical companies by prescription drug revenue
worldwide in 2017 according to EvaluatePharma. On a pro forma basis, revenue of the
Combined Group would have been ¥3,474.0 billion for the fiscal year ended March 31,
2018.

Synergy potential of the Acquisition

Takeda is confident that the Acquisition will create an opportunity to recognise significant recurring costsynergies, with the potential for additional revenue synergies from the combination of Shire andTakeda’s combined infrastructure, market presence and development capabilities.
The Takeda Directors expect recurring pre-tax cost synergies for the Combined Group to reach a
run-rate of at least $1.4 billion per annum by the end of the third fiscal year following completion of theAcquisition. Takeda expects these anticipated synergies to accrue as a direct result of the Acquisition
and that they would not otherwise be achieved on a standalone basis.
4.1

Significant recurring cost synergy potential
The constituent elements of the quantified cost synergies, which are expected to originate fromthe cost bases of both Shire and Takeda, include:•

Manufacturing and supply: approximately four per cent. of the identified cost synergies
are expected to be generated from savings from in-sourcing Oral Solid Dose
manufacturing through Takeda excess capacity, efficiencies in operational procurement
spend and reduced overheads;•

R&D: approximately 43 per cent. of the identified cost synergies are expected to begenerated from removal of duplicated R&D costs, through rationalising ongoing researchand early stage pipeline programmes to optimise value of R&D spend and reducing
overlapping resources; and•Sales, marketing and administrative efficiencies: approximately 53 per cent. of theidentified cost synergies are expected to be generated from the reduction of overlapping
marketing presence in gastroenterology (GI) and neuroscience, consolidation of
overlapping office locations, the elimination of duplicated IT systems, the optimisation ofmarketing and sales employee and non-employee costs and the reduction of duplicate
costs across central support functions.

38

4.2

Realisation costs and cost dis-synergies
The Takeda Directors expect the realisation of the quantified synergies will require estimatedone-off cash costs of approximately $2.4 billion incurred in the first three fiscal years following
completion of the Acquisition.
The Takeda Directors do not expect any other material cost dis-synergies to arise in connection
with the Acquisition.

4.3

Tax structure
The proposed tax structure of the Combined Group has not been finalised at this stage, but the
Takeda Directors expect that the Combined Group may not be able to fully maintain Shire’s
current tax profile as a result of legislation not currently applicable to Shire.

4.4

Revenue growth potential
In addition to the quantified financial benefits highlighted above, the Takeda Directors further
expect that the Combined Group will be able to realise additional revenue synergies which havenot been quantified at this stage. The Takeda Directors expect these to arise from leveraging the
combined strengthened global infrastructure of Takeda and Shire and through greater market
presence in the key therapeutic areas, particularly gastroenterology (GI) and neuroscience.
The foregoing statements of estimated cost savings and synergies relate to future actions andcircumstances which, by their nature, involve risks, uncertainties and contingencies. As a result,the cost savings and synergies referred to may not be achieved, may be achieved later or sooner
than estimated, or those achieved could be materially different from those estimated. For the
purposes of Rule 28 of the Takeover Code and otherwise, the statements of estimated costsavings and synergies contained in this document and the statements of intention, belief or
expectation for the Combined Group and Takeda following completion of the Acquisition
contained in this document are solely the responsibility of Takeda and the Takeda Directors, andnot of the Shire Directors.
These statements are not intended as a profit forecast and should not be interpreted as such.
Appendix III (Statement on quantified financial benefits) of this document includes a copy ofthese statements of anticipated cost savings and synergies arising out of the Acquisition andprovides underlying assumptions and the bases of preparation. The Quantified Financial Benefits
Statement as set out in Appendix III (Statement on quantified financial benefits) of this document
has been reported on under the Takeover Code by Takeda’s reporting accountant, Deloitte LLP,
and its financial advisers, Evercore, J.P. Morgan Cazenove and Nomura.

5.

Financial effects of the Acquisition

5.1

Effect on earnings and assets
Unaudited pro forma condensed combined balance sheet and statement of income
The unaudited pro forma condensed combined financial data set forth below reflects thefollowing:(a)the Acquisition;(b)

the financing obtained by Takeda to fund the cash portion of the Consideration; and(c)the issue of New Takeda Shares to Shire Shareholders on the register of members of Shireat the Scheme Record Time,(collectively, the “Transactions”).

39The final value of Consideration paid under the Scheme will vary based on the exchange rate at
the date of the completion of the Acquisition and the Takeda share price on that date. The terms
and conditions of the financing that will be used to fund the Acquisition, including the amount ofdebt Takeda actually incurs, have therefore not been finally determined and are subject tochange.
The unaudited pro forma condensed combined statement of financial position reflects theTransactions as if they occurred on March 31, 2018 and the unaudited pro forma condensed
combined statement of income reflects the Transactions as if they occurred as of April 1, 2017.
The unaudited pro forma condensed combined financial information has been prepared by
Takeda management in accordance with the regulations of the SEC and is not necessarily
indicative of what the Combined Group’s financial position or results of operations actually would
have been had the Acquisition been completed as of the dates indicated. In addition, theunaudited pro forma condensed combined financial statements do not purport to project the
future financial position or results of operations of the Combined Group. There were no materialtransactions between the Shire Group and the Takeda Group during the period presented in theunaudited pro forma condensed combined financial statements that would need to be eliminated.
The unaudited pro forma condensed combined financial statements have been prepared by
Takeda using the acquisition method of accounting under IFRS as adopted by the Takeda Group,with Takeda being the accounting acquirer. The pro forma adjustments are preliminary and basedon currently available information. The pro forma adjustments have been made solely for the
purpose of preparing these unaudited pro forma condensed combined financial statements.
Differences between these preliminary estimates and the final acquisition accounting will likely
occur, and these differences could be material. The differences, if any, could have a material
impact on the accompanying unaudited pro forma condensed combined financial statements andTakeda’s future results of operations and financial position.
In addition, the unaudited pro forma condensed combined financial statements do not reflect any
cost savings, operating synergies or revenue enhancements that the combined company may
achieve as a result of the Acquisition, the costs to integrate the operations of Shire or the costs
necessary to achieve these cost savings, operating synergies and revenue enhancements.
The unaudited pro forma condensed combined financial information reflects events that are
directly attributable to the Acquisition, are factually supportable, and with respect to the unaudited
pro forma condensed combined statements of operations, are expected to have a continuing
impact on the combined results. The unaudited pro forma condensed combined statement ofincome excludes ¥24,760 million of non-recurring costs expected to be incurred in connection
with the Acquisition and the impact of any incremental cost of sales related to the recognition of
Shire’s inventory at fair value of ¥406,798 million, which is expected to be recorded within the firstyear following completion of the Acquisition.
All financial data included in the unaudited condensed combined financial information arepresented in millions of Japanese Yen and have been prepared on the basis of IFRS and
Takeda’s accounting policies. For the purpose of the pro forma condensed combined financial
information, Shire’s historical financial information as of and for the year ended December 31,
2017 has been conformed from US GAAP to IFRS and Takeda’s accounting policies for material
accounting policy differences based on information available to Takeda.
The unaudited pro forma condensed combined financial information set forth below should beread in conjunction with the audited consolidated financial statements (and their related notes) of
Takeda and Shire for the periods ended March 31, 2017 and December 31, 2017, respectively.
Amounts shown in the tables below have been rounded to the nearest indicated digit unlessotherwise specified. As a result, the sum of the components may not equal the total amountreported due to rounding.

40Unaudited pro forma condensed combined statement of financial position
As of March 31, 2018–––––––––––––––––––––––––––––––––––––––––––––––––
Pro forma
Takeda––––––––

Shire (A)––––––––

Adjustments

Note

Pro forma

1,323,292
4,055,683
6,557,636
101,473432,702–––––––––
12,470,786––––––––––––––––– ––––––––– –––––––––(millions of JPY)ASSETS
Non-current assets:
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax asset
Other
Total non-current assets
Current assets:
Inventories
Trade and other receivables
Cash and cash equivalents
Other current assets
Total current assets
Total assets
LIABILITIES
Non-current liabilities:
Bonds and loans
Net defined benefit liabilities
Deferred tax liabilities
Other
Total non-current liabilities
Current liabilities:
Bonds and loan
Trade and other payables
Provisions
Other
Total current liabilities
Total liabilities
EQUITY
Share capital
Share premium
Treasury shares
Retained earnings
Other components of equity
Equity attributable to ownersof the company
Non-controlling interests
Total equity
TOTAL LIABILITIESAND EQUITY

536,801
1,029,248
1,014,264
64,980382,362––––––––
3,027,655––––––––

749,0122,238,458
3,744,677
35,611
50,340––––––––
6,818,098––––––––

37,479787,977
1,798,695
882–––––––––
2,625,033––––––––(B)(B)(ii)(c)(B)(ii)(a)(E)

212,944420,247
294,522
151,095––––––––
1,078,808––––––––
4,106,463

371,571394,864
57,67751,479––––––––
875,591––––––––
7,693,689

451,998–
124,715–––––––––
576,713––––––––
3,201,746(B)

1,036,513
815,111(C)
476,914202,574–––––––––
2,531,112–––––––––
15,001,898

985,644
87,61190,725
187,565––––––––
1,351,545––––––––

1,858,972
66,056535,912215,366––––––––
2,676,306––––––––––
581,156–––––––––
581,156––––––––

2,844,616
153,667(B)(ii)(b) 1,207,793
402,931–––––––––
4,609,007–––––––––

18
240,259
132,781364,451––––––––
737,509––––––––
2,089,054––––––––

313,948
71,752
234,402
296,958––––––––
917,060––––––––
3,593,366––––––––

3,303,378––
114,391––––––––
3,417,769––––––––
3,998,925––––––––(D)3,617,344
312,011367,183
775,800–––––––––
5,072,338–––––––––
9,681,345–––––––––

77,9149,255 1,669,509
90,740 2,827,075 (1,177,935)(74,373)(31,942)
31,942
1,557,307 1,140,737 (1,165,497)
345,836
155,198(155,198)

(E)
(E)
(E)
(E)
(E)

1,756,678
1,739,880(74,373)
1,532,547
345,836–––––––– –––––––– ––––––––

1,997,424
19,985––––––––
2,017,409––––––––(797,179)–––––––––(797,179)––––––––

5,300,568
19,985–––––––––
5,320,553––––––––––––––––– –––––––– ––––––––

15,001,898

4,106,463

41

4,100,323–––––––––
4,100,323–––––––––––––––––

7,693,689

3,201,746–––––––––

Unaudited pro forma condensed combined statement of income
Year ended March 31, 2018–––––––––––––––––––––––––––––––––––––––––––––––––
Pro forma
Takeda––––––––

Shire (A)––––––––

Adjustments

Note

Pro forma–––––––– ––––––––– –––––––––(millions of JPY except share data)

Revenue
Cost of sales
Selling, general andadministrative expense
Research and development
expenseAmortisation and impairment
losses on intangible assets
associated with products
Other operating income(expense), net
Operating profit
Finance income (expense), net
Share of profit (loss) ofinvestments accounted forusing the equity method
Profit before tax
Income tax (expense)/benefit
Net profit for the year, before
discontinued operations
Gain/(loss) from discontinued
operations
Net profit for the year
Attributable to:
Owners of the Company
Non-controlling interest

1,770,531 1,703,475(495,921) (529,114)

3,474,006(F) (1,026,387)(628,106)(393,241)(844)(F) (1,022,191)(325,441)(184,046)

(231)

(F)

(509,718)(122,131)(198,651)(331,542)(G)(652,324)

42,857––––––––
241,789
7,615(99,072)
1,510–––––––– ––––––––
299,351(332,459)(65,799)(98,579)(I)(32,199)337–––––––– ––––––––
217,205
233,889(30,497)
278,821–––––––– ––––––––(54,705)–––––––––
208,681(H)(156,763)–––––––––(431,038)
107,760––––––––(31,862)–––––––––
20,056(J)
356,084–––––––––

186,708

512,710(323,278)

376,1400––––––––
186,7082,023––––––––
514,733–––––––––(323,278)

2,023–––––––––
378,163–––––––– –––––––– ––––––––

186,886(178)––––––––
Profit from continuing operations
186,708

Earnings per share (JPY):
Basic
DilutedWeighted average shares
outstanding (in millions):
Basic
Diluted

–(1,352)–––––––––––––––––
376,318(178)––––––––
376,140––––––––

239.35237.56243.58242.66

780.8
786.7

1,544.9
1,550.8

For the notes to the unaudited pro forma condensed combined financial statements, see
Appendix IV (Notes to the unaudited pro forma condensed combined financial data) of thisdocument.
5.2

Effect on capital value and income(a)Shire Shares and New Takeda Shares
If the Scheme becomes Effective, Shire Shareholders on the register of members of Shireat the Scheme Record Time will be entitled to receive $30.33 in cash and either 0.839 New
Takeda Shares or 1.678 New Takeda ADSs in accordance with the terms of the Scheme
for each Shire Share held. The following table sets out, for illustrative purposes only and42

on the bases and assumptions set out in the notes below, the financial effects of theAcquisition on the capital value and income for a holder of 1,000 Shire Shares receiving$30.33 in cash and 0.839 New Takeda Shares in accordance with the terms of the Scheme
for each Shire Share held. No account has been taken of any liability to taxation of a Shire
Shareholder or a Takeda Shareholder and no account has been taken of any transaction
costs or any fractional entitlements to New Takeda Shares.
Column (A) is based on the Closing Price of Takeda Shares and Shire Shares on theLatest Practicable Date.
Column (B) is based on the Closing Price of Takeda Shares and Shire Shares on
March 27, 2018 (being the last Business Day before the commencement of the Offer
Period).
Illustrative effect on capital value ($)
Market value of 839 New Takeda Shares
Value of cash portion of Consideration

Note
(1)

(A)
34,40230,330––––––––
64,732––––––––
60,486––––––––
4,246––––––––(B)
44,75130,330––––––––
75,081––––––––
43,499––––––––
31,582––––––––

(3)

1,333

1,428

(4)

1,175

968

2,507
461
––––––––
2,046––––––––

2,396
461––––––––
1,935––––––––

Total value of Consideration
Less: Market value of 1,000 Shire Shares(2)

Illustrative increase in capital value
Illustrative effect on income
Gross annual dividend from 839
New Takeda Shares
Gross income from reinvestmentof cash portion of Consideration
Total gross income under theterms of the Acquisition
Less: Gross dividend from 1,000 Shire Shares
Illustrative increase in gross income

Note

(5)

Notes:(1) The market value of Takeda Shares is based on the closing middle market prices of: (A) 4,647
Japanese Yen per share and exchange rate of $1.00:¥113.33 as derived from Bloomberg on theLatest Practicable Date; and (B) 5,640 Japanese Yen per share and exchange rate of $1.00:¥105.74
as derived from Bloomberg for March 27, 2018 (the last Business Day before the commencement of
the Offer Period).
(2) The market value of Shire Shares is based on the closing middle market prices of: (A) 45.99 pounds
per share and exchange rate of £1.00:$1.3152 as derived from Bloomberg on the Latest Practicable
Date; and (B) 30.70 pounds per share and exchange rate of £1.00:$1.4169 as derived from
Bloomberg for March 27, 2018 (the last Business Day before the commencement of the Offer Period).
(3) The gross annual dividend from 839 New Takeda Shares is based on an annual dividend of JPY
180 per Takeda Share (Takeda’s dividend policy has remained consistent over the past nine years)
and exchange rate of: (A) $1.00:¥113.33 as derived from Bloomberg on the Latest Practicable Date;and (B) $1.00:¥105.74 as derived from Bloomberg for March 27, 2018 (the last Business Day before
the commencement of the Offer Period).
(4) Dividend income from Takeda Shares purchased using the entire cash portion of Consideration,
assuming Takeda share price, and $:¥ and £:$ exchange rates as per Notes (1) and (2) set out above.
(5) Based on 2019 expected dividend of 46.13 US$ cents per Shire share assuming that 2018 and 2019
dividends represent 115 per cent. of the total dividend in the previous year (34.88 US$ cents per Shire
share in 2017 and 40.11 US$ cents per Shire share in 2018).

(b)

Shire ADSs and New Takeda ADSs
If the Scheme becomes Effective, Shire ADS Holders will receive $90.99 in cash and5.034 New Takeda ADSs (upon surrender of their certificated Shire ADSs (if applicable) tothe Shire Depositary after the Scheme Effective Time) for every Shire ADS which they holdat the ADS Effective Date. The following table sets out, for illustrative purposes only andon the bases and assumptions set out in the notes below, the financial effects of the43Acquisition on the capital value and income for a holder of 1,000 Shire ADSs receiving$90.99 in cash and 5.034 New Takeda ADSs for each Shire ADS held at the ADS Effective
Date. No account has been taken of any liability to taxation of a Shire Shareholder or a
Takeda Shareholder and no account has been taken of any transaction costs or any
fractional entitlements to New Takeda ADSs.
Column (A) is based on the Closing Price of Takeda ADSs and Shire ADSs on the Latest
Practicable Date.
Column (B) is based on the Closing Price of Takeda ADSs and Shire ADSs on March 27,
2018 (being the last Business Day before the commencement of the Offer Period).
Illustrative effect on capital value ($)
Market value of 5,034 New Takeda ADSs
Value of cash portion of consideration

Note

(A)

(B)

(1)

104,204
90,990––––––––
195,194––––––––
180,950––––––––
14,244––––––––

132,394
90,990––––––––
223,384––––––––
128,870––––––––
94,514––––––––

(3)

3,998

4,285

(4)

3,491

2,945

7,488
1,384
––––––––
6,105––––––––

7,229
1,384
––––––––
5,846––––––––

Total value of consideration
Less: Market value of 1,000 Shire ADSs

(2)

Illustrative increase in capital value
Illustrative effect on income
Gross annual dividend from5,034 New Takeda ADSs
Gross income from reinvestmentof cash portion of consideration
Total gross income under theterms of the Acquisition
Less: Gross dividend from 1,000 Shire ADSs

Note

(5)

Illustrative increase in gross income
Notes:(1) The market value of Takeda ADSs is based on the closing middle market prices of: (A) 20.70 $ per
ADS as derived from Bloomberg on the Latest Practicable Date; and (B) 26.30 $ per ADS as derived
from Bloomberg for March 27, 2018 (the last Business Day before the commencement of the Offer
Period).
(2) The market value of Shire ADSs is based on the closing middle market prices of: (A) 180.95 $ per
ADS as derived from Bloomberg on the Latest Practicable Date; and (B) 128.87 $ per ADS as derived
from Bloomberg for March 27, 2018 (the last Business Day before the commencement of the Offer
Period).
(3) The gross annual dividend from 5,034 New Takeda ADSs is based on an annual dividend of
JPY 90 per ADS (Takeda’s dividend policy has remained consistent over the past nine years) andexchange rate of: (A) $1.00:¥113.33 as derived from Bloomberg on the Latest Practicable Date; and(B) $1.00:¥105.74 as derived from Bloomberg for March 27, 2018 (the last Business Day before thecommencement of the Offer Period).
(4) Dividend income from Takeda ADSs purchased using the entire cash portion of the consideration,
assuming the Takeda ADS price as per Note (1) set out above.
(5) Based on 2019 expected dividend of 138.38 US$ cents per Shire ADS assuming that 2018 and 2019
dividends represent 115 per cent. of the total dividend in the previous year (104.64 US$ cents per
Shire ADS in 2017 and 120.33 US$ cents per Shire ADS in 2018).

6.

Takeda’s intentions and strategic plans for the Combined Group

6.1

Integration planning
The Takeda Board believes that there is a strong strategic fit between Takeda’s business andShire’s business. The Takeda Board considers that Shire’s product portfolio and pipeline arehighly complementary to Takeda’s and their combination will create a Combined Group that is aleader in highly innovative medicines that are transformative to patients. The Takeda Board
believes that Takeda is the ideal acquirer for Shire and expects to apply the Combined Group’s
44

expertise across therapeutic areas, research capabilities, infrastructure and employee talents toprovide innovative solutions for patients, benefits for stakeholders and growth for shareholders.
Takeda has begun integration planning, with 20 functional integration teams working on plans tobring the two groups together in their respective business areas following completion of theAcquisition. Takeda has also started to design the future operating model of the CombinedGroup, which would be implemented following completion of the Acquisition. The future operating
model is based on the following guiding principles:•Patient-centric – developing more innovative medicines supported by world-class services
and support capabilities.

•

Agile & Simple – minimising complexity and empowering local leaders to make local
decisions.

•

Lean & Focused – concentrating the Combined Group’s efforts on the four core therapeuticareas of GI, neuroscience, oncology and rare diseases, plus plasma-derived therapies andvaccines.

Takeda envisages that the future operating model will include the following key elements:•

The Combined Group’s R&D effort will primarily be focused on four therapy areas: GI,
neuroscience, oncology and rare diseases. There will also be a focused R&D effort invaccines and plasma-derived therapies. The future operating model will be an extensionof Takeda’s existing R&D efforts, which will therefore not be materially disrupted.

•

The Combined Group will maintain a focus on excelling in manufacturing and quality. The
global manufacturing network of the Combined Group will utilise both in-house andoutsourced production, while prioritising technological and digital innovation, consistent
with its aspiration to provide patients with the right medicines, at the right time, at anaffordable price.

•

Under the future operating model, the Combined Group will bring its medicines to patients
through its local entities present in approximately 80 countries. These countries will begrouped into four regions: US, Japan, Europe and Canada, and a region comprising
China, Latin America, Middle East, Asia Pacific, Russia and the Commonwealth of
Independent States. Takeda will also create three global business units for the portfoliosthat have unique needs and require dedicated focus: oncology, plasma-derived therapies
and vaccines.

In addition, Takeda has selected the future Takeda executive team whose roles will become
effective upon completion of the Acquisition. It will comprise a group of highly experienced anddiverse leaders with multiple female leaders and 11 different nationalities. The future Takeda
executive team will not only have excellent functional knowledge, but will also represent
enterprise leaders with a shared commitment to Takeda’s values and vision for the CombinedGroup’s future once their roles come into effect. For a list of the proposed members of the future
Takeda executive team, see Appendix V (Proposed members of the future Takeda executive
team (post-Effective Date)) to this document.
6.2

Employees and employment rights
The Takeda Board attaches great importance to the skills, experience and market knowledge ofthe existing employees of Shire. Takeda is excited to welcome the employees of Shire toenhance Takeda’s therapeutic offerings and grow the value of the Combined Group in the longer
term. The Takeda Board also believes Shire’s employees will benefit from greater opportunities
as a result of being part of a larger, more global group with a wider range of complementary
products and treatments and a deeper combined R&D capability.

45

The Takeda Board intends to look at ways to optimise the structure of the merged administrativeand operational business units of the Combined Group in order to achieve the anticipatedbenefits of the Acquisition.
Takeda’s evaluation work to identify potential synergies of the Combined Group has confirmed
there will be some duplication between the two businesses. However, due to relevant antitrust
legislation, Shire and Takeda have been unable to share the detailed information required by
Takeda for it to formulate comprehensive plans or intentions regarding the impact of theAcquisition on Shire and its wide ranging and distinct business units and operational divisions.
As detailed above, Takeda has begun integration planning and has started to design the future
operating model of the Combined Group. The detailed steps for the integration plan will be
developed further following completion of the Acquisition but Takeda will aim to retain the besttalent across the Combined Group.
Based on its integration planning, Takeda expects a potential reduction of between six andseven per cent. of the total Combined Group workforce globally, comprising between 1.8 and2.1 per cent. attributable to the optimisation of R&D functions and the balance attributable tosales, marketing and administrative efficiencies. These reductions are expected to occur during
the first three years following completion of the Acquisition. However, it is also anticipated that
headcount reductions will be partly mitigated by further job opportunities over the medium term
as a result of the potential revenue synergy opportunities, as well as the standalone growth of
the Combined Group, natural attrition and the elimination of vacant roles.
The finalisation and implementation of any workforce reductions will be subject to comprehensiveplanning and appropriate engagement with stakeholders, including affected employees and any
appropriate employee representative bodies. Takeda would implement any job reductions inaccordance with all relevant legal obligations. Takeda intends to approach the employee andmanagement integration process with the aim of retaining and motivating the best talent acrossthe Combined Group.
Takeda confirms that the existing contractual and employment rights, including in relation topensions, of all Shire Group employees will be fully safeguarded upon, and following, completionof the Acquisition. Takeda does not intend to make any material changes to the conditions of
employment or the balance of the skills and functions of the employees and management of theShire Group or the Takeda Group.
6.3

Headquarters and locations
Upon completion of the Acquisition, Takeda will maintain its global headquarters in Japan,
expand its R&D presence in the Boston area and have major regional locations in Japan,
Singapore, Switzerland and the US. The Takeda leadership team will be primarily located inTokyo or in the Boston area. Takeda will commence a review of the functions to be undertaken
at Shire’s current headquarters in Dublin within the first year following completion of theAcquisition.
The Takeda Board will evaluate the consolidation of Shire’s operations into Takeda’s in the
Boston area, Switzerland and Singapore and the possibility of retaining Shire’s offices in theselocations. The Takeda Board will also consider efficiencies that may be obtained from combining
Shire’s manufacturing facilities into those of Takeda.
The Takeda Board does not envisage any other material changes with respect to theredeployment of Shire’s existing material fixed assets.

6.4

Pensions
The Takeda Board does not intend to make any changes with regard to employer contributions
into Shire’s existing pension schemes or the accrual of benefits to existing members or theadmission of new members to such pension schemes. Takeda intends that following completion46

of the Acquisition, it will continue to comply with Shire’s existing defined benefit pension
obligations, including commitments to make previously agreed deficit contributions andcontractually required contributions.
6.5

Composition of the Takeda Board following completion of the Acquisition
Takeda has agreed to nominate three Shire Directors (Olivier Bohuon, Ian Clark and Steven
Gillis) to join the Takeda Board with effect from the completion of the Acquisition. Suchappointments are subject to approval by the Takeda Shareholders, which will be sought at the
Takeda Extraordinary General Meeting. It has not yet been determined whether any of the other
Shire Directors will have any ongoing role with the Combined Group following completion of theAcquisition, but, in any event, such Shire Directors are not standing for election to the Takeda
Board.

6.6

R&D
The Takeda Board believes that Takeda and Shire have highly complementary R&D activities.
The Takeda Board considers that Shire’s primarily development-focused portfolio aligns well with
Takeda’s largely research-oriented productive R&D engine, which will result in a robust,modality-diverse pipeline focused on meeting the needs of the patients we aim to serve. The
Takeda Board understands the importance of continued investment in R&D to the CombinedGroup, with innovation a key driving factor in its success and the value its therapeutics provide.
The Takeda Board expects that, following completion of the Acquisition, R&D spend will be
optimised by approximately $600 million21 through the removal of duplicated costs between Shireand Takeda, including through rationalising programmes to optimise the value of R&D spend andreducing overlapping resources. Takeda intends to continue to invest in and execute its late stage
pipeline.

6.7

Retention arrangements
Takeda wishes to ensure strong business momentum through retention and to ensure that
employees are fairly treated. Accordingly, Takeda has agreed that Shire may implement
employee retention arrangements for a number of key Shire employees throughout theorganisation who have been identified by Shire after consultation with Takeda.
As part of this, Dr Flemming Ornskov (CEO of Shire) and Mr Thomas Dittrich (CFO of Shire) will
each be entitled to receive a cash payment equivalent to 200 per cent. of their respective annual
salaries and target bonuses for the financial year ending December 31, 2018, which, in eachcase, will be payable, subject to completion of the Acquisition, on the earlier of their ceasing
employment, June 30, 2019 and the date falling six months after completion of the Acquisitionand provided that the relevant executive is in employment on that payment date (subject tocustomary exceptions and conditions) (the “Executive Director Retention Arrangements”).
The total value of the Executive Director Retention Arrangements is $9.1 million.
As required by, and solely for the purposes of, Rule 16.2 of the Takeover Code, Citi, Goldman
Sachs and Morgan Stanley have (in their capacity as independent advisers to Shire for the
purposes of Rule 3 of the Takeover Code) reviewed the terms of the Executive Director Retention
Arrangements together with other information deemed relevant and advised Shire that the
Executive Director Retention Arrangements are fair and reasonable so far as the Shire
Shareholders are concerned. In providing their advice, Citi, Goldman Sachs and Morgan Stanley
have taken into account the commercial assessments of Shire.

21 This statement includes a quantified financial benefits statement which has been reported on for the purposes of the
Takeover Code (see Appendix III (Statement on quantified financial benefits) of this document). The approximate$600 million of R&D spend optimisation can be calculated as 43 per cent. of the $1.4 billion of total run rate pre-tax
cost synergies set out in Appendix III (Statement on quantified financial benefits) of this document.

47

6.8

Other items
No statements in this paragraph 6 constitute “post-offer undertakings” for the purposes of Rule19.5 of the Code.

7.

Financing arrangements

Takeda is financing the cash portion of the Consideration payable to Shire Shareholders pursuant to theAcquisition from third-party debt as described below.
On May 8, 2018, Takeda entered into a bridge credit agreement of $30.85 billion with, among others,
JPMorgan Chase Bank N.A., Tokyo Branch, Sumitomo Mitsui Banking Corporation and MUFG Bank,
Ltd. (the “Bridge Credit Agreement”), part of the proceeds of which may be used to fund the cash
portion of the Consideration payable to Shire Shareholders in connection with the Acquisition. The
bridge facility will be unsecured and is made available by a syndicate of lenders. There are fourtranches under the Bridge Credit Agreement. Three of the four tranches have a maturity of 364 calendar
days from the date when all conditions precedent to drawing under the Bridge Credit Agreement aresatisfied or waived in accordance with the terms of the Bridge Credit Agreement. The fourth tranche has
a maturity of 90 calendar days following such date. It has always been Takeda’s intention to rapidly
reduce or refinance its commitments under the Bridge Credit Agreement prior to completion of theAcquisition with a combination of long-term debt, hybrid capital and available cash resources.
On June 8, 2018, Takeda entered into a term loan credit agreement for an aggregate principal amountof up to $7.5 billion with, among others, JPMorgan Chase Bank N.A., Tokyo Branch, Sumitomo Mitsui
Banking Corporation, MUFG Bank, Ltd. and Mizuho Bank, Ltd. (the “Term Loan Credit Agreement”).
The proceeds from the Term Loan Credit Agreement will be used to fund part of the cash portion of theConsideration payable to Shire Shareholders in connection with the Acquisition. In addition, thecommitments under the Bridge Credit Agreement were reduced by $7.5 billion following Takeda’s entry
into of the Term Loan Credit Agreement. The facility under the Term Loan Credit Agreement is madeavailable by a syndicate of lenders.
On October 26, 2018, Takeda entered into a senior short-term loan facility agreement for an aggregate
principal amount of up to ¥500 billion with, among others, Sumitomo Mitsui Banking Corporation, MUFG
Bank, Ltd., Mizuho Bank, Ltd., The Norinchukin Bank and Sumitomo Mitsui Trust Bank, Ltd. (the“Senior Short-Term Loan Facility Agreement”). The Senior Short-Term Loan Facility Agreement isunsecured and will have a maturity of either one month, two months, three months or six months after
the date of the advance, as determined by Takeda at the time of the advance. The proceeds from the
Senior Short-Term Loan Facility Agreement will be used to fund a portion of the cash element of theConsideration payable to Shire Shareholders in connection with the Acquisition. In addition, thecommitments under the Bridge Credit Agreement were reduced by a further $4.5 billion following
Takeda’s entry into the Senior Short-Term Loan Facility Agreement. The facility under the Senior
Short-Term Loan Facility Agreement is made available by a syndicate of lenders.
On October 26, 2018, Takeda entered into a subordinated loan agreement, with aggregate
commitments of ¥500 billion, with Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., Mizuho
Bank, Ltd., The Norinchukin Bank and Sumitomo Mitsui Trust Bank, Limited (the “Subordinated Loan
Agreement”). The proceeds of the loan (the “Subordinated Loan”) under the Subordinated Loan
Agreement, if drawn upon, will be used to reduce the commitments under the Senior Short-Term Loan
Facility Agreement. The drawdown of all or a part of the Subordinated Loan may not be implemented if
Takeda obtains alternative financing.
On November 8, 2018, Takeda announced an offering of its unsecured EUR denominated senior notes(the “Bond Offering”). The proceeds of the Bond Offering will be used to fund part of the cash portionof the Consideration payable to Shire Shareholders in connection with the Acquisition. The
commitments under the Bridge Credit Agreement will be reduced by reference to the amount of theproceeds of the Bond Offering.

48

For more information on the Bridge Credit Agreement, the Term Loan Credit Agreement, the Senior
Short-Term Loan Facility Agreement, the Subordinated Loan Agreement and the Bond Offering, seeparagraph 9.2 of Part VIII (Additional Information) of this document.
Takeda expects to refinance the remaining commitments under the Bridge Credit Agreement prior tocompletion of the Acquisition and believes that the remaining financing process will be successful at acompetitive aggregate interest rate with an appropriate mix of currencies to reduce currency risk andhedging costs. Takeda is committed to a strong balance sheet and will ensure that it remains investment
grade credit-rated following completion of the Acquisition. Takeda will consider disposing of non-core
assets to help accelerate the deleveraging process.
8.

Information on the Shire Group

Shire is a leading global biotechnology company focused on serving patients with rare diseases andother highly specialised conditions. Shire has grown both organically and through acquisition,completing a series of major transactions that have brought therapeutic, geographic and pipeline
growth and diversification.
Shire seeks to develop and deliver breakthrough therapies for people around the world affected by rarediseases, and those with highly specialised conditions, who lack effective therapies to live their lives tothe fullest.
Serving patients and partnering with healthcare communities in over 100 countries, Shire strives todevelop best-in-class products across core therapeutic areas including Immunology, Hematology,
Neuroscience, Internal Medicine, Genetic Diseases, and Ophthalmics.
Earlier in the year, Shire announced that it has entered into an agreement with Servier for the sale of
its Oncology business for $2.4 billion as part of its strategy to unlock value and sharpen its focus onrare disease leadership. The transaction closed on August 31, 2018.
Following the sale of the Oncology business, Shire has a robust portfolio of leading brands across six
franchises:
Immunology: The Immunology franchise includes immunoglobulin therapies, which are used to treat anumber of conditions including primary immunodeficiency, as well as a portfolio of therapies to treat
hereditary angioedema.
Hematology: The Hematology portfolio is primarily focused on hemophilia, a rare bleeding disorder.
Neuroscience: The Neuroscience portfolio is focused on attention deficit hyperactivity disorder(ADHD), a neurodevelopmental disorder that manifests as a persistent pattern of inattention and/or
hyperactivity-impulsivity that interferes with functioning or development.
Internal Medicine: The Internal Medicine franchise is focused on rare and specialised conditions suchas short bowel syndrome, a rare and potentially fatal condition in which patients struggle to maintainadequate nutrition and hydration, and hypoparathyroidism, a rare disorder of the endocrine system
responsible for regulating electrolyte levels, especially calcium.
Genetic Diseases: The portfolio in Genetic Diseases includes enzyme replacement therapies for threelysosomal storage disorders: Hunter syndrome (mucopolysaccharidosis II), Gaucher
disease (glucocerebrosidase enzyme deficiency), and Fabry disease (alpha-galactosidase A enzyme
deficiency). These are rare, genetic diseases that mainly affect children, and have the potential toseverely impact quality of life and reduce life expectancy if not controlled.
Ophthalmics: XIIDRA, the only product approved in the US to treat the signs and symptoms of dry eye
disease, is the foundational product for the Ophthalmics franchise. Dry eye disease is a highly prevalentcondition in which the eye does not produce an adequate volume of tears or when the tears are not of
the correct consistency, leading to irritation, blurred vision, and potentially corneal damage.

49

For the 52 weeks ended December 31, 2017, Shire’s product sales were $14,449 million (2016:$10,886 million, which included Baxalta (acquired on June 3, 2016) and Dyax (acquired on January 22,2016)) and it generated non-GAAP EBITDA of $6,492 million (2016: $4,710 million, which included
Baxalta (acquired on June 3, 2016) and Dyax (acquired on January 22, 2016)).
For the nine months ended September 30, 2018 (reported on November 1, 2018), Shire’s product sales
were $11,198.5 million (2017: $10,537.9 million) and it generated non-GAAP EBITDA of$4,866.3 million (2017: $4,806.7 million).
Non-GAAP EBITDA is a non-GAAP metric and a reconciliation to US GAAP net income is provided inPart B to Appendix VI (Non-GAAP Reconciliations).
9.

Information on the Takeda Group

Takeda is a global, research and development-driven pharmaceutical company with a presence in morethan 70 countries. Takeda brings highly innovative, life-changing medicines to patients across theglobe, with prescription drugs marketed directly or through Takeda’s partners in approximately
100 countries worldwide. Takeda’s global workforce of more than 27,000 employees is committed tobringing better health and a brighter future to patients. Takeda develops and markets pharmaceuticalproducts to treat a broad range of medical conditions including GI diseases, cancer, neurological andpsychiatric diseases and other medical conditions, including diabetes and hypertension, as well as
vaccines. Takeda is also committed to its corporate social responsibility programme, which is dedicatedto global health, and its access to medicine strategy, which aims to increase access to Takeda’s
innovative and potentially life-saving medicines for patients with some of the highest unmet medical
needs across the world.
Takeda has a focused, agile and innovative research and development organisation whose goal is to
impact patients’ lives by translating science into transformative medicines. Takeda focuses on highly
innovative medicine with 41 clinical stage assets with active development programmes as of October
31, 2018, more than one-third of which have orphan drug designations. As a result of Takeda’s efforts
to strengthen its pipeline, the total number of new molecular entity clinical stage-ups increased from 5 to
17 during the fiscal year ended March 31, 2018. Moreover, there were seven additional new molecular
entity clinical stage-ups from April 1, 2018 to October 31, 2018. Takeda focuses its research anddevelopment efforts on three key therapeutic areas: GI, oncology and neuroscience, plus vaccines.
Takeda has built a distinct research and development strategy based on a therapeutic area focus, arobust research engine and a comprehensive, differentiated partnership model with 45 per cent. of its
pipeline partnered with academia, biotech firms and start-ups. Its research and development
programme aims to leverage a combination of internal and external innovation to deliver a sustainablepipeline. Takeda currently has approximately 180 active partnerships, helping it actively pursue
additional innovation.
Takeda’s 237-year history started in 1781, when Chobei Takeda I began selling traditional Japaneseand Chinese medicines in Doshomachi, Osaka. After Japan’s Meiji Restoration opened the country toincreased overseas trade in the late 1860s, Takeda was one of the first companies to begin importing
western medicines into Japan. In 1895, it began its pharmaceutical manufacturing business, andTakeda’s research division was formed in 1914, allowing Takeda to begin to introduce its own
pharmaceutical products. In 1925, Takeda was incorporated as Chobei Takeda & Co., Ltd. and its namewas later changed to Takeda Pharmaceutical Company Limited. In 1949, Takeda’s shares were listedon the Tokyo and Osaka stock exchanges. Takeda began expanding into overseas markets in the
1960s, first in Asia and, subsequently, other markets around the world. It began enhancing its overseas
business infrastructure in the late 1990s, with the formation of new subsidiaries in the United States andEurope.
Since 2014, Takeda has been focused on becoming an agile, research and development driven, global
pharmaceutical company that is well positioned to deliver highly innovative medicines andtransformative care to patients around the world. Takeda believes that it has successfully strengthened
its reputation through its world-class products and innovation, while remaining true to its values. In50addition to Takeda’s efforts to enhance its research and development capabilities, Takeda has a strong
track record of successful cross-border merger and acquisition activities and post-acquisition
integration, including its acquisition of ARIAD in 2017, Nycomed A/S in 2011 and Millennium
Pharmaceuticals, Inc. in 2008. In July 2018, Takeda acquired TiGenix NV, an advanced
biopharmaceutical company developing novel stem cell therapies for serious medical conditions, withthe aim to bring new treatment options to patients with gastrointestinal disorders. Takeda also enteredinto more than 50 collaborations with third parties during the fiscal year ended March 31, 2018 to help
strengthen its pipeline. With the Acquisition, Takeda is pursuing the next major step in its development
into a global pharmaceuticals company.
9.1

Business overview
Takeda is a global pharmaceutical company with an innovative portfolio, engaged primarily in the
research, development, production and marketing of pharmaceutical products. It has a diversified
global business base operating in more than 70 countries and its prescription drugs are marketedin approximately 100 countries. Takeda develops and markets pharmaceutical products to treata broad range of medical conditions including GI diseases, cancer, neurological and psychiatricdiseases, and other medical conditions, including diabetes and hypertension, as well as
vaccines. In the fiscal year ended March 31, 2017, Takeda had the highest global sales ofprescription drugs among Japanese pharmaceutical companies.
Takeda is focusing on three key priorities in the mid-term: growing its portfolio, strengthening its
pipeline and boosting its profitability. Pursuing portfolio growth involves a focus on Takeda’s
expected key growth drivers, namely the three key therapeutic areas of GI, oncology andneuroscience, as well as emerging markets. This also includes further strengthening of Takeda’s
specialty capabilities, while at the same time working to optimise its portfolio through targeted
acquisitions and selected disposals of non-core assets.
Takeda’s three core therapeutic areas are GI, oncology and neuroscience. Its key growth driverproducts in these core therapeutic areas include ENTYVIO, TAKECAB, NINLARO, ADCETRIS,ICLUSIG, ALUNBRIG and TRINTELLIX. It also focuses on developing vaccines to address global
health needs.
In GI, Takeda’s principal products include:•

ENTYVIO, a treatment for moderate to severe ulcerative colitis and Crohn’s disease, anda product Takeda expects to be a driver for growth in the future. Sales of ENTYVIO havegrown strongly since its launch in 2014 to become Takeda’s top selling product in the fiscal
year ended March 31, 2018. In July 2018, Takeda obtained a new drug application (NDA)
approval for ENTYVIO for the treatment of patients with moderately to severely active
ulcerative colitis in Japan. ENTYVIO is now approved in more than 50 countries worldwide,
and Takeda continues to seek approval for ENTYVIO in additional countries. In the fiscal
year ended March 31, 2018, Takeda’s revenue from ENTYVIO was ¥201.4 billion.

•

PANTOPRAZOLE, a proton-pump inhibitor used to treat gastroesophageal reflux disease.
Takeda obtained this product in its acquisition of Nycomed A/S in 2011. PANTOPRAZOLE
is sold worldwide in a number of countries and regions, and while Takeda’s substancepatents have expired in several key markets, including the United States and the EU, it
continues to generate strong sales in emerging markets. In the fiscal year ended March
31, 2018, Takeda’s revenue from PANTOPRAZOLE was ¥65.8 billion.

•

DEXILANT, a treatment for erosive gastroesophageal reflux disease that was launched in
the United States in 2009. DEXILANT has also been approved in Europe and in a numberof emerging markets. In the fiscal year ended March 31, 2018, Takeda’s revenue from
DEXILANT was ¥65.7 billion.

•

TAKECAB, a treatment for acid-related diseases, and a product Takeda expects to be adriver for growth in the future. TAKECAB was launched in Japan in 2015 and has achieved51significant growth following the expiration of the prescription limitation period in March2016. In the fiscal year ended March 31, 2018, Takeda’s revenue from TAKECAB was¥55.1 billion.
•

AMITIZA, a treatment for constipation that was launched in the United States in 2006.
AMITIZA is in-licensed from Sucampo Pharmaceuticals, Inc., which became a wholly
owned subsidiary of Mallinckrodt plc in February 2018, and Takeda has the exclusive rights
to further develop and commercialise AMITIZA in all global markets, except Japan and thePeople’s Republic of China. In the fiscal year ended March 31, 2018, Takeda’s revenue
from AMITIZA was ¥33.8 billion.

In oncology, Takeda’s principal products include:•

LEUPRORELIN, a treatment for prostate cancer, breast cancer and endometriosis, that ismarketed in approximately 100 countries worldwide. In the fiscal year ended March 31,
2018, Takeda’s revenue from LEUPRORELIN was ¥114.4 billion.

•

VELCADE, a treatment for multiple myeloma and relapsed mantle cell lymphoma that is
approved in more than 90 countries worldwide. VELCADE is indicated in the United States,
Europe and Japan as a first-line treatment for multiple myeloma patients. Janssen
Pharmaceutical Companies have commercialisation rights outside the United States andpay royalties to Takeda on VELCADE sales in their territories. In the fiscal year ended
March 31, 2018, Takeda’s revenue from VELCADE was ¥113.7 billion in the United Statesand it recognised ¥23.6 billion from sales outside the United States. Following the
expiration of patent protection over its active ingredient in 2017, generic versions of
VELCADE have been introduced.

•

NINLARO, the first oral proteasome inhibitor for the treatment of multiple myeloma, and a
product Takeda expects to be a driver for growth in the future. NINLARO has experienced
a strong uptake in sales since launching in the United States in 2015. Due to its efficacy
and safety profile and convenient orally administered dosing of one capsule per week,
Takeda believes NINLARO has significant potential to improve treatment outcomes in
multiple myeloma by extending therapy duration. Takeda believes NINLARO has thepotential to become a broadly-used treatment for multiple myeloma. NINLARO wasapproved in the EU in 2016 and in Japan in 2017, and Takeda is seeking marketing
authorisation in a number of additional countries. In the fiscal year ended March 31, 2018,
revenue from NINLARO was ¥46.4 billion.

•

ADCETRIS, an anti-cancer agent used to treat Hodgkin’s lymphoma and systemic
anaplastic large cell lymphoma, and a product Takeda expects to be a driver for growth in
the future. ADCETRIS was launched in the United States, the EU and Japan in 2011, 2012
and 2014, respectively. ADCETRIS has received marketing authorisation by regulatory
authorities in more than 60 countries worldwide. Takeda jointly develops ADCETRIS with
Seattle Genetics, Inc. and has commercialisation rights in countries outside the UnitedStates and Canada. Takeda believes that ADCETRIS has the potential to become acornerstone in the treatment of malignancies with the presence of CD30, a key driver ofclassical Hodgkin’s lymphoma tumour pathogenesis, and it is working to expand the target
patient population with new indications. In the fiscal year ended March 31, 2018, Takeda’s
revenue from ADCETRIS was ¥38.5 billion.

•

ICLUSIG, a treatment for chronic myeloid leukaemia and Philadelphia chromosome
positive acute lymphoblastic leukaemia, and a product Takeda expects to be a driver for
growth in the future. ICLUSIG was developed by ARIAD and is approved in the UnitedStates, the EU, Australia, Switzerland, Israel, Canada and Japan. In the fiscal year ended
March 31, 2018, Takeda’s revenue from ICLUSIG was ¥23.1 billion.

52

•

ALUNBRIG, an orally administered small molecule anaplastic lymphoma kinase inhibitor
used to treat non-small cell lung cancer, and a product Takeda expects to be a driver for
growth in the future. ALUNBRIG was developed by ARIAD. ALUNBRIG was granted
accelerated approval in the United States in April 2017, and is currently under regulatory
review in the EU. Takeda believes ALUNBRIG has the potential to be the best-in-classanaplastic lymphoma kinase inhibitor, and it is conducting studies that aim to broaden
ALUNBRIG’s approved indications. In the fiscal year ended March 31, 2018, Takeda’s
revenue from ALUNBRIG was ¥2.8 billion.

In neuroscience, Takeda’s principal product is:•

9.2

TRINTELLIX, an antidepressant indicated for the treatment of major depressive disorderin adults, and a product Takeda expects to be a driver for growth in the future. TRINTELLIX
was co-developed with H. Lundbeck A/S, and was launched in 2014 in the United States.
Takeda has commercialisation rights in the United States and Japan (although
TRINTELLIX has not yet been launched in Japan). In 2016, the drug was renamed from
BRINTELLIX to TRINTELLIX in the United States to avoid name confusion with anotherunrelated treatment. In the fiscal year ended March 31, 2018, Takeda’s revenue from
TRINTELLIX was ¥48.4 billion in the United States.

Sales and marketing
Takeda organises its sales channels under five regional business units, United States, Japan
Pharma, Emerging Markets, EUCAN and Japan Consumer Healthcare, and two global specialty
business units, Oncology and Vaccines.
Takeda’s regional business units, United States, Japan Pharma, Emerging Markets and EUCAN,
are focusing on investments that support growth potential in the market and enhance efficiency.
Takeda’s primary sales and marketing activities are organised around these four business units.
The US business unit focuses on recently approved products in the United States, the largest
pharmaceutical market in the world. It has a specialised sales force to support ENTYVIO to better
meet the needs of those who treat and manage inflammatory bowel disease, as well as a general
medicine sales force, and added a dedicated neuroscience sales team to support TRINTELLIX
to reach psychiatrists who treat major depressive disorder.
The Japan Pharma business unit focuses on retaining Takeda’s position as one of the leading
pharmaceutical companies in its home market of Japan, where the government is driving stricter
control of drug prices and promoting the penetration of generics.
The Emerging Markets business unit makes focused investments in order to maximise growthpotential in areas across Asia Pacific, Greater China, Latin America, Near East, Middle East &Africa and Russia/Commonwealth of Independent States. Established Products, or branded
generics (also referred to as Value Brands in the Emerging Markets), are valued by Takeda’s
customers as quality medicine, and innovative products such as ENTYVIO, NINLARO andADCETRIS are also crucial for Emerging Markets, as Takeda expects these key growth drivers
to exhibit strong growth in the coming years.
The EUCAN business unit continues to grow the business with a more specialised approach in
the European and Canadian markets, where public insurance has set a higher bar for the
reimbursement of medicines, requiring innovation and differentiation for the products to be
reimbursed. As Canada’s health insurance system is very similar to that of Europe, the Canadianmarket is managed by the EUCAN business unit.

9.3

Property, plant and equipment
Takeda’s head offices are located in Osaka, Japan and Tokyo, Japan. Takeda generally owns its
facilities or has entered into long-term lease arrangements for them.

53

As of March 31, 2018, the net book values of the buildings and structures, land, machinery andvehicles and tools, furniture and fixtures Takeda owned were ¥293.6 billion, ¥69.7 billion, ¥99.0
billion and ¥19.6 billion, respectively. Takeda owns the substantial majority of its facilities, noneof which is subject to any material encumbrance. The following table describes Takeda’s major
facilities as of March 31, 2018:
Group Company––––––––––––Name of facility (location)––––––––––––––––––––

Type of facility––––––––––––

Takeda Pharmaceutical
Company Limited

Head Office (Chuo-ku, Osakaand other)

Administrative and sales

Takeda Pharmaceutical
Company Limited

Global Head Office (Chuo-ku,
Tokyo)

Administrative and sales

Takeda Pharmaceutical
Company Limited

Osaka Plant (Yodogawa-ku,
Osaka)

Manufacturing, Research &Development

Group Company––––––––––––Name of facility (location)––––––––––––––––––––

Type of facility––––––––––––

Takeda Pharmaceutical
Company Limited

Hikari Plant (Hikari, Yamaguchi)

Manufacturing, Research &Development

Takeda Pharmaceutical
Company Limited

Shonan Research Center(Fujisawa, Kanagawa)Research

Takeda Real Estate Co.,
Ltd.

Takeda Midosuji Building andothers (Chuo-ku, Osaka)

Lease facilities

Nihon PharmaceuticalCo., Ltd.

Osaka Plant and other(Izumisano, Osaka)

Manufacturing, Research &Development

Takeda Healthcare
Products Co., Ltd.

Head Office Plant (Fukuchiyama,
Kyoto)

Manufacturing

Millennium
Pharmaceuticals, Inc.

Head Office Plant and otherproperties (Cambridge,
Massachusetts, US)

Research & Development

Takeda Ireland Limited

Manufacturing
Head Office Plant and otherproperties (Kilruddery and Dublin,
Ireland)

Takeda Pharmaceuticals Head Office (Deerfield, Illinois,
U.S.A., Inc.
US)
10.

Administrative and sales

Permitted Dividends and dividend policy

10.1 Permitted Dividends
Under the terms of the Acquisition, Takeda has agreed that Shire Shareholders will be entitled toreceive any dividends announced, declared, made or paid by Shire, in each case in the ordinary
course (including as to amount and on usual biannual declaration, record and payment dates),in respect of any completed six-month period ending June 30 and December 31 before theEffective Date. Such dividends shall not exceed:(a)34.51 US$ cents per Shire Share for the six-month period ending December 31, 2018(such that the total for the 12-month period ending December 31, 2018 does not exceed
40.11 US$ cents per Shire Share);(b)

in respect of any subsequent six-month period ending June 30, an amount representing
not more than 110 per cent. of the dividend per Shire Share paid in respect of thesix-month period ending June 30, 2018; and(c)in respect of any subsequent six-month period ending December 31, an amount, whentaken in aggregate with any amount paid for the six-month period ending June 30 in the54

same financial year, representing not more than 115 per cent. of the total dividend per
Shire Share paid in respect of the year ending December 31, 2018,(each dividend that is permissible under these criteria being a “Permitted Dividend”), without
any consequential reduction in the Consideration payable by Takeda in respect of each Shire
Share (including such Shire Shares underlying the Shire ADSs) under the Acquisition.
If any dividend and/or other distribution or return of capital is announced, declared, made or paidby Shire in respect of Shire Shares after the date of the Rule 2.7 Announcement and before theEffective Date, other than a Permitted Dividend, or in excess of a Permitted Dividend, Takeda
reserves the right to reduce the Consideration payable in respect of each Shire Share (including
such Shire Shares underlying the Shire ADSs) under the Acquisition: (i) in the case of an amountin excess of a Permitted Dividend, by an amount equivalent to all or any part of such excess; or(ii) in the case of a dividend and/or other distribution or return of capital which is not a Permitted
Dividend, by the amount of all or part of any such dividend, distribution or return of capital.
On October 19, 2018, Shire paid an interim dividend of 5.60 US$ cents per Shire Share in respectof the six-month period ended June 30, 2018. Takeda has confirmed that such amountconstituted a Permitted Dividend.
10.2 Takeda dividend policy
Takeda’s capital resource management is based on the four following focus areas:•

investments in its internal research and development pipeline, foundational technology
and ability to develop and bring to market new products;•

dividends as an important tool for returning capital to shareholders, while emphasising
capital gains for shareholders through increased corporate value;•

the maintenance of an investment grade credit rating; and•disciplined alliances and acquisitions to strengthen its business around its key therapeuticareas.

Takeda’s dividend policy has remained consistent over the past nine years, with an annual
dividend of JPY 180 per share having been paid to Takeda Shareholders. Following completionof the Acquisition, Takeda’s well-established dividend policy will continue to be a key componentof future shareholder returns.
11.

Offer-related arrangements

11.1 Confidentiality Agreement
Takeda and Shire have entered into a mutual confidentiality agreement dated April 22, 2018
pursuant to which each of Takeda and Shire has undertaken, among other things, to keep
information relating to the other party confidential and not to disclose it to third parties (other thanto permitted disclosees) unless required by law or regulation.
The mutual confidentiality agreement also contains undertakings from both Shire and Takeda thatfor a period of 18 months from the date of the Confidentiality Agreement, subject to certain
exceptions, neither Takeda nor Shire will approach or solicit the other’s directors, officers, senior
managers and certain of their other employees.
11.2 Confidentiality and Joint Defense Agreement
Takeda, Shire and their respective legal counsels have also entered into a confidentiality and joint
defense agreement dated April 30, 2018, the purpose of which is to ensure that the exchange
and/or disclosure of certain materials relating to the parties and in relation to, in particular, theanti-trust workstream only takes place between their respective legal counsels and external55

experts, and does not diminish in any way the confidentiality of such materials and does not
result in a waiver of any privilege, right or immunity that might otherwise be available.
11.3 Clean Team Confidentiality Agreement
Takeda and Shire have entered into a clean team confidentiality agreement dated April 30, 2018,
which sets out how any confidential information that is competitively sensitive can be disclosed,
used or shared for the purposes of due diligence, synergies evaluation, integration planning andregulatory clearance. Such commercially sensitive information must only be made available tothe party receiving information through designated persons removed from day-to-day
commercial/strategic operations and decisions and external professional advisers. The findingsof such designated persons and the external advisers may only be relayed to other employees,
officers and directors of the receiving party in specified circumstances and subject to certain
restrictions.
11.4 Co-operation Agreement
A summary of the terms of the Co-operation Agreement is included in paragraph 9.1 of Part VIII
(Additional Information) of this document.
As part of the Co-operation Agreement, Takeda has undertaken that if, at or before terminationof the Co-operation Agreement:(a)the Takeda Board withdraws or adversely modifies, adversely qualifies or fails to provide,or fails to reaffirm (when reasonably requested by Shire to do so) its recommendation that
the Takeda Shareholders vote in favour of the New Takeda Share Resolution (including
before publication of the Takeda Shareholder Documents, their intention to do so) andeither Takeda or Shire serves notice to terminate the Co-operation Agreement, Takeda will
pay to Shire an amount in cash in US Dollars (rounded down to the nearest US Dollar)
equal to two per cent. of the product of £48.17 (being the equivalent value of the cash andTakeda Shares to be delivered per Shire Share, as set out in the Rule 2.7 Announcement)
multiplied by 937,925,528 (being the issued and to be issued ordinary share capital of
Shire, as set out in the Rule 2.7 Announcement) and converted using an exchange rate of£:$ of 1:1.3546;(b)

the New Takeda Share Resolution is not passed at the Takeda Extraordinary General
Meeting and either Takeda or Shire serves notice to terminate the Co-operation
Agreement, Takeda will pay to Shire an amount in cash in US Dollars (rounded down to
the nearest US Dollar) equal to one per cent. of the product of £48.17 (being the equivalentvalue of the cash and Takeda Shares to be delivered per Shire Share, as set out in theRule 2.7 Announcement) multiplied by 937,925,528 (being the issued and to be issued
ordinary share capital of Shire, as set out in the Rule 2.7 Announcement) and converted
using an exchange rate of £:$ of 1:1.3546; or(c)on or before the Long Stop Date, the Scheme (or Takeover Offer, as the case may be)lapses or is withdrawn as a result of Takeda invoking and being permitted by the Panel toinvoke any Regulatory Condition, or Takeda not waiving a Regulatory Condition that is notsatisfied, or if the European Commission on or before such date initiates a Phase 2 review
under the EU Merger Regulation or a similar event has occurred in a Member State of theEU, Takeda will pay to Shire an amount in cash in US Dollars (rounded down to the nearest
US Dollar) equal to 1.5 per cent. of the product of £48.17 (being the equivalent value ofthe cash and Takeda Shares to be delivered per Shire Share, as set out in the Rule 2.7
Announcement) multiplied by 937,925,528 (being the issued and to be issued ordinary
share capital of Shire, as set out in the Rule 2.7 Announcement) and converted using an
exchange rate of £:$ of 1:1.3546.

No break fee will be payable if the Co-operation Agreement has already terminated before theoccurrence of the relevant break fee trigger. If more than one of the foregoing break fee triggers

56

occurs before such termination, Takeda will pay the highest break fee applicable to such triggers.
In no event shall Takeda be required to pay more than one of the break fee amounts describedabove.
In addition, the regulatory break fee referred to in paragraph (c) above will not be payable if:(A)

Shire has obstructed Takeda from being able to agree and implement, in time to avoid abreak fee trigger, any remedy offered by Takeda to, or imposed by, a Relevant Authority inconnection with the satisfaction of a Regulatory Condition by withholding information or
failing to co-operate with reasonable requests made by Takeda in connection with any
such remedy, provided that Takeda is not in breach of certain of its obligations under the
Co-operation Agreement and such remedy is to be implemented conditional upon the
Effective Date; or(B)the break fee trigger referred to in paragraph (c) above is caused to a material extent by
Shire undertaking, after the date of the Co-operation Agreement, an acquisition of any
interest in shares, businesses or assets that would reasonably be expected to result in the
break fee being triggered without Takeda’s prior written consent.

11.5 Master Framework and Custody Agreement
Takeda, Shire (acting as the Representative), the Receiving Agent, the Fiduciary, the Takeda
Depositary, the Global Custodian and Nomura Securities, Co., Ltd have entered into a Master
Framework and Custody Agreement dated November 12, 2018, pursuant to which the parties
have agreed to implement the arrangements and take the steps required to facilitate thesettlement procedure for the New Takeda Securities described in paragraph 20 of this Part II. The
obligations of Shire under the Master Framework and Custody Agreement are conditional upon
the Scheme becoming Effective and the issue of the New Takeda Shares becoming effective
under the Japanese Companies Act.
The Master Framework and Custody Agreement sets out, in particular, the framework for: (i) the
creation and ongoing operation of the Settlement Account; (ii) the processing and actioning of
Securities Elections, including those received within three months of the Effective Date; and(iii) the process for sales of the Fractional Shares, the New Takeda Shares pursuant to the
Dealing Facility, any New Takeda Shares remaining in the No Action Sub-Account at the end of
the period falling three months after the Effective Date and any New Takeda Shares remaining
held through the Corporate Nominee Facility at the end of the period falling two years after the
Effective Date, including the parameters of the Sales Policy.
11.6 Shire Depositary Instruction Letter
Takeda, Shire, the Takeda Depositary, the Shire Depositary and the Receiving Agent haveentered into an Instruction Letter dated November 12, 2018, pursuant to which the parties haveagreed to implement the arrangements and take the steps required to facilitate the settlement
procedure for the cash portion of the Consideration and the New Takeda ADSs to which the Shire
Depositary is entitled, as further described in paragraph 5 of Part X (Further information for ShireADS Holders).
The Shire Depositary Instruction Letter supplements the terms of the Shire Deposit Agreement
and sets out, in particular, the framework for: (i) the solicitation of the votes by the Shire
Depositary from the Shire ADS Holders in respect of the Court Meeting and Shire General
Meeting; (ii) the delivery to each Shire ADS Holder of their pro rata entitlement to theConsideration received by the Shire Depositary (in respect of the Shire Shares which underlie
the Shire ADSs at the Scheme Record Time) in exchange for their Shire ADSs; (iii) the payment
by Shire to the Shire Depositary of fees arising from Shire ADS Holders presenting their Shire
ADSs to the Shire Depositary for cancellation between 8.00 a.m. (New York time) on
December 4, 2018 and 5.00 p.m. (New York time) on December 26, 2018; (iv) the payment by
Shire to the Shire Depositary of fees arising in relation to the distribution of the cash portion of57

the Consideration to Shire ADS Holders; and (v) certain other ancillary matters (including in
relation to the fees and expenses of the Shire Depositary).
12.

Shire Share Plans

Participants in the Shire Share Plans will be contacted separately regarding the effect of the Schemeon their rights under the Shire Share Plans and with the details of Takeda’s proposals and with further
details in respect of the below. A summary of the effect of the Scheme on awards/options/stock
appreciation rights under the Shire Share Plans (“Awards”) is set out below.
The Scheme will apply to any Shire Shares which are unconditionally allotted, issued or transferred tosatisfy the vesting or exercise of Awards under the Shire Share Plans before the Scheme Record Time.
Any Shire Shares allotted, issued or transferred to satisfy the exercise of Awards under the Shire SharePlans after the Scheme Record Time will, subject to the Scheme becoming Effective and the proposed
amendments to the Shire Articles being approved at the Shire General Meeting, be immediatelytransferred to Takeda in exchange for a cash amount of a value equal to the value of the sameconsideration that Shire Shareholders will be entitled to receive under the Scheme.
Further information in respect of the proposed amendments to the Shire Articles is contained in the
Notice of Shire General Meeting at Part XIII (Notice of Shire General Meeting) of this document.
12.1 Shire Long Term Incentive Plan 2015 (the “LTIP”)
Awards granted under the LTIP which would not otherwise vest and/or (in the case of stock
appreciation rights) have been exercisable prior to the Court Sanction Hearing will (inconsequence of the Acquisition and in accordance with participants’ contractual rights under theLTIP) vest on the date of the Court Sanction Hearing to the extent permitted under the LTIP rules.
Awards granted in the form of stock appreciation rights will (unless they lapse earlier inaccordance with the rules of the LTIP) remain exercisable in the 60-day period following the dateof the Court Sanction Hearing. The extent to which Awards under the LTIP vest will be determinedby applying the time pro-rating formula set out in the LTIP rules and, in respect of those Awards
subject to performance conditions, taking into account the extent to which the ShireRemuneration Committee, in its absolute discretion, determines that applicable performance
conditions have been achieved. Awards vesting/exercised on or after the Court Sanction Hearing
will be settled in cash in lieu of Shire Shares or Shire ADSs.
If a participant holds a stock appreciation right with an exercise price that is equal to or exceeds
the value of the Shire Shares or Shire ADSs subject to their Award on the date of the Court
Sanction Hearing and the participant attempts to exercise their stock appreciation right on thatdate, they will be deemed to have forfeited their right to their stock appreciation right in return fora cash compensation payment.
Any participant whose Award lapses on the Court Sanction Hearing (following application of
performance conditions, if relevant) due to time pro rating will be granted a transitional cash
award by Takeda. The vesting schedule applicable to this award will mirror the vesting schedulethat applied to the original award, save that it may vest earlier in certain leaver circumstances.
12.2 Shire Deferred Bonus Plan 2015 (the “DBP”)
Awards granted under the DBP which would not otherwise vest prior to the Court Sanction
Hearing will (in consequence of the Acquisition and in accordance with participants’ contractual
rights under the DBP) vest in full on the date of the Court Sanction Hearing. Awards in the formof restricted stock units vesting on the Court Sanction Hearing will be settled in cash in lieu ofShire Shares or Shire ADSs. Shire ADSs subject to Awards in the form of restricted stock awards
will participate in the Scheme (on the same terms as other Shire ADSs).

58

12.3 Shire Global Employee Stock Purchase Plan (the “GESPP”)
Options granted under the GESPP were exercised on their normal exercise date in accordancewith the rules of the GESPP prior to the date of this document. Consequently, no options granted
under the GESPP are outstanding and no further grants are expected prior to the date of the
Court Sanction Hearing.
12.4 Shire Portfolio Share Plan (the “PSP”)
Awards granted in the form of stock appreciation rights under the PSP will, unless they lapse
earlier, remain exercisable in the 12-month period following the date of the Court Sanction
Hearing. The PSP will be amended to allow stock appreciation rights to be settled in cash in lieu
of Shire Shares or Shire ADSs and the Shire Remuneration Committee has resolved thatexercises on or after the Court Sanction Hearing will be settled in cash in lieu of Shire Shares orShire ADSs.
If a participant holds a stock appreciation right with an exercise price that is equal to or exceeds
the value of the Shire Shares or Shire ADSs subject to their Award on the date of the Court
Sanction Hearing and attempts to exercise their stock appreciation right on that date, they will bedeemed to have forfeited their right to their stock appreciation right in return for a cash
compensation payment.
12.5 Shire Sharesave Scheme 2008 and the Shire UK Sharesave Plan 2015 (together, the “UK
Sharesave”)
Awards granted under the UK Sharesave which would not otherwise have been exercisable prior
to the Effective Date will (in consequence of the Acquisition and in accordance with participants’contractual rights under the UK Sharesave) be exercisable to the extent permitted under the
UK Sharesave rules on and from the Effective Date and until the expiry of the date falling six
months after the Effective Date (unless their Award lapses earlier under the rules of the
UK Sharesave). Any Awards exercised on the Court Sanction Hearing will not be settled until
after the Effective Date, meaning that where Awards are exercised on and from the Court
Sanction Hearing, the Shire Shares issued to satisfy such exercises will be transferred to Takeda
in accordance with the Shire Articles (if amended) as described above.
Takeda will make (or procure that Shire will make), within 45 Business Days following the date ofissue of the relevant Shire Shares, a one-off cash payment to the participants under the
UK Sharesave who exercise their Awards on or after the Effective Date, of an amount equal tothe amount of income tax that each participant may incur on exercise as a result of theAcquisition, grossed up to reflect tax and social security contributions. The gross payment would
be subject to deductions for income tax and employee social security contributions.
12.6 Shire Irish Employee Stock Purchase Plan 2008 and the Shire Irish Sharesave Plan 2015
(together, the “Irish Sharesave”)
Awards granted under the Irish Sharesave which would not otherwise have been exercisable
prior to the Court Sanction Hearing will (in consequence of the Acquisition and in accordance withparticipants’ contractual rights under the Irish Sharesave) be exercisable to the extent permitted
under the Irish Sharesave rules on and from the date of the Court Sanction Hearing and until the
expiry of the date falling six months after the date of the Court Sanction Hearing (unless theirAward lapses earlier under the rules of the Irish Sharesave). Any Awards exercised on the Court
Sanction Hearing will not be settled until after the Effective Date, meaning that where Awards are
exercised or settled on and from the Effective Date, the Shire Shares issued to satisfy such
exercises will be transferred to Takeda in accordance with the Shire Articles (if amended) as
described above.
Takeda will make (or procure that Shire will make), within 45 Business Days following the date ofissue of the relevant Shire Shares, to the participants under the Irish Sharesave who exercise
their Awards on or after the date of the Court Sanction Hearing, a one-off cash payment of an59amount equal to the amount of income tax that each participant may incur on exercise as a resultof the Acquisition, grossed up to reflect tax and social security contributions. The gross payment
would be subject to deductions for income tax and employee social security contributions.
12.7 Baxalta Incorporated 2015 Incentive Plan and the Governing Terms of the SubstituteAwards (the “Baxalta Scheme”)
Awards granted under the Baxalta Scheme will (in consequence of the Acquisition and inaccordance with participants’ contractual rights under the Baxalta Scheme) be cancelled on thedate of the Court Sanction Hearing in return for a cash payment of a value equal to the value ofthe Shire Shares/Shire ADSs underlying such Awards, determined as though all Awards had
vested in full and, in the case of options, been exercised immediately at the time of payment.
Options that are underwater will be cancelled for no consideration, in accordance with the rulesof the Baxalta Scheme.
12.8 Shire deferred equity award to A. Busch (the “DEA Award”)
The DEA Award is expected to (in consequence of the Acquisition and in accordance with Mr
Busch’s contractual rights under the DEA Award) lapse on the date of the Court Sanction
Hearing. To the extent it so lapses, Mr Busch will be granted a transitional cash award by Takeda
over a cash amount equal in value to the Shire Shares subject to the DEA Award that lapsed.
This award will vest on the same timetable that applied to the original award, save that it may
vest earlier in certain leaver circumstances.
13.

Shire Directors and the effect of the Scheme on their interests

Details of the interests of the Shire Directors in the share capital of Shire (including Shire ADSs), andawards/stock appreciation rights/options in respect of such share capital, are set out in paragraphs 5.2
and 5.3 of Part VIII (Additional Information) of this document. Shire Shares (including Shire Shares
underlying Shire ADSs) held by the Shire Directors are subject to the Scheme.
Particulars of the service contracts (including termination provisions) and letters of appointment of the Shire
Directors are set out in paragraph 7 of Part VIII (Additional Information) of this document. Details of the
Executive Director Retention Arrangements are set out in paragraph 6.7 of this Part II, and the treatment of
the Shire Directors’ interests under the Shire Share Plans are set out in paragraph 12 of this Part II.
As set out in paragraph 6.7 of this Part II, Dr Flemming Ornskov (CEO of Shire) and Mr Thomas Dittrich(CFO of Shire) will each be entitled to receive a cash payment equivalent to 200 per cent. of theirrespective annual salaries and target bonuses for the financial year ending December 31, 2018, which,in each case, will be payable, subject to completion of the Acquisition, on the earlier of their ceasing
employment, June 30, 2019 and the date falling six months after completion of the Acquisition andprovided that the relevant executive is in employment on that payment date (subject to customary
exceptions and conditions). The total value of such arrangements is $9.1 million.
Subject to the relevant approval of Takeda Shareholders, three Shire Directors (Olivier Bohuon, Ian
Clark and Steven Gillis) will join the Takeda Board with effect from completion of the Acquisition. It has
not yet been determined whether any of the other Shire Directors will have any ongoing role with the
Combined Group following completion of the Acquisition, but, in any event, such Shire Directors are notstanding for election to the Takeda Board.
Except as referred to above, the effect of the Scheme on the interests of the Shire Directors does notdiffer from the effect of the Scheme on the interests of any other holder of Shire Shares (other than the
Excluded Shares) on the register of members of Shire at the Scheme Record Time.
14.

Irrevocable undertakings

Takeda has received irrevocable undertakings from each of the Shire Directors to vote in favour of the
Scheme at the Court Meeting and the Special Resolution to be proposed at the Shire General Meeting60

in respect of a total of 371,599 Shire Shares (including such Shire Shares underlying Shire ADSs),
representing approximately 0.041 per cent. of the issued ordinary share capital of Shire in issue on theLatest Practicable Date.
Shire has received irrevocable undertakings from each of the Takeda Directors, who hold Takeda
Shares to vote in favour of the Takeda Resolutions, as referred to in paragraph 8 of Part I (Letter fromthe Chairman of Shire plc), at the Takeda Extraordinary General Meeting in respect of a total of 185,896
Takeda Shares, representing approximately 0.02 per cent. of the issued ordinary share capital of
Takeda on the Takeda Voting Record Date.
Further details of these undertakings, including details of the circumstances in which they will cease to
be binding, are set out in paragraph 6 of Part VIII (Additional Information) of this document.
15.

Description of the Scheme and the Shire Meetings

15.1 Introduction
The Acquisition is being implemented by way of a Court-sanctioned scheme of arrangement of
Shire under Article 125 of the Jersey Companies Law. The provisions of the Scheme are set out
in full in Part III (The Scheme of Arrangement) of this document.
The Scheme is a legal process under the Jersey Companies Law, the purpose of which is toenable Takeda to become the owner of the entire issued and to be issued ordinary share capitalof Shire (other than the Excluded Shares). In order to achieve this, it is proposed that all such
Shire Shares at the Scheme Record Time will be transferred to Takeda, in consideration for which
the holders of Shire Shares whose names appear on the register of members of Shire at the
Scheme Record Time will be entitled (subject to certain terms and conditions) to receive cash
consideration and either New Takeda Shares or New Takeda ADSs on the basis set out inparagraph 19 of this Part II.
After the Scheme Record Time, entitlements to Shire Shares held within the CREST system will
be suspended. Once the Scheme becomes Effective, share certificates in respect of Shire
Shares will cease to be valid and every Shire Shareholder will be bound at the request of Shireto deliver up their share certificate(s) to Shire (or any person appointed by Shire to receive thesame) or to destroy the same.
Any Shire Shares issued before the Scheme Record Time (other than any Excluded Shares) will
be subject to the terms of the Scheme.
In order for the Scheme to become Effective:(a)the Scheme must be approved by a majority in number representing not less than75 per cent. of the voting rights of Shire Shareholders (other than holders of Excluded
Shares) who are on the register of members of Shire at the Voting Record Time and whoare present and voting (and entitled to vote), whether in person or by proxy, at the Court
Meeting and at any separate class meeting which may be required (or any adjournment
thereof);(b)

the Special Resolution must be approved at the Shire General Meeting by Shire
Shareholders representing at least 75 per cent. of the votes cast (either in person or byproxy) at the Shire General Meeting;(c)the New Takeda Share Resolution must be duly passed by Takeda Shareholders
representing at least two-thirds of the Takeda Shares voted at the Takeda Extraordinary
General Meeting (the quorum for which is one-third of the then outstanding voting rights of
Takeda);61

(d)all the Conditions to the Acquisition must be satisfied or, where relevant, waived (further
details of the Conditions are set out in Part IV (Conditions to, and further terms of, theimplementation of the Scheme and the Acquisition) of this document);(e)

the Court must sanction the Scheme at the Court Sanction Hearing and issue the Court
Order; and(f)a copy of the Court Order must be delivered to the Registrar of Companies for registration.

Once the Scheme becomes Effective, it will be binding on all holders of Shire Shares(other than the Excluded Shares) at the Scheme Record Time, including those who did notattend the Shire Meetings or vote to approve the Scheme, or who voted against the
Scheme, at the Court Meeting and/or the Special Resolution at the Shire General Meeting.
15.2 The Shire Meetings
Before the Court is asked to sanction the Scheme, the Scheme requires the approval of Shire
Shareholders entitled to vote at the Court Meeting and the passing of the Special Resolution by
Shire Shareholders at the Shire General Meeting.
Notices of the Court Meeting and the Shire General Meeting are set out in Part XII (Notice of
Court Meeting) and Part XIII (Notice of Shire General Meeting) of this document, respectively.
The Court Meeting and the Shire General Meeting will be held at Block 3, Miesian Plaza, 50-58
Baggot Street Lower, Dublin 2, Ireland.
15.3 The Court Meeting
The Court Meeting, which has been convened for 11.15 a.m. (London time) on December 5,
2018, is being held at the direction of the Court to seek the approval of Shire Shareholders
entitled to vote for the Scheme.
At the Court Meeting, voting will be by way of poll and each Shire Shareholder present (andentitled to vote), in person or by proxy, will be entitled to one vote for each Shire Share held. Inorder for the resolution to be passed, it must be approved by a majority in number of Shire
Shareholders representing not less than 75 per cent. of the voting rights of Shire Shareholders(other than holders of Excluded Shares) who are on the register of members of Shire at the
Voting Record Time and who are present and voting (and entitled to vote), whether in person orby proxy, at the Court Meeting (and at any separate class meeting which may be required (or any
adjournment thereof)).
It is important that, for the Court Meeting, as many votes as possible are cast so that the
Court may be satisfied that there is a fair and reasonable representation of Shire
Shareholder opinion. You are therefore strongly urged to complete, sign and return yourForms of Proxy (or appoint a proxy online or through the CREST electronic proxyappointment service) or ADS Voting Card, or to give voting instructions through yourbroker or other securities intermediary, as soon as possible.
You will find the Notice of the Court Meeting in Part XII (Notice of Court Meeting) of thisdocument.
15.4 The Shire General Meeting
The Shire General Meeting has been convened for 11.30 a.m. (London time) on December 5,
2018, or as soon thereafter as the Court Meeting has concluded or been adjourned, to consider
and, if thought fit, pass the Special Resolution to:(a)authorise the Shire Directors to effect the Scheme;

62

(b)

approve certain amendments to the Shire Articles to ensure that, subject to the Scheme
becoming Effective, any Shire Shares issued to any person (including any participant in
the Shire Share Plans) (other than to Takeda, any member of the Takeda Group and/or
their respective nominees) on or after the Scheme Record Time will be compulsorily
acquired by, or to the order of, Takeda, in consideration for (subject to certain terms andconditions) a cash amount of a value equal to the value of the consideration that Shire
Shareholders will be entitled to receive under the Scheme; and(c)appoint Shire, or such other person as may be appointed by Shire, conditional upon andwith effect from the time and date at which the Scheme is sanctioned by the Court, as theagent of all Shire Shareholders at the Scheme Record Time for the purposes ofundertaking any and all matters and procedures necessary or desirable to be undertaken
pursuant to Japanese law (including in particular under Articles 203 and 204 of theJapanese Companies Act) in connection with the issue and settlement of the New Takeda
Shares pursuant to the Scheme.

The proposed amendments to the Shire Articles referred to above are set out in full in the Noticeof the Shire General Meeting in Part XIII (Notice of Shire General Meeting) of this document.
At the Shire General Meeting, voting will be by way of poll and each Shire Shareholder present(in person or by proxy) will be entitled to one vote for each Shire Share held. In order for theSpecial Resolution to be passed, it must be approved by votes in favour representing at least
75 per cent. of the votes cast either in person or by proxy at the Shire General Meeting.
15.5 Entitlement to vote at the Shire Meetings
Each Shire Shareholder who is entered in Shire’s register of members at the Voting Record Timewill be entitled to attend and vote at the Court Meeting and the Shire General Meeting. If either
Shire Meeting is adjourned, only those Shire Shareholders on the register of members at
6.30 p.m. (London time) on the date falling two calendar days before the time appointed for the
adjourned Shire Meeting(s) will be entitled to attend and vote.
Any Shire Shares, or Shire Shares represented by Shire ADSs, which are registered in the nameof, or beneficially owned by, Takeda or any member of the Takeda Group or their respective
nominees constitute Excluded Shares and are therefore not entitled to be, and will not be, voted
or counted at the Court Meeting.
Shire Shareholders are entitled to appoint a proxy to attend, speak and, on a poll, vote insteadof him or her in respect of some or all of their Shire Shares and may also appoint more than one
proxy, provided that each proxy is appointed to exercise the rights attached to a different shareor shares held by such holder.
(a)

Online appointment of proxies
As an alternative to completing and returning the printed Forms of Proxy, proxies may be
appointed electronically by logging on to the following website: www.sharevote.co.uk andfollowing the instructions there. For an electronic proxy appointment to be valid, theappointment must be received by Equiniti no later than 11.15 a.m. (London time) on
December 3, 2018 for the Court Meeting and 11.30 a.m. (London time) on December 3,
2018 for the Shire General Meeting (or, in the case of adjournment(s), not later than
48 hours before the time appointed for the adjourned Shire Meeting(s)). Full details of theprocedure to be followed to appoint a proxy electronically are given on the website.
In the case of the Court Meeting only, if a holder of Shire Shares has not appointed a proxyelectronically by such time, then such holder may complete the BLUE Form of Proxy andhand it to a representative of Equiniti, or the Chairman of the Court Meeting, before thestart of the Court Meeting.

63

(b)

Electronic appointment of proxies through CREST
Shire Shareholders who hold Shire Shares in uncertificated form in CREST and wish to
appoint a proxy or proxies for the Shire Meetings (or any adjourned Shire Meeting) byusing the CREST electronic proxy appointment service may do so by using the procedures
described in the CREST Manual (please also refer to the accompanying notes to thenotices of the Shire Meetings set out in Part XII (Notice of Court Meeting) and Part XIII
(Notice of Shire General Meeting) of this document). CREST personal members or other
CREST sponsored members, and those CREST members who have appointed any voting
service provider(s), should refer to their CREST sponsor or voting service provider(s), whowill be able to take the appropriate action on their behalf.
Further information on the action to be taken is set out on pages 5 to 9 (inclusive) of thisdocument.

(c)

Sending Forms of Proxy by post or by hand
A BLUE Form of Proxy for the Court Meeting and a YELLOW Form of Proxy for the Shire
General Meeting accompany this document. To be valid, those Forms of Proxy must be
duly completed in accordance with the instructions printed on them and returned, either:(i) by post; or (ii) during normal business hours only, by hand, to Equiniti (Jersey) Limited,
c/o Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA,
United Kingdom, so as to be received as soon as possible and in any event not later than
the relevant time set out below:
BLUE Forms of Proxy for the Court Meeting

11.15 a.m. (London time) on
December 3, 2018

YELLOW Forms of Proxy for the Shire General Meeting

11.30 a.m. (London time) on
December 3, 2018

or, if in either case the relevant Shire Meeting is adjourned, the relevant Form of Proxy
should be received not later than 48 hours before the time appointed for the adjourned
Shire Meeting. A pre-paid envelope, for use in the United Kingdom only, is enclosed foryour convenience.
Shire Shareholders who wish to appoint more than one proxy in respect of their holding ofShire Shares should contact Equiniti for further Forms of Proxy or photocopy the Forms of
Proxy as required.
If the BLUE Form of Proxy for the Court Meeting is not returned by such time, it may behanded to a representative of Equiniti, on behalf of the Chairman of the Court Meeting, orto the Chairman of the Court Meeting, before the start of the Court Meeting. However, inthe case of the Shire General Meeting, the YELLOW Form of Proxy must be received by
Equiniti by the time mentioned above, or it will be invalid.
Completion and return of a Form of Proxy, or the appointment of a proxy electronicallyusing CREST (or any other procedure described below), will not prevent a Shire
Shareholder from attending, speaking and voting in person at either the Court Meeting or
the Shire General Meeting, or any adjournment thereof, if they wish and are entitled to doso.
(d)Attending in person
The completion and return of a Form of Proxy or the appointment of a proxy or proxies
through CREST or www.sharevote.co.uk will not prevent a Shire Shareholder from
attending and voting in person at either Shire Meeting or any adjournment thereof, if a
Shire Shareholder so wishes and is so entitled. In the event of a poll on which a Shire64

Shareholder votes in person, their proxy votes previously lodged with Equiniti, Shire or
www.sharevote.co.uk will be excluded.
15.6 Sanction of the Scheme by the Court
Before the Scheme can become Effective, the Court must sanction the Scheme at the Court
Sanction Hearing and issue the Court Order. The Court Sanction Hearing will be held at the Royal
Court of Jersey, Royal Court Building, St. Helier, Jersey JE1 1BA, Channel Islands. All Shire
Shareholders are entitled to attend and be heard at the Court Sanction Hearing in person or
through counsel to support or oppose the sanctioning of the Scheme by the Court.
It is expected that the Court Sanction Hearing will take place on January 3, 2019. If the expected
date of the Court Sanction Hearing is changed, Shire will give adequate notice of the changes by
issuing an announcement through a Regulatory Information Service and will furnish suchannouncement to the SEC on Form 8-K.
The Scheme will become Effective on delivery of a copy of the Court Order to the Registrar ofCompanies for registration.
If the Scheme becomes Effective:(a)it will be binding on all holders of Shire Shares (other than the Excluded Shares) on theregister of members of Shire at the Scheme Record Time irrespective of whether or notthey attended the Shire Meetings or voted in favour of, or against, the Scheme at the Court
Meeting or the Special Resolution at the Shire General Meeting;(b)share certificates in respect of Shire Shares will cease to be valid and every Shire
Shareholder shall be bound at the request of Shire to deliver up their share certificate(s)to Shire (or any person appointed by Shire to receive the same) or to destroy the same;
and

(c)

entitlements to Shire Shares held within the CREST system will be cancelled.

The Shire Shares will be acquired fully paid and free from all liens, charges, equitable interests,
encumbrances and rights of pre-emption and any other interests of any nature whatsoever andtogether with all rights attaching thereto.
If the Scheme does not become Effective on or before the Long Stop Date, it will lapse and theAcquisition will not proceed (unless the Panel (and, if applicable, the Court) otherwise consents).
The Scheme is governed by Jersey law and is subject to the jurisdiction of the Court. The
Scheme is subject to the applicable requirements of the Takeover Code, the Listing Rules, thePanel, the London Stock Exchange, the FCA, the UKLA and the Registrar of Companies.
15.7 Modifications to the Scheme
The Scheme contains a provision for Shire and Takeda to consent jointly on behalf of all persons
concerned, to any modification of, or addition to, the Scheme or to any condition approved or
imposed by the Court.
The Court would be unlikely to approve any modification of, or addition to, or impose a conditionon, the Scheme which might be material to the interests of Shire Shareholders unless Shire
Shareholders were informed of such modification, addition or condition and given the opportunity
to vote on that basis. It would be a matter for the Court to decide, in its discretion, whether or nota further meeting of Shire Shareholders (and any separate class meeting(s)) should be held inthese circumstances.

65

15.8 Fractional entitlements
Fractions of New Takeda Shares and New Takeda ADSs will not be allotted or issued to Shire
Shareholders. The maximum whole number of New Takeda Shares resulting from theaggregation of the fractional entitlements to New Takeda Shares of Shire Shareholders at the
Scheme Record Time and the maximum whole number of New Takeda Shares which represent
the aggregate of the fractional entitlements to New Takeda ADSs of Shire Shareholders at the
Scheme Record Time (the “Fractional Shares”) will instead be aggregated, allotted and issued
on behalf of the relevant Shire Shareholders on bare trust to the Representative, and sold in themarket pursuant to the Sales Policy as soon as practicable after the Effective Date. The net
proceeds of sale (after the deductions specified in the Sales Policy) will be paid in due proportion
to the Shire Shareholders entitled to them in the same currency as the cash portion of theConsideration which was payable to such Shire Shareholders pursuant to the Scheme (save that
if a Shire Shareholder has made a valid Currency Election to receive some of the cash portion of
the Consideration which is payable to them in pounds Sterling, any amounts paid in respect offractional entitlements to such Shire Shareholder shall be paid in pounds Sterling).
15.9 Shire ADS Holders
Shire ADS Holders can direct the voting of the Shire Shares represented by their Shire ADSs thatare held by the Shire Depositary or by cancelling their Shire ADSs so as to become a Shire
Shareholder.
Full details are as described in Part X (Further information for Shire ADS Holders) of thisdocument and further information on the action to be taken is set out on pages 5 to 9 (inclusive)of this document.
15.10 Alternative means of implementing the Acquisition
Takeda reserves the right (subject to the Panel’s consent and to the terms of the Co-operation
Agreement) to elect to implement the Acquisition by way of a Takeover Offer for the entire issued
and to be issued ordinary share capital of Shire not already held by Takeda as an alternative to
the Scheme. In such an event, a Takeover Offer will be implemented on the same terms, so far
as applicable, as those which would apply to the Scheme and subject to the appropriate
amendments referred to in Part IV (Conditions to, and further terms of, the implementation of the
Scheme and the Acquisition) of this document.
If the Acquisition is effected by way of a Takeover Offer and such Takeover Offer becomes or isdeclared unconditional in all respects and sufficient acceptances are received, Takeda intends to:(i) request that the London Stock Exchange and the UKLA cancel trading in Shire Shares on the
London Stock Exchange’s Main Market and the listing of the Shire Shares from the Official List;(ii) terminate Shire’s ADS programme and make an application to delist the Shire ADSs from
NASDAQ and terminate the registration of the Shire ADSs with the SEC; and (iii) exercise its
rights to apply the provisions of Part 18 of the Jersey Companies Law to acquire compulsorily
any outstanding Shire Shares to which such Takeover Offer relates.
16.

Regulatory approvals and other Conditions

The Acquisition is subject to the Conditions and certain further terms as set out in Part IV (Conditions
to, and further terms of, the implementation of the Scheme and the Acquisition) of this document,
including, among other things:(a)the receipt of antitrust clearances in the EU, United States, China, Japan, Brazil and in otherrelevant jurisdictions;(b)the Shire Meetings being held no later than December 27, 2018 (or such later date as may, withthe consent of the Panel, be agreed between Takeda and Shire and the Court may allow);

66

(c)

approval of the Scheme by a majority in number representing not less than 75 per cent. of thevoting rights of Shire Shareholders (other than holders of Excluded Shares) who are on theregister of members of Shire at the Voting Record Time and who are present and voting (andentitled to vote), whether in person or by proxy, at the Court Meeting, and at any separate classmeeting which may be required (or any adjournment thereof);(d)the Special Resolution being approved at the Shire General Meeting by Shire Shareholders
representing at least 75 per cent. of the votes cast (either in person or by proxy) at the Shire
General Meeting;(e)

the New Takeda Share Resolution being duly passed by Takeda Shareholders representing atleast two-thirds of the Takeda Shares voted at the Takeda Extraordinary General Meeting (thequorum for which is one-third of the then outstanding voting rights of Takeda);(f)

Takeda having submitted an application for listing of the New Takeda Shares to the Tokyo Stock
Exchange and the Local Japanese Stock Exchanges by no later than three weeks before theEffective Date and no objection having been received from the Tokyo Stock Exchange or the
Local Japanese Stock Exchanges in relation thereto (or, if received, no such objection remaining
outstanding);(g)

Takeda receiving confirmation that the relevant listing application regarding the New Takeda
ADSs has been approved for listing, subject to official notice of issuance, on the New York Stock
Exchange;(h)the Scheme being sanctioned by the Court (with or without modification, but subject to any
modification being on terms acceptable to Shire and Takeda); and(i)the Scheme becoming Effective by the Long Stop Date.

16.1 Regulatory Conditions
As at the Latest Practicable Date, relevant clearances have been received from (among others)
the competition authorities in the United States, China, Japan and Brazil. Accordingly, allRegulatory Conditions set out in paragraphs 4(d)-(g) in Part A of Part IV (Conditions to, andfurther terms of, the implementation of the Scheme and the Acquisition) of this document havebeen satisfied.
In relation to the Regulatory Condition set out in paragraph 4(c) in Part A of Part IV of thisdocument, Takeda and Shire have held discussions with the European Commission in relation to
the future potential overlap in the area of inflammatory bowel disease between Takeda’s
marketed product Entyvio (vedolizumab) and Shire’s pipeline compound SHP647, which iscurrently in Phase III clinical trials. As a result of those discussions, Takeda has offeredcommitments to divest SHP647 and certain associated rights, with a view to the European
Commission granting a Phase I conditional clearance for the Acquisition and not initiatingproceedings under Article 6(1)(c) of Council Regulation (EC) 139/2004.
The European Commission will issue its decision in relation to the Acquisition on or before
November 20, 2018 and an announcement containing the substance of that decision will bemade in due course by Shire and Takeda through a Regulatory Information Service (with suchannouncement being made available on Shire’s and Takeda’s websites at www.shire.com andwww.takeda.com respectively).
Neither the Takeda Board nor the Shire Board considers SHP647 and the relevant associatedrights to be material to the business, operations or prospects of the Combined Group (taken asa whole).
If the European Commission’s decision were to result in a delay to the expected timetable ofprincipal events set out on pages 1 to 3 of this document, it is intended that the Effective Datewould be as soon as practicable after January 8, 2019. If it becomes necessary to change any

67

of the dates and/or times in the expected timetable, the revised dates and/or times will be notified
to Shire Shareholders and Shire ADS Holders by announcement through a Regulatory
Information Service, which Shire will furnish to the SEC on Form 8-K.
16.2 Other Conditions
The Acquisition remains subject to the other Conditions and certain further terms as set out inPart IV (Conditions to, and further terms of, the implementation of the Scheme and theAcquisition) of this document.
The Conditions relating to the approval of the Scheme by the Shire Shareholders entitled to voteat the Court Meeting, the passing of the Special Resolution at the Shire General Meeting, thesanction of the Scheme by the Court, the delivery of the Court Order to the Registrar ofCompanies for registration, the passing of the New Takeda Share Resolution at the Takeda
Extraordinary General Meeting and the submission by Takeda of an application for listing of the
New Takeda Shares to the Tokyo Stock Exchange and the Local Japanese Stock Exchanges andno objection having been received (or, if received, remaining outstanding), are not capable ofbeing waived in whole or in part.
16.3 Break fee
Under the terms of the Co-operation Agreement (further details of which are set out in paragraph
9.1 of Part VIII (Additional Information) of this document), Takeda has agreed to a “reasonableendeavours” commitment to secure the regulatory clearances and authorisations necessary tosatisfy the Regulatory Conditions (including those Regulatory Conditions that, as at the Latest
Practicable Date, remain outstanding). Takeda has also agreed to pay a regulatory break fee toShire in certain circumstances, including in the event that (at or before termination of the Cooperation Agreement): (i) on or before the Long Stop Date, Takeda invokes (and is permitted by
the Panel to invoke) any Regulatory Condition so as to cause the Acquisition to lapse, to bewithdrawn or not to proceed; (ii) a Regulatory Condition has not been satisfied or waived by
Takeda at 11.59 p.m. (London time) on the Long Stop Date resulting in the Acquisition lapsing,terminating or being withdrawn; or (iii) the European Commission initiates a Phase 2 review
under the EU Merger Regulation or a similar event has occurred in a Member State of the EU(subject to certain exceptions) on or before the Long Stop Date.
17.

Takeda Shareholder Approval

17.1 New Takeda Share Resolution
As described in paragraph 16 of this Part II, the Scheme is conditional on, among other things,
Takeda Shareholders passing the New Takeda Share Resolution (which relates to the grant ofauthority to issue and allot the New Takeda Shares) at the Takeda Extraordinary General Meeting
which has been convened for 10.00 a.m. (Tokyo time) on December 5, 2018 at INTEX Osaka,
Hall 6B Zone, Osaka, Japan.
The authority to allot the New Takeda Shares is sufficient to allow Takeda to allot and issue therequisite number of New Takeda Shares to each of the holders of Shire Shares (other thanExcluded Shares) at the Scheme Record Time in their relevant proportion pro rata to theirentitlement under the Scheme.
The quorum for the Takeda Extraordinary General Meeting is one-third of the total voting rights
attributable to Takeda’s issued share capital, and the New Takeda Share Resolution must be
approved by Takeda Shareholders representing at least two-thirds of the Takeda Shares voted at
the Takeda Extraordinary General Meeting.
If the New Takeda Share Resolution is passed, the authority to issue and allot the New Takeda
Shares will expire on the first anniversary of the date of the Takeda Extraordinary General
Meeting. If the New Takeda Share Resolution is not passed, the Scheme will not proceed.

6817.2 Takeda Director Appointment Resolutions
Under the terms of the Co-operation Agreement, Takeda has agreed to ensure that the agenda
for the Takeda Extraordinary General Meeting includes the approval of the shareholder
resolutions required to appoint Olivier Bohuon, Ian Clark and Steven Gillis (such persons having
been nominated by Shire and who currently are, and, as at the date of the Co-operation
Agreement, were, Shire Directors) to the Takeda Board conditional upon, and with effect from,the Effective Date.
17.3 Takeda Board recommendation
The Takeda Board has resolved unanimously to recommend that Takeda Shareholders vote infavour of the Takeda Resolutions, as those Takeda Directors who hold Takeda Shares haveirrevocably undertaken to do in respect of their entire beneficial holdings of, in aggregate,
185,896 Takeda Shares, representing approximately 0.02 per cent. of Takeda’s issued sharecapital on the Takeda Voting Record Date.
Under the terms of the Co-operation Agreement (further details of which are set out in paragraph
9.1 of Part VIII (Additional Information) of this document), Takeda has agreed to pay a break fee
to Shire in certain circumstances, including in the event that the Takeda Board withdraws oradversely modifies, adversely qualifies or fails to provide, or fails to reaffirm or reissue astatement of intention to make (when reasonably requested by Shire to do so) its
recommendation that the Takeda Shareholders vote in favour of the New Takeda Share
Resolution or the New Takeda Share Resolution is not passed at the Takeda Extraordinary
General Meeting, and either Takeda or Shire serves notice to terminate the Co-operation
Agreement.
18.

New Takeda Securities

If the Scheme becomes Effective, Shire Shareholders on the register of members of Shire at the
Scheme Record Time will receive $30.33 in cash and either 0.839 New Takeda Shares or, subject to avalid ADS Election being made, 1.678 New Takeda ADSs in accordance with the terms of the Scheme
for each Shire Share held.
Takeda is a Japanese company which is listed on the Tokyo Stock Exchange and the Local
Japanese Stock Exchanges. The New Takeda Shares will be listed only in Japan on the Tokyo
Stock Exchange and the Local Japanese Stock Exchanges and the New Takeda ADSs will belisted only in the United States on the New York Stock Exchange. Neither the New Takeda Shares
nor the New Takeda ADSs will be listed on any stock exchange in the United Kingdom.
The New Takeda Shares will be issued credited as fully paid and will rank pari passu in all respects with
the Takeda Shares in issue at the time the New Takeda Shares are issued pursuant to the Scheme,
including in relation to the right to receive notice of, and to attend and vote at, general meetings of
Takeda, the right to receive and retain any dividends and other distributions declared, made or paid byreference to a record date falling after the Effective Date, and to the right to participate in the assets of
Takeda upon a winding up of Takeda. The New Takeda Shares will only be capable of being held in
uncertificated form. Please refer to paragraph 5 of Part V (Takeda Securities) of this document for
further detail on the foregoing matters.
The New Takeda Shares will be issued free from all liens, charges, encumbrances and other third-party
rights and/or interests of any nature whatsoever.
The New Takeda ADSs will be issued subject to, and on the terms of, the Takeda Deposit Agreement.
A summary of the principal terms of the Takeda Deposit Agreement is set out in paragraph 5 of Part V(Takeda Securities) of this document.
The CDIs representing New Takeda ADSs reflect the economic rights attached to the New Takeda
ADSs. However, the holders of CDIs representing New Takeda ADSs will not be the holders of
those New Takeda ADSs, and the CDIs representing New Takeda ADSs will not carry any voting69

rights in Takeda. The terms on which CDIs (such as the CDIs representing New Takeda ADSs) are
issued and held in CREST are set out in the CREST Manual (and, in particular, the deed poll set out in
the CREST International Manual) and the CREST Terms and Conditions issued by Euroclear. Further
details are set out in paragraph 19.3(c)(ii) in this Part II.
Furthermore, the holders of CDIs representing New Takeda ADSs may not be able to claim either:(i) a reduction, pursuant to a double taxation convention, of the rate of 15.315 per cent. at which
it is expected that tax will be withheld under Japanese law from dividends (or other distributions
deemed to be dividends for Japanese tax purposes) made or paid by Takeda in respect of New
Takeda Shares underlying New Takeda ADSs represented by CDIs; or (ii) a refund of such tax
withheld in excess of the rate provided for in a double taxation convention. If holders of CDIs
representing New Takeda ADSs intend to claim the benefit of any applicable double taxation convention,
they may wish to cancel their CDIs as soon as practicable after the Effective Date so as to receive theunderlying New Takeda ADSs. Your attention is drawn to paragraph 3.2(a) of Part VII (Taxation) of thisdocument, which contains certain general comments on the Japanese tax treatment of dividends (orother distributions deemed to be dividends for Japanese tax purposes) made or paid by Takeda.
19.

Settlement of the New Takeda Securities

19.1 Background to settlement of listed Japanese shares
The Takeda Shares are (and the New Takeda Shares, once allotted, issued and admitted, will be)listed and traded on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges.
Pursuant to the Japanese book-entry system and the Act on Book-Entry of Company Bonds,
Shares, etc. of Japan (the “Book-Entry Act”), all shares of Japanese listed companies, including
those of Takeda, are dematerialised and all transfers of such shares are effected through an entry
in the record maintained by Japan Securities Depository Center, Inc. (“JASDEC”), which isJapan’s central securities depository and the only institution designated as a clearing house
under the Book-Entry Act.
In order to hold and trade listed Japanese shares, investors must either have an account withJASDEC or, failing that, an account with an account management institution (“AMI”) that has
been admitted to JASDEC pursuant to the Book-Entry Act. AMIs are financial instruments
business operators (i.e., securities firms), banks, trust companies and certain other financial
institutions that meet the requirements prescribed by the Book-Entry Act.
Transfers (and allotments) of Takeda Shares are effected exclusively through entry in the records
maintained by JASDEC and the AMIs. Title to Takeda Shares passes to the transferee (orallottee) at the time at which the transfer (or allotment) is recorded in the transferee’s (orallottee’s) account at JASDEC or with an AMI.
In addition, for practical reasons relating to the use of shareholder registry administrators as
required by Japanese stock exchanges, the articles of incorporation and share handling rules ofJapanese listed companies provide that any shareholders not resident in Japan are required toappoint a standing proxy in Japan or to provide a mailing address in Japan. Accordingly, in orderfor Shire Shareholders not resident in Japan to elect to receive New Takeda Shares pursuant to
the Scheme in their own direct accounts with JASDEC or an account with an AMI, they are
required to appoint a standing proxy in Japan or to provide a mailing address in Japan.
19.2 Japanese procedural requirements before settlement
Takeda and Shire intend that the Effective Date and the effective date of the issue of the New
Takeda Shares under Japanese law shall occur on the same day. However, following the Scheme
Record Time and before the issue of the New Takeda Shares can become effective underJapanese law, certain procedural requirements must be complied with. In particular:(a)

as soon as practicable following the Scheme Record Time, Takeda shall determine theoffering terms for issue of the New Takeda Shares and issue a notice to the Agent (onbehalf of the Shire Shareholders at the Scheme Record Time) setting out (among other70things) the total number of New Takeda Shares to be issued in consideration for thetransfer of the Shire Shares pursuant to the Scheme;(b)following receipt of such notice, the Agent (on behalf of the Shire Shareholders at the
Scheme Record Time) shall deliver a subscription form to Takeda setting out (among otherthings) the details of the Settlement Account to which the New Takeda Shares shall initially
be issued and allotted (as further described in paragraph 19.3 of this Part II below); and(c)following receipt of such subscription form (but at least one calendar day before theeffective date of the issue of the New Takeda Shares under Japanese law), Takeda shalldeliver an allotment notice to the Agent (on behalf of the Shire Shareholders at the Scheme
Record Time) setting out the number of New Takeda Shares to be allotted to theSettlement Account (on behalf of Shire Shareholders at the Scheme Record Time).

It is expected that each of the foregoing notifications shall be made on the same calendar day(currently expected to be January 7, 2019) and that the Effective Date, and the effective date of
the issue of the New Takeda Shares under Japanese law, shall occur on the first calendar day
after the making of such notifications (currently expected to be January 8, 2019).
19.3 Settlement procedure
The New Takeda Securities will be available for settlement within 14 calendar days of theEffective Date in accordance with Rule 31.8 of the Takeover Code.
As soon as practicable following the Scheme Effective Time, the total number of New Takeda
Shares to be allotted and issued in consideration for the transfer of the Shire Shares pursuant to
the Scheme (including the Fractional Shares) will be recorded to the Settlement Account.
Settlement of the New Takeda Securities will then take place in one of five ways, according to the
Securities Election(s) made by each Shire Shareholder.
(a)Receipt of New Takeda Shares into own JASDEC Account – JASDEC Election
Shire Shareholders who have:(i)a direct account with JASDEC or an account with an AMI (each a “JASDEC
Account”); and(ii)a standing proxy or mailing address in Japan (or who are resident in Japan),may choose to make a JASDEC Election in respect of some or all of their Shire Shares
held at the Scheme Record Time.
The New Takeda Shares which such Shire Shareholders are entitled to receive as
consideration for the Shire Shares in respect of which they have made a valid JASDEC
Election will be delivered from the Settlement Account to the designated JASDEC Accountas soon as practicable following receipt of the New Takeda Shares into the Settlement
Account and in any event by no later than the date which is 14 calendar days after the
Effective Date.
Shire Shareholders who make a JASDEC Election to deliver their New Takeda Shares into
an account with an AMI should contact their AMI to confirm any necessary steps in orderfor the AMI to record the delivery of the New Takeda Shares from the Settlement Account.
Takeda shall not be responsible for any delay in delivery of New Takeda Shares caused by
the failure of an AMI to record delivery of any New Takeda Shares.

71

(b)

Receipt of New Takeda Shares through the Corporate Nominee Facility – Corporate
Nominee Election
Shire Shareholders who have a registered address in the EEA, Channel Islands, Isle ofMan, Switzerland or Gibraltar as at the Scheme Record Time may choose to make a
Corporate Nominee Election in respect of some or all of their Shire Shares held as at the
Scheme Record Time.
Shire Shareholders must provide applicable Customer Identification and Verification
documents (as set out in the notes which accompany the Forms of Election) whenreturning their Form of Election to make a valid Corporate Nominee Election.
Each Shire Shareholder who makes a valid Corporate Nominee Election will, by doing so,
be acknowledging and agreeing to the Corporate Nominee Facility Terms and Conditions
as set out in Appendix II (Corporate Nominee Facility Terms and Conditions) to thisdocument and, accordingly, will have a sub-account opened in their name with the
Fiduciary (each being a Personal Sub-Account) as soon as practicable following receipt of
the New Takeda Shares into the Settlement Account and in any event within 14 calendar
days after the Effective Date. A statement of entitlement detailing the number of New
Takeda Shares held by each participating Shire Shareholder will be posted to that Shire
Shareholder within such 14-day period.
In order to comply with the Corporate Nominee Facility Terms and Conditions, Shire
Shareholders must maintain a registered address in the EEA, Channel Islands, Isleof Man, Switzerland or Gibraltar for the entire period that their New Takeda Sharesare held through the Corporate Nominee Facility. In the event that the United Kingdom
secedes from the EEA (either pursuant to ongoing negotiations for the United Kingdom to
secede from the EU or otherwise), then Shire Shareholders who have a registered addressin the United Kingdom may no longer satisfy the above requirement and the Fiduciary may
be forced to sell, in accordance with the Corporate Nominee Facility Terms and Conditions,
the New Takeda Shares which the Fiduciary holds on behalf of such Shire Shareholders
through the Corporate Nominee Facility.
Further details regarding the Corporate Nominee Facility and the Corporate Nominee
Facility Terms and Conditions are set out in paragraph 21 of this Part II and Appendix II(Corporate Nominee Facility Terms and Conditions) to this document. A copy of the
Corporate Nominee Facility Terms and Conditions is included at Appendix II (Corporate
Nominee Facility Terms and Conditions) to this document.

(c)Receipt of New Takeda ADSs – ADS Election
Shire Shareholders who wish to receive New Takeda ADSs in respect of some or all of their
Shire Shares held as at the Scheme Record Time may choose to make an ADS Election.
Each New Takeda ADS will represent 0.5 New Takeda Shares.
An ADS Election can be made by Shire Shareholders whether they hold their Shire Sharesin certificated form or uncertificated form (that is, in CREST). However, Shire Shareholders
who hold their Shire Shares in certificated form and who make an ADS Election will only
be able to receive New Takeda ADSs (through DTC or directly through the direct
registration system), whereas Shire Shareholders who hold their Shire Shares in
uncertificated form (that is, in CREST) at the Scheme Record Time may elect to receive
either: (i) New Takeda ADSs (through DTC or the direct registration system); or (ii) CDIs
representing New Takeda ADSs. The differences between these options are summarised
below.
(i)

Receipt of New Takeda ADSs
The New Takeda Shares underlying the New Takeda ADSs which such Shire
Shareholders are entitled to receive as consideration for the Shire Shares in respect72

of which they have made a valid ADS Election will be delivered from the Settlement
Account to the Takeda Depositary’s JASDEC Account as soon as practicablefollowing receipt of the New Takeda Shares into the Settlement Account.
The Takeda Depositary will in turn deliver New Takeda ADSs to the relevant Shire
Shareholders through DTC if DTC delivery details have been provided andotherwise will register the New Takeda ADSs in such Shire Shareholder’s name, inwhich case the Takeda Depositary shall issue and mail a DRS statement, in eachcase as soon as practicable following receipt of the underlying New Takeda Shares
into the Takeda Depositary’s JASDEC Account, but in any event no later than
14 calendar days after the Effective Date. If insufficient DTC delivery details havebeen provided such that the delivery cannot be completed within 30 calendar daysof the Effective Date, the Takeda Depositary shall instead issue and mail a DRS
statement to the relevant Shire Shareholder as soon as practicable following theend of such 30-calendar day period.
Shire Shareholders who make an ADS Election to deliver their New Takeda ADSs
to their broker or other securities intermediary in DTC should contact their broker orother securities intermediary to request that it, or the DTC participant through which
it clears, inputs valid instructions to receive delivery of the New Takeda ADSs freeof payment from the Takeda Depositary’s DTC participant account (account number
2504).
Neither Takeda nor the Takeda Depositary shall be responsible for any delay in thedelivery of New Takeda ADSs due to: (i) in respect of an ADS Election to receive
New Takeda ADSs through DTC, the provision of incomplete or incorrect DTC
delivery details by a Shire Shareholder or any failure by a DTC participant to input
valid instructions to receive delivery of the New Takeda ADSs free of payment; and(ii) in respect of an ADS Election to receive New Takeda ADSs through the direct
registration system, the provision of insufficient personal information by a Shire
Shareholder to enable the Takeda Depositary to register that Shire Shareholder’sentitlement to New Takeda ADSs through the direct registration system.
The New Takeda ADSs will be governed by the terms of the Takeda Deposit
Agreement.
(ii)

Receipt of CDIs representing New Takeda ADSs
Under the CREST International Settlement Links Service, CREST Depository
Limited, a subsidiary of Euroclear, issues dematerialised depository interests
representing entitlements to non-UK securities (such as the New Takeda ADSs)
called CDIs. CDIs may be held, transferred and settled exclusively through CREST.
For those Shire Shareholders who hold Shire Shares in uncertificated form and who
have made a valid ADS Election by making a TTE Instruction to receive CDIs
representing New Takeda ADSs, the New Takeda ADSs to which such Shire
Shareholders will be entitled under the Scheme will be delivered, held and settled in
CREST by means of the CREST International Settlement Links Service, and, inparticular, CREST’s established link with DTC, the US settlement and clearance
system. This link operates via the services of CREST International Nominees
Limited, which is a participant in DTC.
The terms on which CDIs (such as the CDIs representing New Takeda ADSs) are
issued and held in CREST are set out in the CREST Manual (and, in particular, thedeed poll set out in the CREST International Manual) and the CREST Terms andConditions issued by Euroclear. On settlement, the relevant New Takeda Shares willbe transferred from the Settlement Account to the Takeda Depositary’s JASDEC
Account. The Takeda Depositary will, in turn, effect the credit of New Takeda ADSs
73

through DTC to the securities deposit account of CREST International Nominees
Limited, as nominee for CREST Depository Limited. CREST Depository Limited willthen issue the CDIs representing New Takeda ADSs through CREST to Equiniti fordelivery to the securities deposit account in CREST in which each relevant Shire
Shareholder who made the valid TTE Instruction previously held Shire Shares. In
accordance with the CREST Terms and Conditions, a custody fee, as determined by
CREST from time to time, will be charged at the user level for the use of the CDIs
representing New Takeda ADSs.
The registered holder of the New Takeda ADSs underlying such CDIs will be Cede
& Co, a nominee of DTC. The custodian of the New Takeda ADSs underlying such
CDIs will be CREST International Nominees Limited, who will hold them through the
DTC system as nominee for CREST Depository Limited. CREST Depository Limited
will hold those New Takeda ADSs on trust (as bare trustee under English law) for
the Shire Shareholders who hold Shire Shares in uncertificated form to whom it will
issue the CDIs representing New Takeda ADSs.
The CDIs representing New Takeda ADSs reflect the economic rights attached to
the New Takeda ADSs. However, while the holders of CDIs representing New
Takeda ADSs will have an interest in the underlying New Takeda ADSs, they will not
be the holders of those New Takeda ADSs.
The CDIs representing New Takeda ADSs will not carry any voting rights in
Takeda (unless and to the extent such CDIs are cancelled such that the Takeda
ADSs are held through DTC by settling a cross-border delivery transaction in
respect of the underlying New Takeda ADSs through CREST to a DTC
participant). Holders of CDIs representing Takeda ADSs will otherwise be treatedin the same manner as if they were registered holders of New Takeda ADSs, in eachcase in accordance with applicable law and, so far as is possible, in accordance with
CREST arrangements. The Takeda Depositary has entered into arrangements with
Equiniti as receiving agent pursuant to which Euroclear will be instructed to credit
the appropriate stock account in CREST of the relevant Shire Shareholder with such
relevant Shire Shareholder’s entitlement to CDIs representing New Takeda ADSs assoon as practicable after the Effective Date and in any event within 14 days thereof.
Holders of CDIs representing New Takeda ADSs may not be able to apply fora reduction, pursuant to a double taxation convention, of the rate at which tax
is withheld under Japanese law from dividends paid by Takeda (see further
paragraph 3.2(a)(iii) of Part VII (Taxation) and paragraph 3.4 of Appendix 1(Risk Factors)). It is recommended that, as soon as practicable after the Effective
Date, holders of CDIs representing New Takeda ADSs cancel their CDIs, so as toreceive the underlying New Takeda ADSs if they intend to claim the benefit of any
applicable double taxation convention (see further paragraph 3.2(a)(ii) of Part VII(Taxation)).
Holders of CDIs representing New Takeda ADSs will be able to cancel such CDIs bysettling a cross-border delivery transaction in respect of the underlying New Takeda
ADSs through CREST to a DTC participant, in accordance with the rules andpractices of CREST and DTC.
(d)Sale of New Takeda Shares through the Dealing Facility – Dealing Facility Election
Shire Shareholders who hold 200 or fewer Shire Shares in certificated form as at the
Scheme Record Time and who have a registered address in the EEA, Channel Islands,
Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time may elect to have allof the New Takeda Shares which they are entitled to receive pursuant to the Scheme sold74

on their behalf under the Dealing Facility and to have the net proceeds of sale remitted tothem in pounds Sterling, by making a Dealing Facility Election.
Each Shire Shareholder who makes a valid Dealing Facility Election will, by doing so, be
acknowledging and agreeing to the Dealing Facility Terms and Conditions as despatchedto those Shire Shareholders considered likely to be eligible to make an Election for the
Dealing Facility together with this document. A copy of the Dealing Facility Terms andConditions is also available on the Takeda and Shire websites at www.takeda.com andwww.shire.com, respectively. Shire Shareholders who consider themselves eligible to
make a Dealing Facility Election, but who have not received a Form of Election which
includes the option to make a Dealing Facility Election and/or the Dealing Facility Terms
and Conditions should contact the Shareholder Helpline.
Subject to a valid Dealing Facility Election having been made, the New Takeda Shares
which such Shire Shareholders are entitled to receive as consideration for their Shire
Shares will be sold in accordance with the Dealing Facility Terms and Conditions andthe Sales Policy, and the net proceeds of sale converted into pounds Sterling and after the
deductions specified in the Sales Policy) will be paid to the relevant Shire Shareholders.
Further details on the Sales Policy is contained in paragraph 22 of this Part II.
(e)

Shire Shareholders who do not make a valid Securities Election
In the case of Shire Shareholders who have made (or are deemed to have made) aninvalid Securities Election, or have failed to make any Securities Election at all, in respectof some or all of their Shire Shares at the Scheme Record Time by the Election Return
Time or TTE Instruction Return Time (as applicable), the New Takeda Shares which such
Shire Shareholders are entitled to receive as the non-cash portion of the Consideration for
the relevant Shire Shares will continue to be held in the Settlement Account and will be
automatically recorded to a sub-account opened with the Fiduciary in the name of theRepresentative (the “No Action Sub-Account”) who shall hold the relevant New Takeda
Shares as a bare trustee for the relevant Shire Shareholders.
If a Shire Shareholder completes and submits a valid Securities Election after the Election
Return Time or TTE Instruction Return Time (as applicable), but before the date falling
three months after the Effective Date, the Representative will procure that such action istaken so that the relevant New Takeda Shares will, as soon as reasonably practicable after
receipt of the Securities Election, be transferred to the designated JASDEC Account or theTakeda Depositary’s JASDEC Account, recorded to the relevant Personal Sub-Account orsold through the Dealing Facility, as the case may be.
The Representative will procure that any New Takeda Shares which remain in the No
Action Sub-Account on the date falling three months after the Effective Date (and inrespect of which no valid Securities Election has been received) will be sold in the market
in accordance with the Sales Policy and the net proceeds of sale (after the deductions
specified in the Sales Policy) will be paid to the relevant Shire Shareholders in: (i) pounds
Sterling, in the case of Shire Shareholders who held their Shire Shares in certificated formand have a registered address in the United Kingdom, Channel Islands or Isle of Man asat the Scheme Record Time; and (ii) US Dollars, in the case of all other Shire
Shareholders. Any such net proceeds payable to Shire Shareholders shall be paid: (a) tothe extent that a Shire Shareholder has instructed and set up a standing electronic
payment mandate with the Shire Registrar for the purpose of receiving dividend paymentsfrom Shire in pounds Sterling and has made (or is deemed to have been made) a valid
Currency Election to receive the cash portion of their Consideration in pounds Sterling, by
way of an electronic BACs transfer to such account as indicated in such standard
electronic payment mandate; and (b) in all other cases, by cheque drawn on a branch ofa UK clearing bank.

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Further details regarding the terms of the Sales Policy are set out in paragraph 22 of thisPart II.
For so long as any New Takeda Shares are held through the No Action Sub-Account, it will
not be possible to exercise voting rights in respect of such New Takeda Shares. Such New
Takeda Shares will, however, carry the right to receive any dividends, distributions or otherreturns of capital announced, declared, made or paid by Takeda by reference to a record
date falling after the Effective Date but before the date on which such New Takeda Sharesare either: (i) transferred out of the No Action Sub-Account or sold through the Dealing
Facility pursuant to a valid Securities Election; or (ii) sold in the market pursuant to theSales Policy. Takeda will procure that any such dividends, distributions or other returns ofcapital announced received by the Fiduciary on behalf of the Representative acting asbare trustee for the relevant Shire Shareholders (including, if applicable, any dividends,
distributions or other returns of capital announced received after the relevant New Takeda
Shares have been sold where the relevant dividend, distribution or other return of capitalannounced was declared, made or paid by reference to a record date falling after the
Effective Date, but before the date of sale) will be paid as soon as practicable after receipt
to the relevant underlying Shire Shareholders in: (i) pounds Sterling, in the case of Shire
Shareholders who held their Shire Shares in certificated form and have a registeredaddress in the United Kingdom, Channel Islands or Isle of Man as at the Scheme Record
Time; and (ii) US Dollars, in the case of all other Shire Shareholders, in each caseconverted at the applicable market exchange rate on the latest reasonably practicable date
for fixing such rate prior to the date of payment and net of any applicable customarytransaction and dealing costs associated with the conversion. Shire Shareholders shouldnote that Japanese withholding tax at a standard rate of 15.315 per cent. will be applied toany dividends (or other distributions deemed to be dividends for Japanese tax purposes)
prior to their payment to the Fiduciary. Shire Shareholders should note that, to the extent
that Shire Shareholders hold their New Takeda Shares through the No Action SubAccount, it is expected that Shire Shareholders who are entitled to the benefit of a double
taxation convention would face significant practical difficulties if they were to try and apply
for a refund of any tax withheld in excess of the applicable treaty rate. Takeda’s usual
practice is to determine a dividend record date of March 31, with payment of the dividend
taking place in June.
19.4 Fractional Shares
Fractions of New Takeda Shares and New Takeda ADSs will not be allotted or issued to Shire
Shareholders. Fractional Shares (being the maximum whole number of New Takeda Shares
resulting from the aggregation of fractional entitlements to New Takeda Shares of Shire
Shareholders at the Scheme Record Time and the maximum whole number of New Takeda
Shares which represent the aggregate of fractional entitlements to New Takeda ADSs of Shire
Shareholders at the Scheme Record Time) will instead be aggregated, allotted and issued onbehalf of the relevant Shire Shareholders on bare trust to the Representative, and sold in themarket pursuant to the Sales Policy as soon as practicable after the Effective Date. The net
proceeds of sale (after the deductions specified in the Sales Policy) will be paid in due proportion
to the Shire Shareholders entitled to them in the same currency as the cash portion of theConsideration which was payable to such Shire Shareholders pursuant to the Scheme (save that
if a Shire Shareholder has made a valid Currency Election to receive some of the cash portion of
the Consideration which is payable to them in pounds Sterling, any amounts paid in respect offractional entitlements to such Shire Shareholder shall be paid in pounds Sterling).
Further details regarding the terms of the Sales Policy are set out in paragraph 22 of this Part II.

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19.5 Effect of the unit share system(a)Overview
Takeda follows the “unit share system” under the Japanese Companies Act (which ismandatory for companies whose shares are listed on the Tokyo Stock Exchange), whereby
Takeda Shareholders have one voting right for each “unit” of shares held by them andshares constituting less than a full unit carry no voting rights. The Takeda Articles providethat 100 Takeda Shares constitute one unit. In addition, pursuant to Rule 15 of theBusiness Regulations of the Tokyo Stock Exchange, shares constituting less than one unit
are not deemed to comprise a trading unit except in limited circumstances and,accordingly, may not be sold on the Tokyo Stock Exchange. Equivalent rules apply to the
Local Japanese Stock Exchanges on which the Takeda Shares are listed.

(b)Elections and sales under the Scheme
Shire Shareholders whose Shire Shares would, pursuant to the terms of the Scheme,
entitle them to a number of New Takeda Shares which includes less than one full unit forthe purposes of the Takeda Articles (i.e., to anything other than a round number of New
Takeda Shares divisible by 100) will still be entitled to make an Election in respect of theShire Shares which correspond to such partial unit of New Takeda Shares, in the samemanner as any other Shire Shareholder. The partial unit of New Takeda Shares will besettled in accordance with the relevant Election(s) made and the relevant procedure(s)described in paragraph 19.3 of this Part II.
To the extent that the total number of: (i) Fractional Shares; (ii) New Takeda Shares to be
sold pursuant to the Dealing Facility; and/or (iii) New Takeda Shares in the No Action
Sub-Account which are to be sold at the end of the period of three months after the
Effective Date, in each case includes less than a full unit of New Takeda Shares, theFiduciary will put in place arrangements to enable each partial unit to be sold at the closing
price of Takeda Shares on the Tokyo Stock Exchange on the relevant trade date, as set
out in the Sales Policy.
Further details regarding the terms of the Sales Policy are set out in paragraph 22 of thisPart II.

(c)

Shire Shareholders who have made a JASDEC Election
Following settlement, Shire Shareholders who have made a valid JASDEC Election will at
any time be able to request through JASDEC or an AMI that Takeda purchases their partial
unit of New Takeda Shares, in accordance with the Japanese Companies Act, the Takeda
Articles and Takeda’s share handling regulations: (i) at the closing price of Takeda Shareson the Tokyo Stock Exchange (or relevant Local Japanese Stock Exchange) on the day on
which the relevant request is received by Takeda’s shareholder register administrator; or(ii) if no trading takes place on the Tokyo Stock Exchange (or relevant Local Japanese
Stock Exchange) on that day, the price of the first trade entered into thereafter.
In addition, Shire Shareholders who hold their New Takeda Shares through a designated
JASDEC Account will be entitled to require Takeda to sell to them such number of
additional New Takeda Shares as is necessary to enable their holding of New Takeda
Shares to constitute one whole unit for the purposes of the Japanese Companies Act, theTakeda Articles and Takeda’s share handling regulations, provided always that Takeda has
sufficient shares in treasury to accommodate such a request.

(d)Shire Shareholders who have made a Corporate Nominee Election
Shire Shareholders who hold their New Takeda Shares through the Corporate Nominee
Facility will be able to provide voting instructions in respect of any partial unit of New

77

Takeda Shares to the Fiduciary. The Fiduciary will be able to aggregate voting instructions
received to enable the maximum number of votes to be exercised.
In addition, to the extent that any Shire Shareholder who holds New Takeda Sharesthrough the Corporate Nominee Facility wishes to sell such New Takeda Shares, and if
such New Takeda Shares include less than a full unit, the Fiduciary will put in placearrangements to enable such partial unit to be sold at the closing price of Takeda Shareson the Tokyo Stock Exchange on the relevant trade date.
Shire Shareholders who hold their New Takeda Shares through the Corporate Nominee
Facility will not be entitled to require Takeda to sell to them such number of additional New
Takeda Shares as is necessary to enable their holding of New Takeda Shares to constituteone whole unit.
(e)Shire Shareholders who have made an ADS Election
Shire Shareholders who have elected to receive New Takeda ADSs (other than those
Shire Shareholders who hold their Shire Shares in uncertificated form and have elected toreceive CDIs representing New Takeda ADSs) will be able to provide voting instructions in
respect of any partial unit of New Takeda Shares to the Takeda Depositary. The Takeda
Depositary will be able to aggregate voting instructions received to enable the maximum
number of votes to be exercised.
The CDIs representing New Takeda ADSs will not carry any voting rights in Takeda(unless and to the extent such CDIs are cancelled, such that the Takeda ADSs areheld through DTC, by settling a cross-border delivery transaction in respect of theunderlying Takeda ADSs through CREST to a DTC participant). Accordingly, Shire
Shareholders who have elected to receive CDIs representing New Takeda ADSs will not
be able to provide voting instructions in respect of the underlying New Takeda ADSs.

19.6 Shire ADS Holders
The Shire Depositary will make an ADS Election in respect of its entire holding of Shire Shares
underlying the Shire ADSs as at the Scheme Record Time. Consequently, as each Shire ADS
represents three Shire Shares, Shire ADS Holders will receive $90.99 in cash and 5.034
New Takeda ADSs (upon surrender of their certificated Shire ADSs (if applicable) to theShire Depositary after the Scheme Effective Time) for every Shire ADS which they hold at
the ADS Effective Date, subject to any deductions in respect of US backup withholding(see paragraph 5 of Part X (Further information for Shire ADS Holders)).
Shire ADS Holders are not entitled to make Elections in respect of their Shire ADSs.
Shire ADS Holders should refer to Part X (Further information for Shire ADS Holders) of thisdocument for further information on settlement in relation to Shire ADSs.
20.

Settlement of the cash portion of the Consideration

20.1 Settlement in respect of Shire Shares held in certificated form (that is, not in CREST)
The cash portion of the Consideration due under the Scheme to Shire Shareholders who holdtheir Shire Shares in certificated form at the Scheme Record Time will be paid:(a)to the extent that a Shire Shareholder has instructed and set up a standing electronic
payment mandate with the Shire Registrar for the purpose of receiving dividend paymentsfrom Shire in pounds Sterling and subject to such Shire Shareholder having made (orbeing deemed to have made) a valid Currency Election to receive the cash portion of their
Consideration in pounds Sterling, by way of an electronic BACs transfer to such accountas indicated in such standard electronic payment mandate; and

78

(b)

in all other cases, by cheque drawn on a branch of a UK clearing bank, despatched by firstclass post (or international standard post, if overseas).

The currency of such cash payments will be in accordance with the Currency Elections made (ordeemed to have been made) by such Shire Shareholders (the ability to make Currency Elections
being described in paragraph 20.3 of this Part II). Payment made by cheque will be payable to
the Shire Shareholders concerned or, in the case of joint holders, to all joint holders on Shire’s
register of members (except that in the case of joint holders, Takeda may procure that suchcheques are made payable to that one of the joint holders whose name stands first in Shire’s
register of members in respect of such joint holding at the Scheme Record Time).
20.2 Settlement in respect of Shire Shares held in uncertificated form (that is, in CREST)
The cash portion of the Consideration due under the Scheme to Shire Shareholders who holdtheir Shire Shares in uncertificated form at the Scheme Record Time will be paid by Takeda byprocuring that Euroclear is instructed to create an assured payment obligation in favour of therelevant Shire Shareholder’s payment bank through CREST (the ability to make Currency
Elections being described in paragraph 20.3 of this Part II). The currency of such cash payments
will be in accordance with the Currency Elections made by such Shire Shareholders.
Each Shire Shareholder who holds Shire Shares in uncertificated form at the Scheme
Record Time and does not make a valid Currency Election must ensure that an active US
Dollar Cash Memorandum Account is in place in CREST by no later than the Scheme
Record Time. In the absence of a US Dollar Cash Memorandum Account, the payment of the
cash portion of the Consideration will not settle, resulting in a delay and the settlement of the
cash portion of the Consideration outside of CREST.
Takeda reserves the right to pay cash to any or all Shire Shareholders who hold Shire Shares in
uncertificated form at the Scheme Record Time in the manner referred to in paragraph 20.1 ofthis Part II if, for reasons outside its reasonable control, it is not able to effect settlement within
the CREST system.
20.3 Currency Conversion Facility
Shire Shareholders may elect to instead receive the US Dollar cash portion of the Considerationin pounds Sterling under the Currency Conversion Facility.
Shire Shareholders with a registered address in the United Kingdom, Channel Islands or Isle of
Man as at the Scheme Record Time and who hold their Shire Shares in certificated form will bedeemed to have made a valid Currency Election and will receive the entire cash portion of theConsideration payable to them in pounds Sterling net of any applicable customary transaction
and dealing costs associated with the conversion at the applicable market exchange rate on thelatest reasonably practicable date for fixing such rate before the relevant payment date, unlessthey opt out of the Currency Conversion Facility by completing and returning an Opt-out Form (acopy of which may be obtained by contacting the Shareholder Helpline). Unless they make avalid Currency Election, all other Shire Shareholders (including Shire Shareholders with aregistered address in the United Kingdom, Channel Islands or Isle of Man as at the Scheme
Record Time, but who hold their Shire Shares in uncertificated form) will receive the cash portionof the Consideration payable to them in US Dollars.
Where a Shire Shareholder has made (or is deemed to have made) a valid Election to receive
the US Dollar cash portion of the Consideration in pounds Sterling under the Currency
Conversion Facility, the cash portion of the Consideration due to such holder in respect of their
Shire Shares in accordance with the terms of the Scheme will be paid in pounds Sterling (net ofany applicable customary transaction and dealing costs associated with the conversion) at theapplicable market exchange rate on the latest reasonably practicable date for fixing such rate
before the relevant payment date.

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Takeda intends to obtain the amount of pounds Sterling required to satisfy Currency Elections
through a series of market transactions carried out over one or more Business Days following the
Scheme Record Time. The number of transactions, time period required, exchange rate obtained
and level of transaction and dealing costs associated with the conversion will depend on market
conditions and the number of Shire Shares in respect of which a valid Currency Election is made.
However, Takeda will use all reasonable endeavours to obtain the best rate reasonably available
in the market (including taking account of the size of the transactions and the timeframes within
which they are to be executed) at the relevant times and to ensure that the applicable transaction
and dealing costs are on arm’s length market terms. The rate obtained in each transaction will
be combined to produce an average rate such that all Shire Shareholders who have made (orare deemed to have made) a Currency Election will receive the same amount of pounds Sterlingfor each of their Shire Shares.
20.4 General
All documents and remittances sent through the post will be sent at the risk of the person(s)entitled thereto.
Save with the consent of the Panel, settlement of the Consideration to which any Shire
Shareholder is entitled under the Scheme will be implemented in full in accordance with the terms
set out in this Part II without regard to any lien, right of set off, counterclaim or analogous right towhich Takeda may otherwise be, or claim to be, entitled against any Shire Shareholder.
21.

Corporate Nominee Facility

21.1 Overview
Shire Shareholders who make a valid Corporate Nominee Election to have their New Takeda
Shares held on their behalf through the Corporate Nominee Facility will be able to hold their New
Takeda Shares in this manner for a maximum of two years from the Effective Date. After this time,
the Fiduciary will procure that any remaining New Takeda Shares held on behalf of the former
Shire Shareholders through the Corporate Nominee Facility are sold in accordance with the
Corporate Nominee Facility Terms and Conditions and the Sales Policy and the net proceeds ofthe sale (converted into pounds Sterling and after deductions specified in the Sales Policy) beremitted in pounds Sterling to the relevant Shire Shareholders pro rata to their entitlement of such
New Takeda Shares by way of cheque drawn on a branch of a UK clearing bank.
Shire Shareholders who hold New Takeda Shares through the Corporate Nominee Facility will
not be the registered holders of such New Takeda Shares; instead such New Takeda Shares will
be registered in the name of the Global Custodian, as custodian for the Fiduciary. The Fiduciary
will hold the New Takeda Shares on behalf of the relevant former Shire Shareholders.
In accordance with Corporate Nominee Facility Terms and Conditions (as set out in Appendix II(Corporate Nominee Facility Terms and Conditions) to this document), from the Effective Date,
all former Shire Shareholders who have New Takeda Shares held on their behalf through the
Corporate Nominee Facility will:(a)receive notices of, and be able to attend and speak at, all general meetings of Takeda via
the Fiduciary;(b)

receive quarterly statements of the assets held on their behalf in the Corporate Nominee
Facility;(c)be able to give directions to the Fiduciary as to voting at all general meetings of Takeda(subject to the unit share system (in respect of which, see paragraph 19.5(c) of thisPart II)); and(d)be able to receive dividends, distributions and other returns of capital via the Fiduciary(subject to applicable Japanese withholding tax deductions),in each case, subject to any applicable laws and legislation.
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Shire Shareholders should note that the Fiduciary will send a tax residency declaration form toeach relevant Shire Shareholder at the same time as their statements of entitlement detailing thenumber of New Takeda Shares held by them through the Corporate Nominee Facility (asdescribed in paragraph 19.3(e) of this Part II above). Shire Shareholders should note that, if the
tax residency declaration form is not completed and returned to the Fiduciary within the time limit
stated thereon, it is expected that Japanese tax will be withheld from any dividends (or other
distributions deemed to be dividends for Japanese tax purposes) made or paid with respect totheir New Takeda Shares at a rate of 15.315 per cent. and that Shire Shareholders who areentitled to the benefit of a double taxation convention would face significant practical difficulties
if they were to try and apply for a refund of any tax withheld in excess of the applicable treaty
rate. In respect of Shire Shareholders who are resident in the UK and who complete and returnthe tax residency declaration form within the time limit stated thereon, it is expected thatJapanese tax will be withheld from any dividends (or other distributions deemed to be dividends
for Japanese tax purposes) made or paid with respect to their New Takeda Shares at a rate of
10 per cent. Different rates may apply to Shire Shareholders resident in countries other than the
UK and who complete and return the tax residency declaration form within the time limit statedthereon; such Shire Shareholders may wish to contact an appropriately qualified independent
professional tax adviser and the Fiduciary for further information. Shire Shareholders should
further note that, in addition to the tax residency declaration, they may be required to submit the“Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax andSpecial Income Tax for Reconstruction on Dividends” or the “Special Application Form for Income
Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for
Reconstruction on Dividends of Listed Stocks”, each together with any other required forms anddocuments.
In order to comply with the Corporate Nominee Facility Terms and Conditions, Shire
Shareholders must maintain a registered address in the EEA, Channel Islands, Isle of Man,
Switzerland or Gibraltar for the entire period that their New Takeda Shares are held
through the Corporate Nominee Facility.
21.2 Sales and transfers
Former Shire Shareholders who hold New Takeda Shares through the Corporate Nominee
Facility will be able to elect to sell their New Takeda Shares through a dealing service to bemade available by the Fiduciary at any time during the period of two years following
the Effective Date by completing and submitting a sales request form (available upon requestfrom the Fiduciary) to the Fiduciary. Sales request forms must be received by the Fiduciary nolater than the date falling two years after the Effective Date. The Fiduciary will then arrange forthe sale to be executed in accordance with such request, the Corporate Nominee Facility Terms
and Conditions and the Sales Policy (or such other terms as may be agreed to by the relevant
holder), subject to any applicable laws and legislation, and for the net proceeds of sale (after
the deductions incurred in connection therewith) to be paid to the relevant holder in pounds
Sterling.
The Corporate Nominee Facility is being made available specifically to facilitate settlement of the
New Takeda Shares being issued as consideration under the Scheme. Shire Shareholders who
participate in the Corporate Nominee Facility will therefore not be able to transfer any additional
Takeda Shares into the Corporate Nominee Facility.
21.3 Transfer from the Corporate Nominee Facility into a designated JASDEC AccountFormer Shire Shareholders who hold New Takeda Shares through the Corporate Nominee
Facility will also be able to elect to transfer their New Takeda Shares from the Corporate Nominee
Facility into a designated JASDEC Account at any time during the period of two years following
the Effective Date by arranging a JASDEC Account and a standing proxy or mailing address inJapan and notifying the Fiduciary thereof by submitting a transfer request form (available upon81request from the Fiduciary) to the Fiduciary by no later than the date falling two years after the
Effective Date.
21.4 Termination sales
Any New Takeda Shares which have not been sold or extracted from the Corporate Nominee
Facility by the date falling two years after the Effective Date will be sold in the market inaccordance with the Sales Policy and the net proceeds of sale (converted into pounds Sterling
and after deductions specified in the Sales Policy) will be paid to the relevant former Shire
Shareholders.
Further details regarding the Sales Policy are set out in paragraph 22 of this Part II.
21.5 Costs and fees
None of the costs incurred by Takeda with respect to the initial establishment of the Corporate
Nominee Facility will be passed on to those former Shire Shareholders on whose behalf New
Takeda Shares will be held in the Corporate Nominee Facility. However, to comply with Japaneselaw (so as to respect the principle of equality of treatment of shareholders under the JapaneseCompanies Act), an account maintenance fee is required to be chargeable to those former
Shire Shareholders who enjoy the benefit of the Corporate Nominee Facility after the Effective
Date. Unless waived by the Fiduciary, such fees will be £5.25 (including VAT) per Personal
Sub-Account per 12-month period (meaning a maximum amount of £10.50 will be payable per
Personal Sub-Account in respect of the two-year period from the Effective Date during which
New Takeda Shares may be held through the Corporate Nominee Facility).
In addition, an annual management fee for unclaimed payments (up to a maximum of£5.00 (including VAT) per 12-month period) is chargeable by the Fiduciary to Shire Shareholders
on whose behalf New Takeda Shares are held in the Corporate Nominee Facility. The fee shall
only apply to a Shire Shareholder if all the New Takeda Shares that were held on behalf of such
Shire Shareholder in the Corporate Nominee Facility have been sold or transferred out of the
Corporate Nominee Facility and the Fiduciary continues to hold unclaimed payments for the
relevant Shire Shareholder. Unclaimed payments are any payments issued to a
Shire Shareholder that remain uncashed 12 months following the date of issue. The annual
management fee will be deducted from the unclaimed payments held on behalf of the relevant
Shire Shareholder. Shire Shareholders will be notified of any unclaimed payments on theirquarterly statements and given the opportunity to claim these funds (less an applicable reissuefee) in advance of any annual management fee being applied.
The above fees are, however, separate to any dealing expenses, brokerage fees or foreignexchange fees or commissions which will be passed on to the former Shire Shareholders on
whose behalf sales are made or dividends are received.
21.6 Terms and Conditions
Please refer to the Corporate Nominee Facility Terms and Conditions as set out in Appendix II(Corporate Nominee Facility Terms and Conditions) to this document for further detail on theforegoing matters.

82

22.

Sales Policy

Any sale of New Takeda Shares to be procured by Takeda or the Fiduciary as contemplated by thisdocument will be carried out in accordance with the terms of the Master Framework and Custody
Agreement (and the Dealing Facility Terms and Conditions or the Corporate Nominee Facility Terms
and Conditions (as applicable)). The following parameters (the “Sales Policy”) shall apply to any such
sale:
Item

Details

Number of New Takeda Shares
to be soldNumber of New Takeda Shares to be sold in each sale will be
specified in each instruction by the Fiduciary.

Exchange

The Tokyo Stock Exchange (TSE)Broker

Nomura Securities Co., Ltd

Maximum aggregate ordervolume per day(1)15% of the average daily trading volume during the four weeks
preceding the week in which the relevant sales day falls.

Treatment of share units

Whole units of Takeda Shares (1 unit is 100 Takeda Shares) will
be sold on the Tokyo Stock Exchange.
Any partial unit (being any number of 1 to 99 New Takeda
Shares) will be sold at the closing price on the relevant tradedate.

Dealing charges and deductions(i)

0.3% transaction fee charged by the Broker; plus(ii)

0.25% currency conversion fee charged by the Broker;
plus

(iii)

in the case of sales of New Takeda Shares held in the
Corporate Nominee Facility through the dealing service
made available by the Fiduciary, any additional fees that
may be applicable under the Corporate Nominee Facility
Terms and Conditions from time to time.

Note:(1) Refers to all sales of New Takeda Shares instructed to be undertaken pursuant to the Master Framework andCustody Agreement (and the Dealing Facility Terms and Conditions or the Corporate Nominee Facility Terms andConditions, applicable) on behalf of the Fiduciary on a given day.

Further details of the Master Framework and Custody Agreement are set out in paragraph 11.5 of thisPart II.
23.

Listing of the New Takeda Securities and cancellation of listing the Shire Shares and Shire
ADSs

23.1 Listing of the New Takeda Securities
Takeda ADSs currently trade in the over-the-counter market in the United States and are notlisted on any national US securities exchange. Prior to the Scheme Record Time, Takeda intends
to achieve the registration of the Takeda ADSs under the US Exchange Act and their admission
for listing and trading on the New York Stock Exchange.
Before the Scheme becoming Effective, applications will be made to: (i) the Tokyo Stock
Exchange and the Local Japanese Stock Exchanges for the New Takeda Shares to be admitted
to listing and admitted to trading; and (ii) the New York Stock Exchange in order that the New
Takeda Shares are capable of being deposited with the Takeda Depositary in exchange for thecorresponding amount of New Takeda ADSs (each representing 0.5 Takeda Shares), which may
be traded on the New York Stock Exchange.

83

It is expected that the New Takeda Shares will be admitted to trading on the Tokyo Stock
Exchange and the Local Japanese Stock Exchanges, the New Takeda ADSs will be admitted to
trading on the New York Stock Exchange, and dealings for normal settlement in the New Takeda
Shares and New Takeda ADSs will commence shortly after the Effective Date.
No application has been made or is currently intended to be made by Takeda for the New Takeda
Securities to be admitted to listing or trading on any other exchange.
23.2 Cancellation of listing the Shire Shares and Shire ADSs
It is intended that the last time for dealing in Shire Shares on the London Stock Exchange will be
4.30 p.m. (London time) on January 4, 2019, being the day following the Court Sanction Hearing.
No transfers of Shire Shares will be registered after 6.00 p.m. (London time) on that date. It is
intended that dealings in Shire Shares on the London Stock Exchange will be formally suspended
before markets open on the following business day, expected to be January 7, 2019. It is further
intended that, before the Scheme becoming Effective, an application will be made by Shire to the
London Stock Exchange for the cancellation of the trading of Shire Shares on its main market for
listed securities and the UKLA will be requested to cancel the listing of Shire Shares on the
Official List, in each case to take effect shortly after the Effective Date.
Share certificates in respect of the Shire Shares will cease to be valid from the Effective Date. In
addition, entitlements to the Shire Shares held within the CREST system will be disabled fromthe Scheme Record Time and expired and removed soon thereafter.
It is intended that the last time for dealing in Shire ADSs on NASDAQ will be at close of business(New York time) on January 4, 2019, being the day following the Court Sanction Hearing. It is
intended that dealings in Shire ADSs on NASDAQ will be formally halted before markets open on
the following business day, expected to be January 7, 2019. It is intended that, following theEffective Date, Shire’s ADS programme be terminated and that applications be made to delist
the Shire ADSs from NASDAQ and terminate the registration of Shire’s ADSs with the SEC(please refer to the “Expected Timetable of Principal Events” on pages 1 to 3 of this document).
If the Shire ADSs are delisted and/or deregistered, they would cease to be “margin securities”,
which would likely have an adverse impact on the value of the Shire ADSs.
23.3 Mandates and communication preferences
All mandates and other instructions, including communication preferences (but excluding any
mandate in respect of Shire’s income access arrangements which allow Shire Shareholders toreceive dividends from a member of the Shire Group that is tax resident in the United Kingdom),
given to Shire by Shire Shareholders who have made a Corporate Nominee Election in respectof some or all of their Shire Shares and which remain in force at the Scheme Record Time shall,unless and until revoked, be deemed as from the Effective Date to be valid and effective
mandates or instructions to Takeda in relation to the New Takeda Shares held through the
Corporate Nominee Facility.
Other than as set out in the paragraph above and as required in relation to the settlement ofConsideration pursuant to the terms of the Scheme, all mandates and other instructions given to
Shire by Shire Shareholders and which remain in force at the Scheme Record Time relating toShire Shares (including, without limitation, any mandate in respect of Shire’s income accessarrangements which allow Shire Shareholders to receive dividends from a member of the Shire
Group that is tax resident in the United Kingdom) shall, from the Effective Date, cease to be validand shall not be effective in relation to the New Takeda Shares.
24.

Return of documents of title

If the Scheme is withdrawn or lapses, or a Form of Election is validly withdrawn, documents of title
submitted and other documents lodged with any Form of Proxy and/or the Form of Election will be84returned to the relevant Shire Shareholder as soon as practicable and in any event within 14 calendar
days of such lapse or withdrawal.
25.

Taxation

Shire Shareholders and Shire ADS Holders should read Part VII (Taxation) of this document, whichcontains a general description of certain United Kingdom, United States, Japanese, Jersey and Irish tax
consequences of the Acquisition. Shire Shareholders and Shire ADS Holders who are in any doubt as
to their tax position, or who are subject to taxation in any jurisdiction other than the United Kingdom or
United States, should consult an appropriately qualified independent professional tax adviser
immediately.
26.

Shire Subscriber Ordinary Shares

In addition to the Shire Shares currently in issue, two Shire Subscriber Ordinary Shares are currently inissue. The Shire Subscriber Ordinary Shares were originally issued to the initial subscribers to Shire’s
memorandum of association on incorporation of Shire.
Pursuant to Article 5(B) of the Shire Articles, the holder of a Shire Subscriber Ordinary Share has noright to receive notice of, or to attend and vote at, a general meeting of Shire and no right to receive
any dividends paid by Shire. In the event of a winding up of Shire, a holder of a Shire Subscriber
Ordinary Share is only entitled to receive the nominal value of that share, and only after the holders of
Shire Shares have received the nominal value in respect of all Shire Shares in issue. Accordingly, theShire Subscriber Ordinary Shares are not considered to have any economic value (beyond theirnominal value) and have never been listed on a stock exchange. The Shire Subscriber Ordinary Sharesare currently held by Stephen Williams, the Deputy Company Secretary of the Shire Group.
The Shire Subscriber Ordinary Shares will not be subject to the Scheme. Shire will procure that,
immediately before the Scheme Effective Time, the holder of the Shire Subscriber Ordinary Shares will
deliver a duly executed transfer form in favour of Takeda (or to such nominee as Takeda may direct) toenable Takeda (or its nominee) to be registered as the holder of the Shire Subscriber Ordinary Shares.
27.

Overseas Shareholders

27.1 General
The availability of the Scheme and the Acquisition to Overseas Shareholders may be affected by
the laws of the relevant jurisdictions. Overseas Shareholders should inform themselves about
and should observe any applicable legal requirements. It is the responsibility of all Overseas
Shareholders to satisfy themselves as to their full compliance with the laws of the relevant
jurisdiction in connection therewith, including the obtaining of any governmental, exchange
control or other consents which may be required and their compliance with any other necessary
formalities which are required to be observed and the payment of any issue, transfer or othertaxes due in such jurisdiction. Shire Shareholders and Shire ADS Holders who are in any doubt
regarding such matters should consult an appropriate independent professional adviser in therelevant jurisdiction without delay.
Overseas Shareholders should consult their own legal and tax advisers with respect to the legal
and tax consequences of the Acquisition in their particular circumstances.
27.2 Restricted Shire Shareholders
If, in respect of a Shire Shareholder who is resident, located or has a registered address in ajurisdiction outside Jersey or the United Kingdom, Takeda is advised that the law of a country or
territory outside Jersey or the United Kingdom precludes: (i) the allotment, issue and/or delivery
to that Shire Shareholder of New Takeda Shares and/or New Takeda ADSs in accordance with
the Scheme; (ii) the provision to that Shire Shareholder of the right to make an Election; and/or(iii) either or both of the matters referred to in points (i) and/or (ii), except after compliance by
Shire or Takeda (as the case may be) with any governmental or other consent or any registration,85

filing or other formality with which Shire and/or Takeda (as the case may be) is unable to comply
or compliance with which Shire and/or Takeda (as the case may be) regards as unduly onerous,
then Takeda may, in its sole discretion, require Shire to treat such Shire Shareholder as a
Restricted Shire Shareholder for the purposes of the Scheme.
Given that: (i) investors must either have an account with JASDEC or, failing that, an account withan AMI that has been admitted to JASDEC pursuant to the Book-Entry Act in order to hold andtrade the New Takeda Shares; and (ii) Restricted Shire Shareholders are not permitted to makeElection(s) in respect of their Shire Shares at the Scheme Record Time so as to provide relevant
details for the settlement of their New Takeda Shares, the New Takeda Shares to which any
Restricted Shire Shareholders are entitled shall be issued to a person appointed by Takeda to
hold such New Takeda Shares on terms that such person shall, as soon as possible following theEffective Date, procure the sale of the relevant New Takeda Shares at the best price which canreasonably be obtained at the time of sale.
The net proceeds of any such sale (after the deductions specified in the Sales Policy) shall be
paid to the relevant Restricted Shire Shareholder pro rata to their entitlement in US Dollars bycheque drawn on a branch of a UK clearing bank and despatched to the relevant Restricted Shire
Shareholder at their registered address. Any remittance of the net proceeds of the sale referredto shall be at the risk of the relevant Restricted Shire Shareholder.
Restricted Shire Shareholders should consult their own legal and tax advisers with respect to thelegal and tax consequences of the Acquisition in their particular circumstances.
27.3 US securities law
The New Takeda Shares (including the New Takeda Shares underlying the New Takeda ADSs)
have not been and will not be registered under the US Securities Act or under the securities lawsof any state or other jurisdiction of the United States.
The New Takeda Shares (including the New Takeda Shares underlying the New Takeda ADSs)
are expected to be issued in reliance upon the exemption from the registration requirements of
the US Securities Act provided by Section 3(a)(10) thereof as well as exemptions fromregistration and qualification under applicable state securities laws.
For the purposes of qualifying for the exemption from the registration requirements of the US
Securities Act afforded by Section 3(a)(10), Shire will advise the Court that its sanctioning of the
Scheme will be relied upon by Takeda as an approval of the Scheme following a hearing on its
fairness to Shire Shareholders, at which hearing all Shire Shareholders are entitled to attend inperson or through counsel to support or oppose the sanctioning of the Scheme with respect towhich notification has been given to all Shire Shareholders.
Under US securities laws, persons who are or will be deemed to be affiliates (as defined under
the US Securities Act) of Takeda within 90 calendar days of the Effective Date may not resell the
New Takeda Securities received under the Scheme without registration under the US Securities
Act, except pursuant to an applicable exemption from, or in a transaction not subject to, theregistration requirements of the US Securities Act. Whether a person is an affiliate of a company
for such purposes depends upon the circumstances, but affiliates of a company can include
certain officers and directors and significant shareholders. Shire Shareholders and Shire ADS
Holders who believe they may be or become (within 10 calendar days of the Effective Date)affiliates for the purposes of the US Securities Act should consult their own legal advisers before
any resale of New Takeda Securities received under the Scheme.
The New Takeda Securities generally should not be treated as “restricted securities” within themeaning of Rule 144(a)(3) under the US Securities Act and persons who receive securities under
the Scheme (other than “affiliates” as described in the paragraph above) may resell them without
restriction under the US Securities Act.

86

27.4 Other overseas securities laws
Unless otherwise determined by Takeda or required by the Takeover Code and permitted byapplicable law and regulation, the Acquisition will not be made available, directly or indirectly, in,into or from a jurisdiction where to do so would violate the laws in that jurisdiction. No person may
vote in favour of the Acquisition by any use, means, instrumentality or form, and the Acquisition
will not be capable of acceptance, from or within a jurisdiction, if to do so would constitute a
violation of the laws of that jurisdiction.
Accordingly, unless otherwise determined by Takeda or Shire or required by the Takeover Codeand permitted by applicable law and regulation, copies of this document and any accompanying
documents are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise
forwarded, distributed or sent in, into or from a Restricted Jurisdiction, where to do so would
violate the laws in that jurisdiction, and persons receiving this document and/or accompanying
documents (including custodians, nominees and trustees) must not mail or otherwise distributeor send them in, into or from any jurisdiction, where to do so would violate the laws in thatjurisdiction. Any person (including, without limitation, any custodian, nominee and trustee) who
would, or otherwise intends to, or who may have a contractual or legal obligation to, forward thisdocument and/or any other related document to any jurisdiction outside Jersey or the United
Kingdom should inform themselves of, and observe, any applicable legal or regulatory
requirements of their jurisdiction.
28.

Action to be taken

28.1 Voting at the Shire Meetings
IT IS IMPORTANT THAT, FOR THE COURT MEETING, AS MANY VOTES AS POSSIBLE ARE
CAST SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR AND
REASONABLE REPRESENTATION OF SHIRE SHAREHOLDER OPINION. YOU ARE
THEREFORE STRONGLY URGED TO COMPLETE, SIGN AND RETURN BOTH YOURFORMS OF PROXY (OR APPOINT A PROXY ONLINE OR THROUGH THE CREST
ELECTRONIC PROXY APPOINTMENT SERVICE) OR ADS VOTING CARD, OR TO GIVE
VOTING INSTRUCTIONS THROUGH YOUR BROKER OR OTHER SECURITIESINTERMEDIARY, AS SOON AS POSSIBLE.
The Scheme will require approval at a meeting of Shire Shareholders entitled to vote convened
with the permission of the Court and is to be held at Block 3, Miesian Plaza, 50-58 Baggot Street
Lower, Dublin 2, Ireland at 11.15 a.m. (London time) on December 5, 2018. Implementation of
the Scheme will also require approval by Shire Shareholders of the Special Resolution relating
to the Acquisition to be proposed at the Shire General Meeting. The Shire General Meeting will
be held at the same place as the Court Meeting on December 5, 2018 at 11.30 a.m. (Londontime) (or as soon thereafter as the Court Meeting shall have concluded or been adjourned).
Shire Shareholders entitled to attend and vote at the Shire Meetings are entitled to appoint a
proxy to exercise all or any of their rights to attend, speak and vote at the Court Meeting and/or
Shire General Meeting. A proxy need not be a Shire Shareholder.
The completion and return of a Form of Proxy or the appointment of a proxy or proxies throughCREST or www.sharevote.co.uk shall not prevent a Shire Shareholder from attending and voting
in person at either Shire Meeting or any adjournment thereof, if a Shire Shareholder so wishes
and is so entitled. In the event of a poll on which a Shire Shareholder votes in person, their proxyvotes previously lodged with Equiniti, Shire or www.sharevote.co.uk will be excluded.
(a)

Sending Forms of Proxy by post or by hand
Please complete and sign the Forms of Proxy in accordance with the instructions printed
on them and return them, either: (i) by post; or (ii) during normal business hours only, byhand, to Equiniti (Jersey) Limited, c/o Equiniti Limited at Aspect House, Spencer Road,87

Lancing, West Sussex BN99 6DA, United Kingdom, so as to be received as soon as
possible and in any event not later than the relevant time set out below:
BLUE Forms of Proxy for the Court Meeting

11.15 a.m. (London time) on
December 3, 2018

YELLOW Forms of Proxy for the Shire General Meeting

11.30 a.m. (London time) on
December 3, 2018

or, if in either case the relevant Shire Meeting is adjourned, the relevant Form of Proxy
should be received not later than 48 hours before the time appointed for the adjourned
Shire Meeting. A pre-paid envelope, for use in the United Kingdom only, is enclosed foryour convenience.
If the BLUE Form of Proxy for the Court Meeting is not returned by such time, it may behanded to a representative of Equiniti, on behalf of the Chairman of the Court Meeting, orto the Chairman of the Court Meeting, before the start of the Court Meeting. However, inthe case of the Shire General Meeting, the YELLOW Form of Proxy must be received by
Equiniti by the time mentioned above, or it will be invalid. Such invalidity will not, however,prevent a Shire Shareholder from attending the Shire General Meeting and speaking andvoting at the Shire General Meeting in person if they are entitled and wish to do so.
Shire Shareholders are entitled to appoint a proxy in respect of some or all of their Shire
Shares and may also appoint more than one proxy, provided that each proxy is appointed
to exercise the rights attached to a different share or shares held by such holder. Shire
Shareholders who wish to appoint more than one proxy in respect of their holding of Shire
Shares should contact Equiniti for further Forms of Proxy or photocopy the Forms of Proxyas required.
(b)

Online appointment of proxies
As an alternative to completing and returning the printed Forms of Proxy, proxies may be
appointed electronically by logging on to the following website: www.sharevote.co.uk andfollowing the instructions there. For an electronic proxy appointment to be valid, theappointment must be received by Equiniti no later than 11.15 a.m. (London time) on
December 3, 2018 for the Court Meeting and 11.30 a.m. (London time) on December 3,
2018 for the Shire General Meeting (or, in the case of adjournment(s), not later than
48 hours before the time appointed for the adjourned Shire Meeting(s)). Full details of theprocedure to be followed to appoint a proxy electronically are given on the website.
In the case of the Court Meeting only, if you have not appointed a proxy electronically bysuch time, you may complete the BLUE Form of Proxy and hand it to a representative of
Equiniti, or the Chairman of the Court Meeting, before the start of the Court Meeting.

(c)Electronic appointment of proxies through CREST
If you hold Shire Shares in uncertificated form – that is, in CREST – and wish to appoint a
proxy or proxies for the Shire Meetings (or any adjourned Shire Meeting) by using the
CREST electronic proxy appointment service, you may do so by using the procedures
described in the CREST Manual (please also refer to the accompanying notes to thenotices of the Shire Meetings set out in Part XII (Notice of Court Meeting) and Part XIII
(Notice of Shire General Meeting) of this document). CREST personal members or other
CREST sponsored members, and those CREST members who have appointed any voting
service provider(s), should refer to their CREST sponsor or voting service provider(s), whowill be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid,
the appropriate CREST message (a “CREST Proxy Instruction”) must be properly
authenticated in accordance with the specifications of Euroclear and must contain the88information required for such instructions as described in the CREST Manual. The
message (regardless of whether it constitutes the appointment of a proxy or anamendment to the instructions given to a previously appointed proxy) must, in order to bevalid, be transmitted so as to be received by Equiniti (ID 7RA01) not later than 48 hours
before the time appointed for the Court Meeting or Shire General Meeting (or adjourned
Shire Meeting), as applicable. For this purpose, the time of receipt will be taken to be thetime (as determined by the time stamp applied to the message by the CREST Application
Host (as defined in the CREST Manual)) from which Equiniti is able to retrieve themessage by enquiry to CREST in the manner prescribed by CREST. After this time, anychange of instructions to proxies appointed through CREST should be communicated tothe appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service
providers should note that Euroclear does not make available special procedures in
CREST for any particular messages. Normal system timings and limitations will therefore
apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed any voting service provider(s), to procurethat their CREST sponsor or voting service provider(s) take(s)) such action as shall benecessary to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable, their CREST
sponsors or voting service providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
Shire may treat as invalid a CREST Proxy Instruction in the circumstances set out in the
CREST Regulations.
(d)Voting on the Acquisition if you are a Shire ADS Holder
A Shire ADS Holder can vote, or direct the voting of, the Shire Shares represented by its
Shire ADSs in a number of ways as further described in Part X (Further information for
Shire ADS Holders) of this document.
Voting via the Shire Depositary: Shire ADS Holders as at the ADS Voting Record Timeof 5.00 p.m. (New York time) on November 7, 2018 should, if they wish to direct the votingof the Shire Shares represented by their Shire ADSs that are held via the Shire Depositary(or its nominee), sign, complete and return the ADS Voting Card in accordance with the
instructions printed thereon and in the Notice of Court Meeting and Extraordinary General
Meeting received from the Shire Depositary in order to instruct the Shire Depositary how
to vote the Shire Shares represented by their Shire ADSs on their behalf at the Court
Meeting and the Shire General Meeting. The ADS Voting Card should be returned by mailto Shire plc, c/o Citibank Shareholder Services, PO Box 43099, Providence RI 029405000, USA, as soon as possible and, in any event, so as to be received no later than
10.00 a.m. (New York time) on November 29, 2018 or if either the Court Meeting or the
Shire General Meeting is adjourned, such later date as may be notified by the Shire
Depositary, having consulted with Shire. Alternatively, Shire ADS Holders as at the ADS
Voting Record Time of 5.00 p.m. (New York time) on November 7, 2018 may instruct theShire Depositary with voting instructions by internet or telephone, as set out in the
instructions printed on the ADS Voting Card and in the Notice of Court Meeting andExtraordinary General Meeting received from the Shire Depositary.
Shire ADS Holders who hold their Shire ADSs indirectly must follow the instructions fromtheir custodian, broker or other agent through which they hold their Shire ADSs if they wish
to give voting instructions to the Shire Depositary. Providing voting instructions via acustodian, broker or other agent may require the provision of information by a particulardeadline, well in advance of the deadline to give the Shire Depositary voting instructions,89and therefore you are encouraged to reach out to such custodian, broker or other agent
for any such deadline as quickly as possible.
Following timely receipt of a signed and completed ADS Voting Card (or instructions byinternet or telephone) from a Shire ADS Holder, the Shire Depositary shall endeavour,
insofar as practicable and permitted under the provisions of, or governing, the Shire
Shares represented by Shire ADSs, to vote or cause its nominee to vote (by means of theappointment of a proxy or otherwise) such Shire Shares represented by the Shire ADSs in
respect of which instructions have been received in accordance with those instructions.
The Shire Deposit Agreement provides that the Shire Depositary will not exercise any
voting discretion in respect of the Shire Shares represented by Shire ADSs. If the Shire
Depositary does not receive an ADS Voting Card (or instructions by internet or telephone)from a Shire ADS Holder before 10.00 a.m. (New York time) on November 29, 2018 inrespect of their entire holding of Shire ADSs, then:(i)in respect of the Shire General Meeting only, subject to the terms of the Shire
Deposit Agreement, such Shire ADS Holder shall be deemed to have instructed theShire Depositary to give a person designated by Shire a discretionary proxy tovote the Shire Shares represented by the Shire ADSs in respect of which the Shire
Depositary has not received voting instructions. Any such Shire ADS Holder may berequired, in accordance with DTR 5 of the Disclosure Guidance and Transparency
Rules, to notify Shire of their relevant holding of Shire ADSs if the percentage of theirvoting rights falls below a notifiable threshold as a result of a person designated by
Shire having been so appointed. In the event that a person designated by Shire isgiven such a discretionary proxy, it is the intention of the Shire Board to direct such
person to exercise such votes in line with the voting recommendation of the Shire
Board for each of the resolutions to be proposed at the Shire General Meeting; and(ii)

in respect of the Court Meeting, such Shire ADS Holder shall not be deemed to have
instructed the Shire Depositary to give a person designated by Shire a discretionary
proxy to vote the Shire Shares represented by the Shire ADSs in respect of which
the Shire Depositary has not received voting instructions. Accordingly, the Shire
Shares represented by the Shire ADSs in respect of which the Shire Depositary has
not received voting instructions will not be represented at the Court Meeting and will
not be voted at the Court Meeting.

Cancellation of Shire ADSs so as to become a Shire Shareholder: Shire ADS Holders
who wish to attend the Court Meeting and/or the Shire General Meeting must take steps
to present their Shire ADSs (and, to the extent that such Shire ADSs are certificated, thecertificates evidencing such Shire ADSs) to the Shire Depositary for cancellation before
5.00 p.m. (New York time) on November 23, 2018 (subject to the relevant Shire ADS
Holder’s compliance with the terms of the Shire Deposit Agreement and payment of theShire Depositary’s fees), together with: (i) delivery instructions for the Shire Shares
represented by such Shire ADSs (including, if applicable, the name and address of theperson who will be the registered holder of such Shire Shares); and (ii) if the cancellation
is to take place before the Shire Meetings, a certification that the Shire ADS Holder:(x) beneficially owned the relevant Shire ADSs as at the ADS Voting Record Time and has
not given, and will not give, voting instructions to the Shire Depositary in respect of such
Shire ADSs in relation to the Shire Meetings (or has cancelled all voting instructions
previously given); (y) beneficially owned the relevant Shire ADSs as at the ADS Voting
Record Time and has given voting instructions to the Shire Depositary in respect of such
Shire ADSs in relation to the Shire Meetings, but undertakes not to vote the Shire Shares
represented by such Shire ADSs at the Shire Meetings; or (z) did not beneficially own therelevant Shire ADSs as at the ADS Voting Record Time, but undertakes not to vote theShire Shares represented by such Shire ADSs at the Shire Meetings. Shire ADS Holders

90

who hold their Shire ADSs in a brokerage, bank, custodian or other nominee accountshould promptly contact their broker, bank or other nominee to find out what actions are
required to instruct the broker, bank or other nominee to cancel the Shire ADSs on theirbehalf. Shire ADS Holders who present their Shire ADSs to the Shire Depositary forcancellation prior to 5.00 p.m. (New York time) on November 23, 2018 in order to takedelivery of Shire Shares will be responsible for the payment of the Shire Depositary’s fees
associated with such cancellation.
Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m.
(New York time) on November 23, 2018 until 8.00 a.m. (New York time) on
December 4, 2018. Shire ADS Holders who take steps (as described in the paragraphs
above) to cancel their Shire ADSs before 5.00 p.m. (New York time) on November 23, 2018
and become Shire Shareholders before the Voting Record Time will also have the right toattend the Court Sanction Hearing in person and be represented by counsel to support or
oppose the sanctioning of the Scheme.
28.2 Making an Election in respect of the Consideration
Your attention is drawn to Part IX (Notes for making Elections) of this document, which sets out
in detail how to make an Election in respect of the Consideration.
Flowcharts have also been included on pages 16 to 18 in order to assist you in making an
Election in respect of the Consideration.
29.

Shareholder Helpline

If you have any questions about this document, the Court Meeting or the Shire General Meeting, or are
in any doubt as to how to complete the Forms of Proxy, lodge a Form of Election or make a TTE
Instruction, please call Equiniti between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday(except public holidays in England and Wales) on 0330 123 5506 (if calling from within the UK) or +44(0)121 415 0856 (if calling from outside the UK). Calls are charged at the standard geographic rate andwill vary by provider. Calls outside the United Kingdom will be charged at the applicable internationalrate. Different charges may apply to calls from mobile telephones.
The helpline for Shire ADS Holders is provided by the Shire Depositary and is available between
8.30 a.m. and 6.00 p.m. (New York time) Monday to Friday (except public holidays in the US) on +1 866
395 6421 from within the US or +1 781 575 4555 if calling from outside the US. Calls are charged at
the standard geographic rate and will vary by provider. Calls outside the US will be charged at theapplicable international rate.
Please note that calls may be monitored or recorded and Equiniti and the Shire Depositary cannot
provide legal, tax or financial advice or advice on the merits of the Scheme.
30.

Risk factors

Shire Shareholders and Shire ADS Holders should consider fully and carefully the risk factors
associated with the Combined Group, the New Takeda Shares and the New Takeda ADSs. Yourattention is drawn to the risk factors set out in Appendix I (Risk Factors) to this document andthe other information relating to the New Takeda Securities set out in Part V (Takeda Securities)of this document.
31.

Further information

The terms of the Scheme are set out in full in Part III (The Scheme of Arrangement) of this document.
Shire Shareholders and Shire ADS Holders are also directed to the further information contained in thisdocument, all of which forms part of this Explanatory Statement, and, in particular, to the Conditions andadditional terms set out in Part IV (Conditions to, and further terms of, the implementation of the91Scheme and the Acquisition), and the additional information set out in Part VIII (Additional Information)of this document.
Yours faithfully,

Jan Skarbek
For and on behalf of
Citigroup Global Markets Limited

Nick Harper
For and on behalf ofGoldman Sachs International

David Kitterick
For and on behalf ofMorgan Stanley & Co. International plc

92

PART IIITHE SCHEME OF ARRANGEMENTROYAL COURT OF JERSEYSAMEDI DIVISION
File No. 2018/276
IN THE MATTER OF SHIRE PLC(Registered Number 99854)
andIN THE MATTER OF THE COMPANIES (JERSEY) LAW 1991––––––––––––––––––––––SCHEME OF ARRANGEMENT(under Article 125 of the Companies (Jersey) Law 1991)
betweenSHIRE PLCAND
THE SCHEME SHAREHOLDERS(as hereinafter defined)––––––––––––––––––––––PRELIMINARY(A)

In this Scheme, unless inconsistent with the subject or context, the following expressions havethe following meanings:“ADS” or “American
Depositary Share”

an American Depositary Share;“ADS Election”

an election for the ADS Election Facility which is made either: (i)by validly completing Part 4C on the Certificated Form ofElection or CREST Form of Election (as applicable) andreturning the relevant Form of Election to the Receiving Agent, ineach case in accordance with the terms of this Scheme; or (ii) in
the case of Scheme Shareholders who hold their Scheme
Shares in uncertificated form and wish to receive CDIs
representing New Takeda ADSs, by making a valid TTE
Instruction in accordance with the terms of this Scheme (asapplicable);“ADS Election Facility”

the facility provided for in Clause 5(A)(iii) under which a Scheme
Shareholder may elect to receive 1.678 New Takeda ADSs or, inthe case of a Scheme Shareholder who makes a valid ADS
Election to receive CDIs representing New Takeda ADSs before
the TTE Instruction Return Time and who holds Scheme Sharesin uncertificated form as at the Scheme Record Time, CDIs
representing New Takeda ADSs, in each case for some or all of
the Scheme Shares they hold, in lieu of the 0.839 New Takeda

93

Shares per Scheme Share which such Scheme Shareholder
would otherwise have been entitled to receive, as Considerationin accordance with Clause 2, subject to the terms and conditions
applicable to the New Takeda ADSs;“American Depositary
Receipt”

an American Depositary
Depositary Shares;“AMI”

a JASDEC account management institution that has been
admitted to JASDEC pursuant to the Book-Entry Act;

“BACs”

Bankers’ Automated Clearing System, as operated by Bacs
Payment Schemes Limited, a company which deals withpayments that are made between bank accounts within the
United Kingdom;“Book-Entry Act”

the Act on Book-Entry of Company Bonds, Shares, etc. of Japan,
as amended from time to time;“Business Day”

a day (other than a Saturday, Sunday or public holiday in
London, Jersey, New York or Tokyo) on which banks are open forbusiness in London, Jersey, New York and Tokyo;“CDI”

a CREST depository interest, as defined in the CREST Manual;“certificated” or “incertificated form”

a share or other security which is not in uncertificated form;“Certificated Form ofElection”

the form of election under which a Scheme Shareholder who
holds Scheme Shares in certificated form may make: (i) aCurrency Election; and/or (ii) a JASDEC Election, Corporate
Nominee Election and/or an ADS Election (other than an ADS
Election to receive CDIs representing New Takeda ADSs);
and/or (iii) a Dealing Facility Election, subject to the terms andconditions set out in the Scheme Circular;“Code”The City Code on Takeovers and Mergers;“Company”

Shire plc, a public limited company incorporated in Jersey withregistered number 99854 and whose registered office is at
22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands;“Consideration”

the consideration payable to Scheme Shareholders pursuant toClause 2, comprising $30.33 in cash and either 0.839 New
Takeda Shares or, subject to the relevant Scheme Shareholder
having made a valid ADS Election, 1.678 New Takeda ADSs per
Scheme Share (as the same may be reduced subject to, and inaccordance with, Clause 2);“Corporate Nominee
Election”

an election to receive New Takeda Shares through the Corporate
Nominee Facility which is made by validly completing Part 4B oneither the Certificated Form of Election or the CREST Form ofElection (as applicable) and returning the relevant Form ofElection to the Receiving Agent, in each case in accordance withthe terms of this Scheme;“Corporate Nominee
Facility”

the facility provided for in Clause 5(A)(ii) under which a Scheme
Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme
94

Receipt

evidencing American

Record Time may elect to have the Fiduciary hold on their behalf
some or all of the New Takeda Shares which such Scheme
Shareholder is entitled to receive pursuant to this Scheme;“Corporate Nominee Facility the terms and conditions governing the operation of theTerms and Conditions”
Corporate Nominee Facility, as set out at Appendix II (Corporate
Nominee Facility Terms and Conditions) to the Scheme Circular;“Court”

the Royal Court of Jersey;“Court Meeting”

the meeting or meetings of the holders of Ordinary Shares (otherthan Excluded Shares) as at the Voting Record Time or any
class or classes thereof convened pursuant to an order of the
Court pursuant to Article 125 of the Jersey Companies Law for
the purpose of considering and, if thought fit, approving (with orwithout modification) this Scheme, and any adjournment,
postponement or reconvention thereof;“Court Order”

the Act of the Court sanctioning this Scheme under Article 125 of
the Jersey Companies Law;

“Court Sanction Hearing”

the hearing at which the Court sanctions the Scheme;“CREST”

the relevant system (as defined in the CREST Regulations) inrespect of which Euroclear is the authorised operator (as definedin the CREST Regulations) in accordance with which securities
may be held and transferred in uncertificated form;“CREST Form of Election”

the form of election under which a Scheme Shareholder who
holds Scheme Shares in uncertificated form (that is, in CREST)
may make a JASDEC Election, Corporate Nominee Election
and/or ADS Election, or such other form of instruction as may be
agreed between a Scheme Shareholder and the Receiving
Agent for the purposes of making an election on substantively
the same terms as an Election, in each case subject to the terms
and conditions set out in the Scheme Circular;“CREST Manual”

the CREST Manual published by Euroclear, as amended fromtime to time;“CREST Regulations”

in relation to Scheme Shares held in uncertificated form, theCompanies (Uncertificated Securities) (Jersey) Order 1999, as
amended from time to time and in relation to CDIs representing
New Takeda ADSs, the Uncertificated Securities Regulations
2001 (SI 2001 No. 3755), as amended from time to time;“Currency Conversion
Facility”

the facility provided for in Clause 5(B) under which a Scheme
Shareholder may elect to receive some or all of the cash portionof the Consideration (which, in accordance with Clause 2(A), isdenominated in US Dollars) payable to them in accordance withthis Scheme instead paid in pounds Sterling;“Currency Election”

an election under the Currency Conversion Facility which is
made: (i) in the case of Scheme Shareholders who hold their
Scheme Shares in certificated form, by validly completing Part 3of the Certificated Form of Election and returning the CertificatedForm of Election to the Receiving Agent in accordance with theterms of this Scheme; or (ii) in the case of Scheme Shareholders
who hold their Scheme Shares in uncertificated form, by making95a valid TTE Instruction in accordance with the terms of thisScheme;“Dealing Facility”

the facility provided for in Clause 5(A)(iv) under which a Scheme
Shareholder who holds 200 or fewer Scheme Shares incertificated form as at the Scheme Record Time and has aregistered address in the EEA, Channel Islands, Isle of Man,
Switzerland or Gibraltar as at the Scheme Record Time mayelect to have all of the New Takeda Shares which they areentitled to receive as Consideration for their Scheme Sharespursuant to this Scheme sold on their behalf, subject to the
Dealing Facility Terms and Conditions;“Dealing Facility Election”

an election to sell New Takeda Shares through the Dealing
Facility which is made by validly completing Part 4D on theCertificated Form of Election and returning the Certificated Formof Election to the Receiving Agent, in each case in accordancewith the terms of this Scheme;“Dealing Facility Terms andConditions”

the terms and conditions governing the operation of the Dealing
Facility, as set out on the Takeda and Shire websites, at
www.takeda.com and www.shire.com, respectively;“EEA”

the European Economic Area as at the date of this document;“Effective”

means this Scheme having become effective in accordance with
its terms;“Election”

a Currency Election or a Securities Election, as the context
requires;“Election Return Time”

6.00 p.m. (London time) on the date falling two calendar days
before the date on which Scheme Record Time falls (or suchother time and/or date as may be announced by the Company(with the consent of Takeda) via a Regulatory Information
Service (with such announcement being made available on the
Company’s and Takeda’s websites at www.shire.com andwww.takeda.com, respectively, and communicated to Scheme
Shareholders at around the same date as such announcement),such announcement being made prior to a date that would,
absent such an announcement, be the Election Return Date);“ESA Instruction”

has the meaning given to it in the CREST Manual;“Euroclear”

Euroclear UK & Ireland Limited, incorporated in England andWales with registered number 02878738;“Excluded Shares”

any Ordinary Shares:“Fiduciary”(i)registered in the name of, or beneficially owned by,
Takeda or any member of the Takeda Group or theirrespective nominees;(ii)

represented by Shire ADSs which are registered in thename of, or beneficially owned by, Takeda or any memberof the Takeda Group or their respective nominees; or(iii)held in treasury by the Company;

Equiniti Financial Services Limited;96

“Forms of Election”

the Certificated Form of Election sent to Scheme Shareholders
who hold their Scheme Shares in certificated form (other thanholders who are resident, located or have a registered address
in a jurisdiction where the extension or availability of the Scheme
would breach any applicable law or to whom Clause 3(A)(ii)
applies) and the CREST Form of Election sent to Scheme
Shareholders who hold their Scheme Shares in uncertificatedform (that is, in CREST) (other than holders who are resident,
located or have a registered address in a jurisdiction where theextension or availability of the Scheme would breach any
applicable law or to whom Clause 3(A)(ii) applies), and “Form ofElection” shall mean either such form of election as the context
requires;“Global Custodian”

Nomura Bank (Luxembourg) S.A.;“holder”

a registered holder and includes any person(s) entitled bytransmission;“JASDEC”

Japan Securities Depository Center, Inc.;“JASDEC Account”

a direct account with JASDEC or a securities account with oneof the AMIs;“JASDEC Election”

an election described under Clause 5(A)(i) which is made byvalidly completing Part 4A on either the Certificated Form ofElection or the CREST Form of Election (as applicable) andreturning the relevant Form of Election to the Receiving Agent, ineach case in accordance with the terms of this Scheme;“Jersey Companies Law”

the Companies (Jersey) Law 1991, as amended from time totime;“Latest Practicable Date”

with respect to the issued share capital of Takeda, the close ofbusiness on October 31, 2018, and otherwise, the close ofbusiness on November 7, 2018, being the latest practicable date
before the date of this Scheme;“New Takeda ADSs”

the new Takeda ADSs to be delivered pursuant to this Scheme
to those Scheme Shareholders who have made a valid ADS
Election to receive New Takeda ADSs (including any New
Takeda ADSs underlying CDIs representing New Takeda ADSs);“New Takeda Shares”

the new Takeda Shares to be delivered to Scheme Shareholders
pursuant to this Scheme;“No Action Sub-Account”

a sub-account opened with the Fiduciary in the name of theRepresentative acting as bare trustee for Scheme Shareholders(if any) who have made (or are deemed to have made) an invalid
Securities Election or have failed to make a valid Securities
Election in respect of some or all of their Scheme Shares;“Ordinary Course Dividend” has the meaning given to it in Clause 2(E);“Ordinary Shares”

ordinary shares of 5 pence each in the capital of the Company;“Panel”

The Panel on Takeovers and Mergers;“Permitted Dividend”

has the meaning given to it in Clause 2(E);97“Personal Sub-Account”

a sub-account opened with the Fiduciary in the name of each
Scheme Shareholder who makes a valid Corporate Nominee
Election;“Receiving Agent”

the receiving agent appointed by the Company for the purposesof this Scheme, being Equiniti Limited, a limited liability company
incorporated in England with registered number 06226088;“Registrar”

Equiniti (Jersey) Limited, a limited liability company incorporated
in Jersey with registered number 99609;“Registrar of Companies”

the registrar of companies in Jersey;“Representative”

the Company or such other person as may be appointed by theCompany in writing from time to time;“Restricted Scheme
Shareholder”

a Scheme Shareholder in respect of whom Clause 3(A) applies;“Sales Policy”

the sales policy set out in paragraph 22 of Part II (Explanatory
Statement) of the Scheme Circular;“Scheme”

this scheme of arrangement proposed to be made under Article
125 of the Jersey Companies Law between the Company andthe Scheme Shareholders, in its present form or with or subject
to any modification, addition or condition approved or imposedby the Court and agreed to by the Company and Takeda;“Scheme Circular”

the circular dated November 12, 2018 sent by the Company toholders of Ordinary Shares of which this Scheme forms part;“Scheme Effective Date”

the date on which this Scheme becomes Effective in accordancewith Clause 10;“Scheme Record Time”

6.00 p.m. (London time) on the calendar day following the dateof the Court Sanction Hearing;“Scheme Shareholder”

a holder of Scheme Shares;“Scheme Shares”

the Ordinary Shares:(i)in issue at the date of this Scheme;(ii)(if any) issued after the date of this Scheme and before
the Voting Record Time; and(iii)(if any) issued at or after the Voting Record Time andbefore the Scheme Record Time on terms that the original
holder or any subsequent holder thereof will be bound by
this Scheme or in respect of which the original or any
subsequent holder thereof shall have agreed in writing to
be bound by this Scheme,

and in each case remaining in issue at the Scheme Record
Time, but excluding any Excluded Shares;“Securities Election”

a JASDEC Election, Corporate Nominee Election, ADS Election
or Dealing Facility Election, as the context requires;“Settlement Account”

the JASDEC Account to be opened by the Global Custodian on
the instruction of the Fiduciary, for the purpose of entering into98the record maintained by JASDEC the New Takeda Shares to beissued in connection with the Acquisition and, as relevant, thecontinued holding of New Takeda Shares in accordance with theBook-Entry Act;
“Shire ADS”

an American Depositary Share issued under the Shire Deposit
Agreement, such American Depositary Share representing three
Ordinary Shares;“Shire Deposit Agreement”

the amended and restated deposit agreement, including theform of American Depositary Receipt for American Depositary
Shares representing Ordinary Shares attached thereto, setting
forth the terms of the Shire ADSs from time to time;“Takeda”

Takeda Pharmaceutical Company Limited, a company
incorporated in Japan and whose registered office is at
1-1 Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan;“Takeda ADS”

an American Depositary Share issued under the Takeda Deposit
Agreement, such American Depositary Share representing
0.5 Takeda Shares;“Takeda Deposit Agreement” the deposit agreement, including the form of American
Depositary Receipt for American Depositary Shares
representing Takeda Shares attached thereto, setting forth theterms of the Takeda ADSs from time to time;(B)“Takeda Depositary”

The Bank of New York Mellon, or the depositary from time to time
for the Takeda ADSs pursuant to the Takeda Deposit Agreement;“Takeda Group”

Takeda and its subsidiaries and subsidiary undertakings fromtime to time;“Takeda Shares”

the shares of common stock of no par value in the capital of
Takeda;“TTE Instruction”

a transfer to escrow instruction as defined in the CREST Manual;“TTE Instruction Return
Time”

the Scheme Record Time, being the latest time for making a TTE
Instruction;“uncertificated” or “inuncertificated form”

a share or other security recorded on the relevant register as
being in uncertificated form in CREST, and title to which, by
virtue of the CREST Regulations, may be transferred by meansof CREST; and“Voting Record Time”

6.30 p.m. (London time) on the day which is two calendar days
before the date of the Court Meeting or, if the Court Meeting is
adjourned, 6.30 p.m. (London time) on the date falling two
calendar days before the date appointed for such adjourned
meeting.

References to:(i)

Clauses are to clauses of this Scheme;(ii)

time are to London time;(iii)“pounds”, “pounds Sterling”, “Sterling”, “£”, “pence”, “penny” and “p” are to the lawful
currency of the United Kingdom;(iv)“JPY”, “JP¥”, “¥” and “Japanese Yen” are to the lawful currency of Japan; and
99

(v)

“US$”, “$” and “US Dollars” are to the lawful currency of the United States.

(C)

The issued ordinary share capital of the Company as at the Latest Practicable Date was£46,147,333, divided into 922,946,619 ordinary shares of 5 pence each and two subscriber
ordinary shares of £1 each, all of which were credited as fully paid and of which 7,357,283 were
held in treasury. The subscriber ordinary shares are not subject to the Scheme and Shire willprocure that the holder of the subscriber ordinary shares delivers a duly executed transfer formin favour of Takeda shortly prior to the Scheme becoming Effective.

(D)

As at the Latest Practicable Date, options and awards which could require the issue of up to
20,387,812 Ordinary Shares (including Ordinary Shares underlying Shire ADSs) have been
granted pursuant to the Shire Long Term Incentive Plan 2015, the Shire Sharesave Scheme
2008, the Shire UK Sharesave Plan 2015, the Shire Irish Employee Stock Purchase Plan 2008,
the Shire Irish Sharesave Plan 2015, the Shire Deferred Bonus Plan 2015, the Shire Portfolio
Share Plan and the Baxalta Incorporated 2015 Incentive Plan and the Governing Terms of the
Substitute Awards.22(E)

The issued share capital of Takeda as at the Latest Practicable Date was 794,701,895 ordinary
shares of no par value, of which 162,897 were held in treasury.

(F)

As at the Latest Practicable Date, no Ordinary Shares were registered in the name of or
beneficially owned by Takeda or any other member of the Takeda Group.

(G)

Takeda has agreed to appear by Counsel at the Court Sanction Hearing and to submit to bebound by and undertake to the Court to be bound by the provisions of this Scheme and to
execute and do, or procure to be executed and done, all such documents, acts and things as may
be necessary or desirable to be executed or done by it to give effect to and be bound by thisScheme.

THE SCHEME
1.

Transfer of Scheme Shares(A)

On the Scheme Effective Date, Takeda (or such of its nominee(s) as are agreed between Takeda
and the Company) shall acquire all the Scheme Shares fully paid, with full title guarantee, freefrom all liens, equities, charges, encumbrances and other interests, and together with all rights
attached thereto, including voting rights and the right to receive and retain all dividends and other
distributions declared, made or paid by the Company by reference to a record date falling on orafter the Scheme Effective Date.

(B)

For the purposes of such acquisition, the Scheme Shares shall be transferred to Takeda (or suchof its nominee(s) as are agreed between Takeda and the Company) and such transfer shall beeffected by means of a form of transfer or other instrument or instruction of transfer, or by meansof CREST, and to give effect to such transfers any person may be appointed by the Company as
attorney or agent and shall be authorised as such attorney or agent on behalf of the holder
concerned to execute and deliver such form of transfer or other instrument or instruction oftransfer in respect of, or procure the transfer by means of CREST, of such Scheme Shares, andevery form, instrument or instruction of transfer so executed or instruction given shall be aseffective as if it had been executed or given by the holder or holders of the Scheme Shares
thereby transferred.

(C)

Pending registration of the transfer of the Scheme Shares pursuant to Clause 1(A) and
Clause 1(B), each Scheme Shareholder irrevocably appoints Takeda (or such of its nominee(s)22 Includes Ordinary Shares (including Ordinary Shares underlying Shire ADSs) that could be issued upon the exerciseof outstanding stock appreciation rights, assuming Shire ADS and Ordinary Share prices of $180.95 and £45.99
respectively, the closing prices on the Latest Practicable Date. The reasonably envisaged maximum number ofOrdinary Shares which could be issued pursuant to the exercise/vesting of outstanding options/awards prior to May 8,
2019 is 14,927,934.

100

as are agreed between Takeda and the Company) as its attorney and/or agent to exercise on its
behalf (in place of and to the exclusion of the relevant Scheme Shareholder) any voting rights
attached to its Scheme Shares and any or all rights and privileges attaching to the Scheme
Shares, to sign any consent to short notice of any general or separate class meeting of theCompany and authorises the Company to send to Takeda (and/or such of its nominee(s) as areagreed between Takeda and the Company) any notice, circular, warrant or other document orcommunication which may be required to be sent to them as a member of the Company, suchthat from the Scheme Effective Date no Scheme Shareholder shall be entitled to exercise any
voting rights attached to the Scheme Shares or any other rights or privileges attaching to the
Scheme Shares.
2.

Consideration for the transfer of Scheme Shares(A)

In consideration for the transfer of the Scheme Shares to Takeda (or its nominee(s) referred to in
Clause 1(B)), Takeda shall, subject to the remaining provisions of this Scheme, allot and issue
New Takeda Shares (or, where relevant, procure the issue of New Takeda ADSs) and pay orprovide, or procure that there shall be paid or provided, cash consideration to or for the accountof each Scheme Shareholder on the following basis:(i)$30.33 in cash; and(ii)

0.839 New Takeda Shares or, subject to the relevant Scheme Shareholder having made avalid ADS Election, 1.678 New Takeda ADSs (or CDIs representing such New Takeda
ADSs),

for each Scheme Share.
(B)

The New Takeda Shares allotted and issued pursuant to Clause 2(A) shall be issued credited as
fully paid and will rank pari passu in all respects with the Takeda Shares in issue on the Scheme
Effective Date, including the right to receive and retain dividends and other distributions declared,
made or paid by reference to a record date falling on or after the Scheme Effective Date.

(C)

Takeda shall procure that the New Takeda ADSs issued pursuant to this Scheme will rank paripassu in all respects with any Takeda ADSs in issue on the Scheme Effective Date, including theright to receive and retain cash and other distributions, made or paid by reference to a record
date falling on or after the Scheme Effective Date (save that CDIs representing New Takeda
ADSs shall not carry any voting rights in Takeda), but shall in any event be issued subject to theterms of the Takeda Deposit Agreement.

(D)

Subject to Clause 2(E), if any dividend and/or other distribution or return of capital is announced,
declared, made or paid by the Company in respect of a Scheme Share (other than a Permitted
Dividend) or in an amount in excess of a Permitted Dividend after May 8, 2018 and before the
Scheme Effective Date, Takeda shall be entitled to reduce the amount of Consideration payable
in respect of each Scheme Share:

(E)

(i)

in the case of an Ordinary Course Dividend in an amount in excess of a Permitted
Dividend, by an amount equivalent to all or any part of such excess (calculated, for the
avoidance of doubt, on a per Scheme Share basis); or(ii)

in the case of any dividend and/or other form of distribution or return of capital which is not
a Permitted Dividend, by the amount of all or part of any such dividend and/or other formof distribution or return of capital (calculated, for the avoidance of doubt, on a per Scheme
Share basis).

Notwithstanding the provisions of Clause 2(D), holders of Scheme Shares shall be entitled toreceive and retain any dividends announced, declared, made or paid by Shire, in each case in
the ordinary course (including as to amount and on usual biannual declaration, record andpayment dates), in respect of any completed six-month period ending June 30 or December 31

101

before the Scheme Effective Date (each an “Ordinary Course Dividend”). Such Ordinary
Course Dividends shall not exceed:(i)34.51 US$ cents per Ordinary Share for the six-month period ending December 31, 2018(such that the total for the 12-month period ending December 31, 2018 does not exceed
40.11 US$ cents per Ordinary Share);(ii)

in respect of any subsequent six-month period ending June 30, an amount representing
not more than 110 per cent. of the dividend per Ordinary Share paid in respect of the sixmonth period ending June 30, 2018; and(iii)

in respect of any subsequent six-month period ending December 31, an amount, whentaken in aggregate with any amount paid for the six-month period ending June 30 in thesame financial year, representing not more than 115 per cent. of the total dividend per
Ordinary Share paid in respect of the year ending December 31, 2018,(each Ordinary Course Dividend that is permissible under these criteria being a “Permitted
Dividend”), without any consequential reduction in the Consideration payable by Takeda inrespect of each Scheme Share under the Scheme. Takeda has agreed and acknowledged thaton October 19, 2018, the Company paid an interim dividend of 5.60 US$ cents per Ordinary
Share in respect of the six-month period ended June 30, 2018, which constituted a Permitted
Dividend.
(F)

Holders of Ordinary Shares appearing in the register of members either at the Scheme Record
Time, or at any earlier record time or times as may be determined by the directors of theCompany, will be entitled to receive and retain Permitted Dividends (including after this Scheme
has become Effective and notwithstanding the transfer of the Scheme Shares to Takeda or its
nominee(s) referred to in Clause 1(B)) without any consequential reduction in the Consideration
payable by Takeda in respect of each Scheme Share (under the terms of the Scheme and theCompany and (where applicable) Takeda shall do all things necessary to give effect to thisClause 2(F).

(G)

If Takeda exercises the right referred to in Clause 2(D) to reduce the Consideration by: (x) all orpart of the amount of any dividend (and/or other form of distribution or return of capital)
announced, declared, made or paid by the Company, which is not a Permitted Dividend; or (y)an amount of any Ordinary Course Dividend that is in excess of the amount of a Permitted
Dividend:(i)holders of Ordinary Shares appearing on the register of members at the relevant record
time as determined by the directors of the Company will be entitled to receive and retainthat dividend (and/or other form of distribution or return of capital) in respect of theOrdinary Shares they held at such record time;(ii)

any reference in this Scheme and the Scheme Circular to the Consideration payable under
the Scheme shall be deemed a reference to the Consideration as so reduced; and(iii)

the exercise of such rights shall not be regarded as constituting any revision or variationof the terms of the Scheme.

3.

Overseas shareholders(A)

The provisions of Clause 2, Clause 4, Clause 5 and Clause 6 shall be subject to any prohibition
or condition imposed by law. Without prejudice to the generality of the foregoing, if, in respect of
any Scheme Shareholder who is resident, located or has a registered address in a jurisdiction
outside Jersey or the United Kingdom, Takeda is advised that:(i)the law of a country or territory outside Jersey or the United Kingdom precludes:

102

(ii)

(a)

the allotment, issue and/or delivery to that Scheme Shareholder of New Takeda
Shares and/or New Takeda ADSs in accordance with Clause 4; and/or(b)

the provision to that Scheme Shareholder of the right to make an Election inaccordance with Clause 5 and Clause 6; orthe law of a country or territory outside Jersey or the United Kingdom precludes either orboth of the matters referred to by Clause 3(A)(i)(a) and/or Clause 3(A)(i)(b), except after
compliance by the Company or Takeda (as the case may be) with any governmental orother consent or any registration, filing or other formality with which the Company and/or
Takeda (as the case may be) is unable to comply or compliance with which the Company
and/or Takeda (as the case may be) regards as unduly onerous,

then:
(iii)

in the case of Clause 3(A)(i)(a) and Clause 3(A)(ii) (insofar as it applies toClause 3(A)(i)(a)), Takeda may determine in its sole discretion that any such New Takeda
Shares and/or New Takeda ADSs shall not be allotted, issued and delivered to such
Scheme Shareholder but instead the New Takeda Shares and/or the New Takeda Sharesthat would otherwise represent the New Takeda ADSs (as applicable) shall be allotted andissued to a nominee, appointed by Takeda, for such Scheme Shareholder, on terms thatthe nominee shall be authorised on behalf of such Scheme Shareholder to procure thatsuch New Takeda Shares shall, as soon as practicable following the Scheme Effective
Date, be sold on behalf of such Scheme Shareholder in accordance with the Sales Policy
and any sale under this Clause 3(A) shall be carried out at the best price which canreasonably be obtained at the time of sale and the net proceeds of such sale (after the
deductions specified in the Sales Policy) shall be paid to such Scheme Shareholder in US
Dollars by making a payment to such Scheme Shareholder in accordance with Clause 6.
In the absence of bad faith or wilful default, none of the Company, Takeda or any broker
or agent of either of them shall have any liability for any loss arising as a result of the timing
or terms of any such sale; and(iv)

in the case of Clause 3(A)(i)(b) and Clause 3(A)(ii) (insofar as it applies toClause 3(A)(i)(b)), Takeda may determine in its sole discretion that the provision to that
Scheme Shareholder of the right to make an Election in accordance with Clause 5 andClause 6 shall not apply.

(B)

In the case of a Scheme Shareholder who is resident, located or has a registered address in ajurisdiction where the extension or availability of the Scheme would breach any applicable law or
to whom Clause 3(A) applies, no Securities Election or Currency Election made by such Scheme
Shareholder shall be of any effect and the omission to send a Form of Election to such Scheme
Shareholder or to recognise any Election made by such Scheme Shareholder shall not constitutea breach by the Company or Takeda of any of their respective obligations under this Scheme.

(C)

Neither Takeda nor the Company will be liable to any Scheme Shareholder in respect of any
omission or denial pursuant to this Clause 3 or any determination made hereunder.

4.

Allotment and issue of New Takeda Shares and New Takeda ADSs

Immediately after the Scheme becomes Effective, Takeda shall:(A)make all such allotments of, and shall issue, such New Takeda Shares; and(B)

procure all such allotments of, and procure the issue of, such New Takeda ADSs,

as are required to be issued pursuant to this Scheme to the persons respectively entitled thereto, suchconsideration to be settled as set out in Clause 6 and in accordance with the Elections of each Scheme
Shareholder.

103

5.

Elections(A)

Subject to the terms and conditions set out in this Scheme, each Scheme Shareholder (otherthan a Restricted Scheme Shareholder) may:(i)elect to hold the New Takeda Shares which such Scheme Shareholder is entitled toreceive as Consideration for some or all of its Scheme Shares in accordance with Clause 2
in their own JASDEC Account, by making a valid JASDEC Election;(ii)

in the case of a Scheme Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to holdthe New Takeda Shares which such Scheme Shareholder is entitled to receive as
Consideration for some or all of its Scheme Shares in accordance with Clause 2 throughthe Corporate Nominee Facility, subject to the Corporate Nominee Facility Terms andConditions, by making a valid Corporate Nominee Election;(iii)

elect under the ADS Election Facility to receive 1.678 New Takeda ADSs or, in the case ofa Scheme Shareholder who makes a valid ADS Election to receive CDIs representing New
Takeda ADSs before the TTE Instruction Return Time and who holds Scheme Shares in
uncertificated form as at the Scheme Record Time, CDIs representing New Takeda ADSs,
in each case for some or all of the Scheme Shares they hold, in lieu of the 0.839 New
Takeda Shares per Scheme Share which such Scheme Shareholder would otherwise havebeen entitled to receive, as Consideration in accordance with Clause 2, subject to theterms and conditions applicable to the New Takeda ADSs, by making a valid ADS Election;
or

(iv)

in the case of a Scheme Shareholder who holds 200 or fewer Scheme Shares incertificated form as at the Scheme Record Time and has a registered address in the EEA,
Channel Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time,elect under the Dealing Facility to have all of the New Takeda Shares which such Scheme
Shareholder is entitled to receive as Consideration for their Scheme Shares in accordancewith Clause 2 sold on their behalf under the Dealing Facility and the net proceeds of such
sale remitted to the Scheme Shareholder in pounds Sterling, subject to the Dealing Facility
Terms and Conditions, by making a valid Dealing Facility Election.

(B)

Subject to the terms and conditions set out in this Scheme (including, without limitation,
Clause 5(C)), each Scheme Shareholder (other than a Restricted Scheme Shareholder) may
elect under the Currency Conversion Facility to receive some or all of the cash portion of theConsideration which is payable to them in accordance with Clause 2 in pounds Sterling (net ofany applicable customary transaction and dealing costs associated with the conversion) at theapplicable average market exchange rate obtained by Takeda through a series of market
transactions over one or more Business Days following the Scheme Record Time (but before therelevant payment date specified pursuant to the terms of this Scheme), by making a valid
Currency Election.

(C)

Notwithstanding Clause 5(B), each Scheme Shareholder who holds Scheme Shares incertificated form and has a registered address in the United Kingdom, Channel Islands or Isle of
Man as at the Scheme Record Time shall be deemed to have made a valid Currency Election toreceive the entire cash portion of the Consideration which is payable to them in accordance with
Clause 2 instead paid in pounds Sterling (net of any applicable customary transaction anddealing costs associated with the conversion) at the applicable average market exchange rate
obtained by Takeda through a series of market transactions over one or more Business Days
following the Scheme Record Time (but before the relevant payment date), unless such Scheme
Shareholder validly opts out of the Currency Conversion Facility in accordance with the
instructions included in the Scheme Circular.

(D)

Each Election will only be accepted under the Scheme in respect of a whole number of Scheme
Shares. Any Election which is made in respect of a number of Scheme Shares which is not a104

whole number shall be deemed to be made in respect of the nearest whole number of Scheme
Shares when rounded down.
(E)

A Scheme Shareholder may (if entitled to make Securities Elections pursuant to this Scheme)
make a single JASDEC Election, a single Corporate Nominee Election and/or a single ADS
Election in respect of some or all of their holding of Scheme Shares, but is not permitted to makemultiple JASDEC Elections, multiple Corporate Nominee Elections and/or multiple ADS Elections
in respect of any part of their holding of Scheme Shares.

(F)

A Scheme Shareholder (if entitled to make a Dealing Facility Election pursuant to this Scheme)
may make a Dealing Facility Election in respect of their entire holding of Scheme Shares only. In
the event that a Scheme Shareholder makes a valid Dealing Facility Election, but for compliancewith this Clause 5(F), then such Scheme Shareholder shall be deemed to have made a valid
Dealing Facility Election in respect of their entire holding of Scheme Shares and any other
Securities Election purported to have been made by such Scheme Shareholder shall be invalid.

(G)

A Scheme Shareholder (if entitled to make a Currency Election pursuant to this Scheme) may
make a Currency Election in respect of all or part of their holding of Scheme Shares.

(H)

If a Scheme Shareholder has made a valid Election in respect of their entire holding of Scheme
Shares by: (i) making a valid Currency Election using a Form of Election; (ii) marking “ALL” in therelevant part of an applicable Form of Election in respect of a valid JASDEC Election, Corporate
Nominee Election or ADS Election; or (iii) by making a valid Dealing Facility Election, then thevalidity of such Election shall not be affected by any increase or decrease in the number of
Scheme Shares held by the Scheme Shareholder at any time before the Scheme Record Time.
Accordingly, such Election shall apply in respect of all of the Scheme Shares which the Scheme
Shareholder holds at the Scheme Record Time.

(I)

If a Scheme Shareholder has made one or more valid Elections in respect of a specified numberof Scheme Shares and, at Scheme Record Time, the number of Scheme Shares held by that
Scheme Shareholder is:
(i)

(ii)

equal to, or greater than, the aggregate number of Scheme Shares to which such
Election(s) relates, then:(a)the validity of the Election(s) made by the Scheme Shareholder shall not be affectedby any alteration in the number of Scheme Shares held by the Scheme Shareholder
in the period before the Scheme Record Time; and(b)such Election(s) will apply only in respect of the number of Scheme Shares specified
in the relevant Form of Election and/or TTE Instruction (as applicable) and those
Scheme Shares which are not the subject of a valid Election shall be dealt with inaccordance with Clause 5(R); or

less than the aggregate number of Scheme Shares to which such Election(s) relates, then:(a)the validity of the Election(s) made by the Scheme Shareholder shall not be affectedby any alteration in the number of Scheme Shares held by the Scheme Shareholder
in the period before the Scheme Record Time;(b)

if the relevant Election is a Currency Election, such Scheme Shareholder shall betreated as having made the Currency Election in respect of their entire holding of
Scheme Shares;(c)

if the relevant Election is a Securities Election and the Scheme Shareholder has
made only a single valid Securities Election, such Scheme Shareholder shall betreated as having made such Securities Election in respect of their entire holding of
Scheme Shares; and

105

(d)

(J)

subject to Clause 5(J), if the relevant Election is a Securities Election and the
Scheme Shareholder has made more than one valid Securities Election, then therelevant Securities Elections shall apply pro rata in respect of all of the Scheme
Shares which the Scheme Shareholder holds at the Scheme Record Time.

In the event that a pro rata reduction is applied in respect of an Election pursuant toClause 5(I)(ii)(d) and such reduction would result in the apportionment of a fraction of a Scheme
Share between two or more Election options, the number of Scheme Shares apportioned to eachsuch Election option shall be rounded down to the nearest whole number and any fractions
resulting therefrom shall be aggregated and:(i)subject to the relevant Scheme Shareholder having made a valid ADS Election in respectof some of their holding of Scheme Shares, any such whole Scheme Shares resulting
therefrom shall be treated as having been the subject of a valid ADS Election; or(ii)

in the event that the relevant Scheme Shareholder has not made a valid ADS Election in
respect of some of their holding of Scheme Shares, any such Scheme Shares resulting
therefrom shall be treated as having been the subject of a valid JASDEC Election.

(K)

Elections made by Scheme Shareholders who hold their Scheme Shares in certificated form shallbe made by completion of a Certificated Form of Election which shall be executed by the Scheme
Shareholder or their duly authorised agent (or, in the case of a body corporate, executed by anauthorised representative) and in the case of joint holders in like manner by or on behalf of all
such holders. To be valid, the Certificated Form of Election must be completed and returned bypost or by hand (during normal business hours only) in accordance with the instructions printed
thereon so as to arrive by not later than the Election Return Time at Equiniti, Corporate Actions,
Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom.

(L)

Elections made by Scheme Shareholders who hold their Scheme Shares in uncertificated formshall be made:(i)in respect of a Securities Election (other than an ADS Election to receive CDIs
representing New Takeda ADSs), by completion of a CREST Form of Election which shallbe executed by the Scheme Shareholder or their duly authorised agent (or, in the case ofa body corporate, executed by an authorised representative) and in the case of joint
holders in like manner by or on behalf of all such holders. To be valid, the CREST Form ofElection must be completed and returned by post or by hand (during normal businesshours only) in accordance with the instructions printed thereon so as to arrive by not later
than the Election Return Time at Equiniti, Corporate Actions, Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA, United Kingdom;(ii)

in respect of an ADS Election to receive CDIs representing New Takeda ADSs, by way of
TTE Instruction. To be valid, the TTE Instruction must be made and received by not later
than the TTE Instruction Return Time; and(iii)

in respect of a Currency Election, by way of TTE Instruction. To be valid, the TTE
Instruction must be made and received by not later than the TTE Instruction Return Time.

(M)

Upon execution and delivery by a Scheme Shareholder of a valid Form of Election or the making
of a valid TTE Instruction, such holder shall be bound by the terms and provisions contained insuch Form of Election or TTE Instruction (as the case may be) and by the terms and provisionsof this Scheme.

(N)

If a Form of Election is received after the Election Return Time or a TTE Instruction is received
after the TTE Instruction Return Time or is received before the Election Return Time or TTE
Instruction Return Time (as applicable) but is not, or is deemed not to be, valid or complete in all
respects at the applicable time, then such Election shall be void unless the Company and106

Takeda, in their absolute discretion (but in accordance with Clause 6(B)(vi) (if applicable)),determine to treat it as valid whether in whole or in part.
(O)

A Form of Election duly completed and delivered or TTE Instruction made and submitted, in eachcase in accordance with this Clause 5, may be withdrawn:(i)for those Scheme Shareholders who have returned a Form of Election, by notice to the
Receiving Agent in writing, to be received by no later than 1.00 p.m. on the Business Day
immediately prior to the date on which the Election Return Time falls; and(ii)

for those Scheme Shareholders who have submitted a TTE Instruction, by submission ofa valid ESA Instruction by no later than 1.00 p.m. on the Business Day immediately prior
to the date on which the Scheme Record Time falls.

(P)

Any Election(s) made by a Scheme Shareholder will not affect the entitlements of Scheme
Shareholders who do not make any such Election(s).

(Q)

Restricted Scheme Shareholders shall not be entitled to make any Election(s).

(R)

Scheme Shareholders who do not make a valid Securities Election in accordance with thisClause 5 in respect of all of their Scheme Shares will become entitled, in respect of each Scheme
Share in relation to which no such Securities Election has been made, to the New Takeda Shares
which are to be issued as Consideration for such Scheme Shares pursuant to Clause 2, however
such New Takeda Shares shall be held in the Settlement Account until the occurrence of theearlier of the events specified in Clause 6(B)(vi).

6.

Settlement(A)

Settlement of the cash portion of the Consideration shall be effected as follows:(i)where, at the Scheme Record Time, a Scheme Shareholder holds Scheme Shares incertificated form, payment of the cash portion of the Consideration payable to such
Scheme Shareholder in accordance with Clause 2 shall be settled by Takeda:(a)to the extent that a Scheme Shareholder has instructed and set up a standing
electronic payment mandate with the Registrar for the purpose of receiving dividend
payments from the Company in pounds Sterling and subject to such Scheme
Shareholder having made (or being deemed to have made) a valid Currency
Election to receive their entitlement to Consideration in pounds Sterling, by way ofan electronic BACs transfer for the amount payable to the relevant Scheme
Shareholder to such account as is indicated in such standard electronic payment
mandate; and(b)

in all other cases, in US Dollars or pounds Sterling (as applicable in accordance with
the Currency Election made (or deemed to have been made) by such Scheme
Shareholder) by cheque for the amount payable to the relevant Scheme
Shareholder drawn on a branch of a UK clearing bank.

Electronic BACs transfers shall be made, and cheques shall be despatched, as soon aspracticable on or after the Scheme Effective Date, and in any event within 14 calendar
days of the Scheme Effective Date; and(ii)

where, at the Scheme Record Time, a Scheme Shareholder holds Scheme Shares in
uncertificated form, payment of the cash portion of the Consideration payable to such
Scheme Shareholder in accordance with Clause 2 shall be paid by means of CREST, in
accordance with the Currency Election made by such Scheme Shareholder, by Takeda
procuring that Euroclear is instructed to create an assured payment obligation in favour of
the Scheme Shareholder’s payment bank in respect of the cash portion of theConsideration due to them as soon as practicable on or after the Scheme Effective Date107

and in any event within 14 calendar days of the Scheme Effective Date, in accordance with
the CREST assured payment arrangements, provided that: (a) Takeda shall not be
responsible for any delay in settlement as a result of a failure by a Scheme Shareholder
to ensure that it has an active US Dollar cash memorandum account in place in CREST at
the Scheme Record Time; and (b) Takeda reserves the right to make such payment by wayof electronic BACs transfer or cheque as set out in Clause 6(A)(i) if, for reasons outside its
reasonable control, it is not able to effect settlement in accordance with this Clause 6(A)(ii).
(B)

Settlement of the New Takeda Securities shall be effected as follows:(i)

as soon as practicable following the Scheme Effective Time, Takeda shall procure that the
total number of New Takeda Shares to be allotted and issued in consideration for thetransfer of the Scheme Shares in accordance with Clause 2, together with the maximum
whole number of New Takeda Shares resulting from the aggregation of fractional
entitlements pursuant to Clause 7, shall be allotted, issued and recorded to the Settlement
Account. Each Scheme Shareholder is deemed to appoint the Fiduciary as its nominee forsuch purpose to receive and hold the New Takeda Shares through the Settlement Accountpending settlement in accordance with the remainder of this Clause 6(B);(ii)

in the case of Scheme Shareholders who have made a valid JASDEC Election and subject
always to the provisions of Clause 7 with respect to fractional entitlements, Takeda shallprocure that the New Takeda Shares which such Scheme Shareholders are entitled toreceive as Consideration for the Scheme Shares in respect of which they have made such
JASDEC Election are delivered from the Settlement Account to the Scheme Shareholder’sdesignated JASDEC Account as soon as practicable on or after the Scheme Effective Dateand in any event by no later than the date which is 14 calendar days after the Scheme
Effective Date (but provided that Takeda shall not be responsible for any delay in deliveryof New Takeda Shares caused by the failure of an AMI to record delivery of any New
Takeda Shares);(iii)

in the case of Scheme Shareholders who have made a valid Corporate Nominee Election
and subject always to the provisions of Clause 7 with respect to fractional entitlements,
Takeda shall procure that the Fiduciary, acting as nominee for the relevant Scheme
Shareholders, records the relevant number of New Takeda Shares which such Scheme
Shareholders are entitled to receive as Consideration for the Scheme Shares in respect ofwhich such Scheme Shareholder has made such Corporate Nominee Election to therelevant Scheme Shareholder’s Personal Sub-Account and posts a statement ofentitlement detailing the number of New Takeda Shares held by each such Scheme
Shareholder in their Personal Sub-Account to that Scheme Shareholder as soon aspracticable thereafter and in any event by no later than the date which is 14 calendar days
after the Scheme Effective Date;(iv)

in the case of Scheme Shareholders who have made a valid ADS Election and subject
always to the provisions of Clause 7 with respect to fractional entitlements, Takeda shallprocure that the New Takeda Shares which such Scheme Shareholders would otherwise
be entitled to receive as Consideration for the Scheme Shares in respect of which they
have made such ADS Election are delivered from the Settlement Account to the Takeda
Depositary’s JASDEC Account and that either:(a)the Takeda Depositary delivers two New Takeda ADSs to each such Scheme
Shareholder in respect of each such New Takeda Share which such Scheme
Shareholder would otherwise have been entitled to receive as Consideration for
Scheme Shares in respect of which they have made a valid ADS Election under thisScheme, in accordance with the terms of the Takeda Deposit Agreement; or(b)where the Scheme Shareholder holds their Scheme Shares in uncertificated formand has made a valid ADS Election to receive CDIs representing New Takeda ADSs,

108

the Takeda Depositary effects the credit of two New Takeda ADSs (in respect ofeach such New Takeda Share which such Scheme Shareholder would otherwise
have been entitled to receive as Consideration for Scheme Shares in respect ofwhich they have made a valid ADS Election under this Scheme) through DTC to thesecurities deposit account of CREST International Nominees Limited as nominee for
CREST Depository Limited, which will then issue the CDIs representing New
Takeda ADSs through CREST to the Registrar for delivery to the securities deposit
account in CREST in which such Scheme Shareholder previously held Scheme
Shares,in each case, as soon as practicable on or after the Scheme Effective Date and in any
event by no later than the date which is 14 calendar days after the Scheme Effective Date,provided that neither Takeda nor the Takeda Depositary shall be responsible for any delayin the delivery of New Takeda ADSs due to: (i) in respect of an ADS Election to receive
New Takeda ADSs through DTC, the provision of incomplete or incorrect DTC delivery
details by a Scheme Shareholder or any failure by a DTC participant to input valid
instructions to receive delivery of the New Takeda ADSs free of payment; and (ii) in respectof an ADS Election to receive New Takeda ADSs through the direct registration system, theprovision of insufficient personal information by a Scheme Shareholder to enable theTakeda Depositary to register the entitlement of such Scheme Shareholder to New Takeda
ADSs through the direct registration system.
(v)

in the case of Scheme Shareholders who have made a valid Dealing Facility Election andsubject always to the provisions of Clause 7 with respect to fractional entitlements, Takeda
shall procure that all of the New Takeda Shares which such Scheme Shareholders areentitled to receive as Consideration for their Scheme Shares are sold in the market on
behalf of such Scheme Shareholders and the net proceeds of sale are paid to such
Scheme Shareholders in pounds Sterling by cheque for the amount payable to the relevant
Scheme Shareholder drawn on a branch of a UK clearing bank (such cheques to be
despatched as soon as practicable on or after the Scheme Effective Date, and in any event
within 14 calendar days of the Scheme Effective Date), in each case in accordance withthe terms of the Dealing Facility Terms and Conditions and the Sales Policy; and(vi)

in the case of Scheme Shareholders who do not make a valid Securities Election inaccordance with Clause 5 in respect of all of their Scheme Shares, Takeda shall procurethat the New Takeda Shares which such Scheme Shareholders are entitled to receive inaccordance with Clause 5(R) as Consideration for those of their Scheme Shares in respectof which no valid Securities Election has been made are allotted and issued to theSettlement Account and are recorded to the No Action Sub-Account and held by the
Representative as bare trustee for the relevant Scheme Shareholders, until the earlier of:(a)the delivery of a valid Securities Election by such Scheme Shareholder inaccordance with Clause 5 in relation to the action which should be taken in respectof the New Takeda Shares (in which case Takeda shall procure that theRepresentative shall procure that such action shall be taken as is required in orderto give effect to such Securities Election as soon as practicable after such Securities
Election is validly made). For the purposes of this Clause 6(B)(vi)(a), any Securities
Election submitted by a relevant Scheme Shareholder shall apply as an instruction
to the Representative in relation to the action which should be taken in respect of
the New Takeda Shares which are held by the Representative as bare trustee forthe relevant Scheme Shareholder; and(b)the date which falls three months from the Scheme Effective Date (in which caseTakeda shall procure that the Representative, on behalf of the relevant Scheme
Shareholders, shall procure that such New Takeda Shares are sold in the market assoon as practicable thereafter in accordance with the Sales Policy and that the net

109proceeds of sale (after the deductions specified in the Sales Policy and rounded
down to the nearest whole cent or penny, as applicable) are paid in due proportion
to the relevant Scheme Shareholders in: (i) pounds Sterling, in the case of Scheme
Shareholders who held their Scheme Shares in certificated form and have aregistered address in the United Kingdom, Channel Islands or Isle of Man as at the
Scheme Record Time; and (ii) US Dollars, in the case of all other Scheme
Shareholders).
If any dividends are declared, made or paid on such New Takeda Shares by reference toa record date falling after the Scheme Record Date but before such New Takeda Shares
are: (i) transferred out of the No Action Sub-Account or sold through the Dealing Facility ineach case pursuant to a valid Securities Election; or (ii) sold in the market pursuant to theSales Policy, such dividends shall be received by the Fiduciary on behalf of theRepresentative acting as bare trustee for the relevant Scheme Shareholders and Takeda
shall procure that such action shall be taken as is required in order that such dividends arepaid to the relevant Scheme Shareholders in: (a) pounds Sterling, in the case of Scheme
Shareholders who held their Scheme Shares in certificated form and have a registeredaddress in the United Kingdom, Channel Islands or Isle of Man as at the Scheme Record
Time; and (b) US Dollars, in the case of all other Scheme Shareholders, in each caseconverted at the applicable market exchange rate on the latest reasonably practicable date
for fixing such rate prior to the date of payment to the Scheme Shareholder and net of any
applicable customary transaction and dealing costs associated with the conversion.
(C)

Payment of any amounts to which a Scheme Shareholder is entitled under Clause 6(B)(vi) shallbe made in accordance with Clause 6(A)(i).

(D)

Scheme Shareholders who do not make a valid Securities Election in accordance with Clause 5in respect of all of their Scheme Shares are deemed, in respect of all of the New Takeda Shares
which such Scheme Shareholders are entitled to receive as Consideration for those of their
Scheme Shares in respect of which no valid Securities Election has been made, to appoint theRepresentative to perform all such actions as are necessary or desirable for the purposes ofeffecting settlement of the New Takeda Shares in accordance with Clause 6(B)(vi), including,
without limitation:(i)to hold the relevant New Takeda Shares in the No Action Sub-Account pending their salein accordance with the Sales Policy or the submission of a valid Securities Election;(ii)

to give instructions to the Fiduciary regarding the sale or any action to be taken to giveeffect to a valid Securities Election; and(iii)

to receive notices in respect of the New Takeda Shares and to exercise any other rights
exercisable by, or perform any actions required of, a holder of such New Takeda Shares inorder to comply with applicable laws, provided always that the Representative shall holdthe relevant New Takeda Shares as bare trustee for the relevant Scheme Shareholders.

(E)

All sales of New Takeda Shares to be procured by Takeda, the Representative or the Fiduciary
as contemplated by this Scheme shall be carried out in accordance with the Sales Policy and all
Scheme Shareholders are deemed to acknowledge and consent to the matters set out in such
Sales Policy.

(F)

All deliveries of notices, statements of entitlement and/or cheques required to be made under thisScheme shall be made by sending the same by first class post to addresses within the United
Kingdom or international standard post to addresses outside the United Kingdom (as applicable)from the United Kingdom (or by such other method as may be approved by the Panel) addressedto the person entitled thereto to the address appearing in the register of members of theCompany or, in the case of joint holders, to the address of the holder whose name stands first insuch register in respect of the joint holding concerned at such time.

110

(G)

All payments made by way of electronic BACs transfer as authorised or permitted under theterms of this Scheme shall be paid to the Scheme Shareholder concerned using the accountdetails indicated in the standing electronic payment mandate set up by such Scheme
Shareholder with the Registrar and the transfer of such amount by way of electronic BACs
transfer shall be a complete discharge to Takeda for the monies represented thereby.

(H)

All cheques shall be made payable to the Scheme Shareholder concerned or, in the case of joint
holders, to the holder whose name stands first in the register of members of the Company inrespect of the joint holding concerned at the Scheme Record Time and the encashment of any
such cheque or the creation of any such assured payment obligation as is referred to in
Clause 6(A)(ii) shall be a complete discharge to Takeda for the monies represented thereby.

(I)

Neither the Company nor Takeda shall be responsible for any loss or delay in the transmissionof the statements of entitlement or cheques sent to Scheme Shareholders in accordance with thisClause 6, which shall be posted at the risk of each such Scheme Shareholder.

(J)

The monies to be transferred by Takeda or its nominee(s) referred to in Clause 1(B) (asapplicable) to the Receiving Agent for the purposes of satisfying the obligations of Takeda or its
nominee(s) referred to in Clause 1(B) (as applicable) to pay the consideration due and payable
to the Scheme Shareholders under and in accordance with the terms of the Scheme shall be heldby the Receiving Agent solely for that purpose and Takeda or its nominee(s) referred to in Clause
1(B) (as applicable) undertakes that it will not seek, require or accept repayment of the monies
paid to the Receiving Agent for the purposes detailed above prior to the first business day after
the twelfth anniversary of the date on which this Scheme becomes Effective or otherwise with thepermission of the Court.

7.

Fractional entitlements(A)

Minor adjustments to the entitlements of Scheme Shareholders pursuant to any Securities
Election may be made by the Receiving Agent with the prior consent of the Company and Takeda
on such terms as the Company and Takeda consider to be fair and reasonable. Suchadjustments shall be final and binding on all Scheme Shareholders.

(B)

Subject to Clause 7(A):

(C)

(i)

the aggregate number of New Takeda Shares which a Scheme Shareholder is entitled toreceive pursuant to Clause 2 in respect of any Scheme Shares in respect of which it has
made a valid JASDEC Election, a valid Corporate Nominee Election or a valid Dealing
Facility Election shall be rounded down to the nearest whole number; and(ii)

the aggregate number of New Takeda ADSs, including New Takeda ADSs underlying CDIs
representing New Takeda ADSs, which a Scheme Shareholder is entitled to receive
pursuant to Clause 2 in respect of any Scheme Shares in respect of which it has made avalid ADS Election shall be rounded down to the nearest whole number.

No fractions of New Takeda Shares shall be allotted to any Scheme Shareholder, however, any
resulting fractional entitlements in respect of New Takeda Shares shall be aggregated and
Takeda shall procure that the maximum whole number of New Takeda Shares resulting therefrom
shall be allotted and issued to the Settlement Account pursuant to Clause 6(B)(i) and recorded
to a sub-account opened with the Fiduciary in the name of the Representative who shall hold therelevant New Takeda Shares as a bare trustee for the relevant Scheme Shareholders. Takeda
shall procure that such New Takeda Shares are sold in the market as soon as practicable on orafter the Scheme Effective Date in accordance with the Sales Policy and that the net proceedsof sale (after the deductions specified in the Sales Policy) are paid in due proportion to the
Scheme Shareholders entitled to them in the same currency as the cash portion of theConsideration payable to such Scheme Shareholders pursuant to Clause 6(A), provided that if a
Scheme Shareholder has made a valid Currency Election to receive some of the cash portion of
the Consideration which is payable to them in accordance with Clause 2 in pounds Sterling, any
111amounts falling due pursuant to this Clause 7(C) shall be paid to that Scheme Shareholder inpounds Sterling.
(D)

No fractions of New Takeda ADSs shall be allotted to any Scheme Shareholder, however, any
resulting fractional entitlements in respect of New Takeda ADSs shall be aggregated and Takeda
shall procure that the maximum whole number of New Takeda Shares which represent such New
Takeda ADSs shall be allotted and issued to the Settlement Account pursuant to Clause 6(B)(i)and recorded to a sub-account opened with the Fiduciary in the name of the Representative who
shall hold the relevant New Takeda Shares as a bare trustee for the relevant Scheme
Shareholders. Takeda shall procure that such New Takeda Shares are sold in the market as soon
as practicable following the Effective Date in accordance with the Sales Policy and that the net
proceeds of sale (after the deductions specified in the Sales Policy) are paid in due proportion to
the Scheme Shareholders entitled to them in the same currency as the cash portion of theConsideration payable to such Scheme Shareholders pursuant to Clause 6(A), provided that if a
Scheme Shareholder has made a valid Currency Election to receive some of the cash portion of
the Consideration which is payable to them in accordance with Clause 2 in pounds Sterling, any
amounts falling due pursuant to this Clause 7(D) shall be paid to that Scheme Shareholder inpounds Sterling.

(E)

All relevant Scheme Shareholders are deemed to appoint the Representative as bare trustee toperform all such actions as are necessary or desirable for the purposes of effecting the sale of
the New Takeda Shares in accordance with this Clause 7, including, without limitation: (i) to holdthe relevant New Takeda Shares in the Settlement Account pending their sale in accordance with
the Sales Policy; (ii) to give instructions to the Fiduciary regarding the sale of such New Takeda
Shares in accordance with the Sales Policy; and (iii) to receive notices in respect of the New
Takeda Shares and to exercise any other rights exercisable by, or perform any actions requiredof, a holder of such New Takeda Shares under applicable laws, provided always that theRepresentative shall hold the relevant New Takeda Shares as bare trustee for the relevant
Scheme Shareholders.

(F)

Payment of any amounts to which a Scheme Shareholder is entitled under Clause 7(C) and/orClause 7(D) shall be made in accordance with Clause 6(A)(i) or Clause 6(A)(ii), as appropriate.

8.

Share certificates and cancellation of CREST entitlements

With effect from, or, in the case of Clause 8(D) only as soon as practicable after, the Scheme Effective
Date:
(A)

all certificates representing Scheme Shares shall cease to be valid as documents of title to the
Scheme Shares represented thereby and every Scheme Shareholder holding certificated
Scheme Shares shall be bound at the request of the Company to deliver up their certificate(s)relating to Scheme Shares to the Company (or any other person appointed by the Company toreceive the same) or to destroy the same;(B)

Euroclear shall be instructed to cancel or transfer the entitlements to Scheme Shares of holdersof Scheme Shares in uncertificated form;(C)

following the cancellation of the entitlements to Scheme Shares of holders of Scheme Shares in
uncertificated form, the Registrar shall be authorised to rematerialise entitlements to such
Scheme Shares; and(D)

the Company shall procure that, subject to the completion of any form of transfer or other
instrument or instruction of transfer as may be required, appropriate entries are made in theregister of members of the Company to reflect the transfer of the Scheme Shares to Takeda
and/or its nominee(s) pursuant to Clause 2.

112

9.

Mandates(A)

All mandates and other instructions, including communications preferences, but excluding any
mandate in respect of the Company’s income access arrangements which allow Scheme
Shareholders to receive dividends from a subsidiary of the Company that is tax resident in the
United Kingdom, which have been given to the Company by Scheme Shareholders who havemade a Corporate Nominee Election in respect of some or all of their Scheme Shares and which
remain in force at the Scheme Record Time in respect of their Scheme Shares shall, unless anduntil revoked or amended, be deemed from the Scheme Effective Date to be valid and effective
mandates or instructions to Takeda in relation to the New Takeda Shares held through the
Corporate Nominee Facility.

(B)

Other than as set out in Clause 9(A) and as required in relation to the settlement of Consideration
pursuant to the terms of this Scheme, all mandates and other instructions (including, without
limitation, any mandate in respect of the Company’s income access arrangements which allow
Scheme Shareholders to receive dividends from a subsidiary of the Company that is tax resident
in the United Kingdom) given to the Company by Scheme Shareholders in force at the Scheme
Record Time relating to Scheme Shares shall, from the Scheme Effective Date, cease to be valid.

10.

Effective time(A)

This Scheme shall become effective in accordance with its terms as soon as a copy of the Court
Order shall have been delivered to the Registrar of Companies for registration.

(B)

Unless this Scheme shall have become Effective on or before May 8, 2019, or such later date, ifany, as the Company and Takeda may agree with the Panel’s consent, and the Court may allow,
this Scheme shall never become Effective.

(C)

If this Scheme does not become Effective, any Election made shall cease to be valid.

11.

Modification

The Company and Takeda may jointly consent on behalf of all persons concerned to any modificationof, or addition to, this Scheme or to any condition that the Court may approve or impose.
12.

Governing law(A)This Scheme is governed by Jersey law and is subject to the exclusive jurisdiction of the Court.
The rules of the Code apply to this Scheme on the basis provided in the Code.

(B)

The Forms of Election, all TTE Instructions and all Elections thereunder, and all action taken or
made, or deemed to be taken or made, pursuant to any of the terms of this Scheme, shall begoverned by and interpreted in accordance with Jersey law and shall be subject to the jurisdictionof the Court.

(C)

Execution of a Form of Election or the making of a TTE Instruction by or on behalf of a Scheme
Shareholder shall constitute such Scheme Shareholder’s agreement that the Court is (subject toClause 12(D)) to have exclusive jurisdiction to settle any dispute or claim arising out of or inconnection with any of the Forms of Election or TTE Instructions, and for such purposes that such
Scheme Shareholder irrevocably submits to the jurisdiction of the Court.

(D)

Execution of a Form of Election or the making of a TTE Instruction by or on behalf of a Scheme
Shareholder shall constitute such Scheme Shareholder’s agreement that Clause 12(C) is
included for the benefit of Takeda, the Company and their respective agents and, accordingly,
notwithstanding Clause 12(C), each of Takeda, the Company and their respective agents shallretain the right to, and may in its absolute discretion, bring proceedings in the courts of any othercountry which may have jurisdiction, and that electing Scheme Shareholder irrevocably submits
to the jurisdiction of the courts of any such country.

Dated November 12, 2018113

PART IV
CONDITIONS TO, AND FURTHER TERMS OF,
THE IMPLEMENTATION OF THE SCHEME AND THE ACQUISITIONPart A: Conditions of the Scheme and the Acquisition
Long Stop Date
1.

The Acquisition is conditional upon the Scheme becoming unconditional and effective, subject to
the Takeover Code, by not later than the Long Stop Date.

Scheme approval
2.

The Scheme is subject to the following conditions:(a)

its approval by a majority in number representing at least 75 per cent. of the voting rightsof the Shire Shareholders (other than holders of Excluded Shares) at the Voting Record
Time (or the relevant class or classes thereof, if applicable) who are present and vote (and
who are entitled to vote), whether in person or by proxy, at the Court Meeting and at any
separate class meeting which may be required by the Court (or at any adjournment of any
such meetings), such Court Meeting and any such separate class meeting to be held onor before December 27, 2018 (or such later date, if any, as may, with the consent of the
Panel, be agreed by Takeda and Shire and the Court may allow);(b)

the Special Resolution being duly passed by the requisite majority or majorities of Shire
Shareholders at the Shire General Meeting, or at any adjournment thereof, such Shire
General Meeting to be held on or before December 27, 2018 (or such later date, if any, asmay, with the consent of the Panel, be agreed by Takeda and Shire and the Court may
allow); and(c)the sanction of the Scheme by the Court (with or without modification but subject to any
modification being on terms acceptable to Shire and Takeda) and the delivery of a copy of
the Court Order to the Registrar of Companies for registration.

Takeda Shareholder approval
3.

The Acquisition is conditional upon the passing at the Takeda Extraordinary General Meeting of
the New Takeda Share Resolution.

General Conditions
4.

In addition, subject as stated in Part B of this Part IV below and to the requirements of the Panel,
the Acquisition is conditional upon the following Conditions and, accordingly, the necessary
actions to make the Scheme effective will not be taken unless such Conditions (as amended if
appropriate) have been satisfied or, where relevant, waived:
Admission of the New Takeda Securities(a)

Takeda having submitted an application for listing of the New Takeda Shares to the Tokyo
Stock Exchange and the Local Japanese Stock Exchanges by no later than three weeks
before the Effective Date and no objection having been received from the Tokyo Stock
Exchange or the Local Japanese Stock Exchanges in relation thereto (or, if received, nosuch objection remaining outstanding), so that the New Takeda Shares will be admitted tolisting on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges with effectfrom their issue and will be admitted to trading on the Tokyo Stock Exchange and the Local
Japanese Stock Exchanges by no later than 14 calendar days after the Effective Date; and

114

(b)

confirmation having been received by Takeda that the New Takeda ADSs have been
approved for listing, subject to official notice of issuance, on the New York Stock
Exchange;

Antitrust clearances
European Union merger control(c)insofar as the Acquisition falls within the scope of Council Regulation (EC) 139/2004 (the“Regulation”):(i)the European Commission taking a decision, on terms reasonably satisfactory to
Takeda, that it shall not initiate proceedings under Article 6(1)(c) of the Regulationin relation to the Acquisition or any matter arising from or relating to the Acquisition;(ii)

if the European Commission makes a referral under Article 9(1) of the Regulation to
the competent authorities of a National Competition Authority (“NCA”) of any
Member State other than the UK; that NCA taking a decision, on terms reasonably
satisfactory to Takeda, of equivalent effect to that set out in sub-paragraph (i) above;
and

(iii)

if the European Commission makes a referral under Article 9(1) of the Regulation to
the competent UK authority (being the Competition and Markets Authority), it being
established on terms satisfactory to Takeda that the Competition and Markets
Authority does not intend to make a CMA Phase 2 Reference of the Acquisition orof any matter arising from or relating to the Acquisition;

United States merger control(d)

all necessary notifications and filings having been made and all applicable waiting periods(including any extensions thereof) under the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (as amended) and the rules and regulations made thereunderhaving expired, lapsed or been terminated as appropriate in each case in respect of theAcquisition (including, without limitation, its implementation) and the acquisition or the
proposed acquisition of any shares or other securities in, or control of, Shire by Takeda or
any member of the Wider Takeda Group;

Chinese merger control(e)(i)

State Administration for Market Regulation (“SAMR”) issuing a notice approving theAcquisition; or(ii)

the applicable review period pursuant to the PRC Anti-Monopoly Law, including any
extension of such period, having elapsed and no prohibitions or restrictive
conditions that are not on terms reasonably satisfactory to Takeda having been
imposed by SAMR in relation to the Acquisition;

Japanese merger control(f)the waiting period under the Japanese Act on Prohibition of Private Monopolization and
Maintenance of Fair Trade (Act No. 54 of April 14, 1947, as amended) with respect to theAcquisition having expired and notification having been received from the Japan Fair
Trade Commission (“JFTC”) of its decision not to issue a cease and desist order pursuant
to Article 9 of JFTC Regulation No. 1 of 1953;

Brazilian merger control(g)Brazil’s Council for Economic Defence (“CADE”) having approved the consummation of
the Acquisition unconditionally or, if approved with conditions, on such conditions as are115

reasonably satisfactory to Takeda, pursuant to the Brazilian competition law No. 12529 ofNovember 30, 2011, Title VII Chapter 3;
Notifications, waiting periods and Authorisations(h)other than in relation to the matters referred to in Conditions 4(a) to 4(g), all material
notifications, filings or applications which are deemed necessary by Takeda having been
made in connection with the Acquisition and all necessary waiting periods and other time
periods (including any extensions thereof) under any applicable legislation or regulation of
any jurisdiction having expired, lapsed or been terminated (as appropriate) and all
statutory and regulatory obligations in any jurisdiction having been complied with in eachcase in respect of the Acquisition and all Authorisations deemed reasonably necessary by
Takeda in any jurisdiction for or in respect of the Acquisition and the acquisition or the
proposed acquisition of any shares or other securities in, or control or management of,
Shire or any other member of the Wider Shire Group by any member of the Wider Takeda
Group having been obtained in terms and in a form satisfactory to Takeda from all
appropriate Third Parties or (without prejudice to the generality of the foregoing) from any
person or bodies with whom any member of the Wider Shire Group or the Wider Takeda
Group has entered into contractual arrangements and all such Authorisations necessary,
appropriate or desirable to carry on the business of any member of the Wider Shire Groupin any jurisdiction having been obtained and all such Authorisations remaining in full force
and effect at the time at which the Acquisition becomes otherwise effective and there being
no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew
such Authorisations;

General antitrust and regulatory(i)other than in relation to the matters referred to in Conditions 4(a) to 4(h), no antitrust
regulator or other Third Party having given notice of a decision to take, institute, implement
or threaten any action, proceeding, suit, investigation, enquiry or reference (and in eachcase, not having withdrawn the same), or having required any action to be taken orotherwise having done anything, or having enacted, made or proposed any statute,regulation, decision, order or change to published practice (and in each case, not having
withdrawn the same) and there not continuing to be outstanding any statute, regulation,
decision or order which would or might reasonably be expected to:(i)require, prevent or materially delay the divestiture or materially alter the terms
envisaged for such divestiture by any member of the Wider Takeda Group or by any
member of the Wider Shire Group of all or any material part of its businesses, assets
or property or impose any limitation on the ability of all or any of them to conduct
their businesses (or any part thereof) or to own, control or manage any of theirassets or properties (or any part thereof);(ii)

require any member of the Wider Takeda Group or the Wider Shire Group to acquire
or offer to acquire any shares, other securities (or the equivalent) or interest in any
member of the Wider Shire Group or any asset owned by any Third Party (other thanin the implementation of the Acquisition);(iii)

impose any limitation on, or result in a delay in, the ability of any member of theWider Takeda Group directly or indirectly to acquire, hold or to exercise effectively
all or any rights of ownership in respect of shares or other securities in Shire or on
the ability of any member of the Wider Shire Group or any member of the Wider
Takeda Group directly or indirectly to hold or exercise effectively all or any rights ofownership in respect of shares or other securities (or the equivalent) in, or to
exercise voting or management control over, any member of the Wider Shire Group,
to an extent which is material in the context of the Combined Group taken as awhole or material in the context of the Acquisition;

116

(iv)

otherwise adversely affect any or all of the business, assets, profits or prospects ofany member of the Wider Shire Group or any member of the Wider Takeda Group;(v)

result in any member of the Wider Shire Group or any member of the Wider Takeda
Group ceasing to be able to carry on business under any name under which it
presently carries on business;(vi)

make the Acquisition, its implementation or the acquisition or proposed acquisitionof any shares or other securities in, or control or management of, Shire by any
member of the Wider Takeda Group void, unenforceable and/or illegal under thelaws of any relevant jurisdiction, or otherwise, directly or indirectly, materiallyprevent or prohibit, restrict, restrain or delay or otherwise to a material extent orotherwise materially interfere with the implementation of, or impose material
additional conditions or obligations with respect to, or otherwise challenge, impede,interfere or require material amendment of the Acquisition or the acquisition or
proposed acquisition of any shares or other securities in, or control or managementof, Shire by any member of the Wider Takeda Group;(vii)

require, prevent or materially delay a divestiture by any member of the Wider Takeda
Group of any shares or other securities (or the equivalent) in any member of theWider Shire Group or any member of the Wider Takeda Group, to an extent which
is material in the context of the Combined Group taken as a whole or material in thecontext of the Acquisition; or(viii)

impose any material limitation on the ability of any member of the Wider Takeda
Group or any member of the Wider Shire Group to conduct, integrate or co-ordinate
all or any part of its business with all or any part of the business of any other memberof the Wider Takeda Group and/or the Wider Shire Group,

and all applicable waiting and other time periods (including any extensions thereof) during
which any such antitrust regulator or other Third Party could decide to take, institute,
implement or threaten any such action, proceeding, suit, investigation, enquiry or
reference or take any other step under the laws of any jurisdiction in respect of theAcquisition or the acquisition or proposed acquisition of any Shire Shares or otherwiseintervene having expired, lapsed or been terminated;
Certain matters arising as a result of any arrangement, agreement, etc.
(j)except as Disclosed, there being no provision of any arrangement, agreement, lease,licence, franchise, permit or other instrument to which any member of the Wider Shire
Group is a party or by or to which any such member or any of its assets is or may bebound, entitled or be subject or any event or circumstance which, as a consequence of theAcquisition or the acquisition or the proposed acquisition by any member of the Wider
Takeda Group of any shares or other securities (or the equivalent) in Shire or because ofa change in the control or management of any member of the Wider Shire Group orotherwise, would reasonably be expected to result in, to an extent which is material in thecontext of the Wider Shire Group taken as a whole or material in the context of theAcquisition:(i)any monies borrowed by, or any other indebtedness, actual or contingent, of, or any
grant available to, any member of the Wider Shire Group being or becoming
repayable, or capable of being declared repayable, immediately or before its or theirstated maturity date or repayment date, or the ability of any such member to borrowmonies or incur any indebtedness being withdrawn or inhibited or being capable ofbecoming or being withdrawn or inhibited;(ii)

the creation or enforcement of any mortgage, charge or other security interest over
the whole or any part of the business, property or assets of any member of the117Wider Shire Group or any such mortgage, charge or other security interest(whenever created, arising or having arisen) becoming enforceable;(iii)

any such arrangement, agreement, lease, licence, franchise, permit or other
instrument being terminated or the rights, liabilities, obligations or interests of any
member of the Wider Shire Group being adversely modified or adversely affected or
any onerous obligation or liability arising or any adverse action being taken or
arising thereunder;(iv)

the rights, liabilities, obligations, interests or business of any member of the Wider
Shire Group or any member of the Wider Takeda Group under any sucharrangement, agreement, licence, permit, lease or instrument or the interests orbusiness of any member of the Wider Shire Group or any member of the Wider
Takeda Group in or with any other person or body or firm or company (or any
arrangement or arrangement relating to any such interests or business) being or
becoming capable of being terminated, or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being taken thereunder;(v)

any member of the Wider Shire Group ceasing to be able to carry on business under
any name under which it presently carries on business;(vi)

the value of, or the financial or trading position or prospects of, any member of theWider Shire Group being prejudiced or adversely affected; or(vii)

the creation or acceleration of any liability (actual or contingent) by any member ofthe Wider Shire Group,and no event having occurred which, under any provision of any arrangement, agreement,
licence, permit, franchise, lease or other instrument to which any member of the Wider
Shire Group is a party or by or to which any such member or any of its assets are bound,entitled or subject, would result in any of the events or circumstances as are referred to in
Conditions 4(j)(i) to 4(j)(vii);
Certain events occurring since December 31, 2017(k)except as Disclosed, no member of the Wider Shire Group having since December 31,
2017:
(i)

issued or agreed to issue or authorised or proposed the issue of additional sharesof any class, or securities or securities convertible into, or exchangeable for, orrights, warrants or options to subscribe for or acquire, any such shares, securities
or convertible securities or transferred or sold or agreed to transfer or sell or
authorised or proposed the transfer or sale of Shire Shares out of treasury (except,
where relevant, as between Shire and wholly owned subsidiaries of Shire or
between the wholly owned subsidiaries of Shire and except for the issue or transfer
out of treasury of Shire Shares on the exercise of employee share options or vestingof employee share awards in the ordinary course under the Shire Share Plans);(ii)

recommended, declared, made or paid or resolved to recommend, declare, pay ormake any bonus, dividend or other distribution (whether payable in cash orotherwise) other than (i) dividends (or other distributions whether payable in cash orotherwise) lawfully made or paid by any wholly owned subsidiary of Shire to Shireor any of its wholly owned subsidiaries and (ii) Permitted Dividends declared or paidby Shire in the ordinary course before the Effective Date;(iii)

other than pursuant to the Acquisition (and except for transactions between Shireand its wholly owned subsidiaries or between the wholly owned subsidiaries of Shireand transactions in the ordinary course of business), implemented, effected,
authorised or proposed or announced its intention to implement, effect, authorise or118

propose any merger, demerger, reconstruction, amalgamation, scheme,commitment or acquisition or disposal of assets or shares or loan capital (or theequivalent thereof) in any undertaking or undertakings in any such case to an extent
which is material in the context of the Wider Shire Group taken as a whole or in thecontext of the Acquisition;(iv)

except for transactions between Shire and its wholly owned subsidiaries or between
the wholly owned subsidiaries of Shire, and except for transactions in the ordinary
course of business, disposed of, or transferred, mortgaged or created any security
interest over any asset or any right, title or interest in any asset or authorised,proposed or announced any intention to do so in a manner which is material in thecontext of the Wider Shire Group taken as a whole or in the context of theAcquisition;(v)

except for transactions between Shire and its wholly owned subsidiaries or between
the wholly owned subsidiaries of Shire and except for transactions in the ordinary
course, issued, authorised or proposed or announced an intention to authorise or
propose, the issue of or made any change in or to the terms of any debentures or
become subject to any contingent liability or incurred or increased any indebtedness
in each case which is material in the context of the Wider Shire Group taken as awhole or material in the context of the Acquisition;(vi)

entered into or varied or authorised, proposed or announced its intention to enter
into or vary any contract, arrangement, agreement, transaction or commitment(whether in respect of capital expenditure or otherwise) which is outside of theordinary course and is of a long-term, unusual or onerous nature or magnitude or
which is or which involves an obligation of a nature or magnitude which is materiallyrestrictive on the Wider Shire Group taken as a whole, and in either case which ismaterial in the context of the Wider Shire Group taken as a whole or material in thecontext of the Acquisition;(vii)

entered into or materially varied the terms of, or made any offer (which remains
open for acceptance) to enter into or materially vary the terms of any contract,service agreement, commitment or arrangement with any director or, except forsalary increases, bonuses or variations of terms in the ordinary course, senior
executive of Shire, other than as agreed by the Panel or agreed with Takeda;(viii)

proposed, agreed to provide or modified the terms of any share option scheme,
incentive scheme or other benefit relating to the employment or termination of
employment of any employee of the Wider Shire Group which are material in thecontext of the Wider Shire Group taken as a whole or material in the context of theAcquisition, other than in accordance with the terms of the Acquisition or as agreed
by the Panel or Takeda;(ix)purchased, redeemed or repaid or announced any proposal to purchase, redeem orrepay any of its own shares or other securities or reduced or, except in respect ofthe matters mentioned in sub-paragraph (i) above, made any other change to any
part of its share capital;(x)

except in the ordinary course of business, waived, compromised or settled any claim
by or against any member of the Wider Shire Group which is material in the context
of the Wider Shire Group as a whole or material in the context of the Acquisition;(xi)

terminated or varied the terms of any agreement or arrangement which is of a longterm or unusual nature between any member of the Wider Shire Group and anyother person in a manner which is materially adverse to the Wider Shire Grouptaken as a whole;119

(xii)

made or agreed or consented to or procured any change to, or the custodian ortrustee of any scheme having made a change to:(a)the terms of the governing documents of any pension scheme(s) establishedby any member of the Wider Shire Group for its directors, former directors,
employees, former employees or their dependants;(b)

the contributions payable to any such scheme(s) or to the benefits which
accrue, or to the pensions which are payable, thereunder;(c)the basis on which qualification for, or accrual or entitlement to, such benefits
or pensions are calculated or determined; or(d)the basis upon which the liabilities (including pensions) of such pension
schemes are funded, valued, made, agreed or consented to,to an extent which is in any such case material in the context of the Wider Shire
Group taken as a whole or material in the context of the Acquisition, and other thanin accordance with applicable law;(xiii)

carried out any act:(a)which would or could reasonably be expected to lead to the commencementof the winding up of any pension scheme(s) established by any member ofthe Wider Shire Group for its directors, former directors, employees, former
employees or their dependants;(b)which would or might create a material debt owed by an employer to any suchplan; or(c)which would or might accelerate any obligation on any employer to fund or
pay additional contributions to any such plan,

to an extent which is in any such case material in the context of the Wider Shire
Group taken as a whole or material in the context of the Acquisition;(xiv) been unable, or admitted in writing that it is unable, to pay its debts when they falldue or commenced negotiations with one or more of its creditors with a view torescheduling or restructuring any of its indebtedness, or having stopped orsuspended (or threatened to stop or suspend) payment of its debts generally orceased or threatened to cease carrying on all or a substantial part of its business,in each case which is material in the context of the Wider Shire Group taken as awhole or material in the context of the Acquisition;(xv)(other than in respect of a member of the Wider Shire Group which is dormant andwas solvent at the relevant time) taken any steps, corporate action or had any legal
proceedings instituted or threatened against it in relation to the suspension of
payments, a moratorium of any indebtedness, its winding up (voluntary orotherwise), dissolution, reorganisation or for the appointment of a receiver,administrator, administrative receiver, trustee or similar officer of all or any of its
assets or revenues or any analogous or equivalent steps or proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any such
person appointed, in any case which is material in the context of the Wider Shire
Group taken as a whole or material in the context of the Acquisition;(xvi) (except for transactions between Shire and its wholly owned subsidiaries or
between the wholly owned subsidiaries of Shire), made, authorised, proposed or
announced an intention to propose any change in its loan capital, in any case which
is material in the context of the Wider Shire Group taken as a whole or material in
the context of the Acquisition;120

(xvii) except for transactions between members of the Wider Shire Group andtransactions entered into the ordinary course of business, entered into, implemented
or authorised the entry into, any joint venture, asset or profit sharing arrangement,
partnership or merger of business or corporate entities, in any case which is material
in the context of the Wider Shire Group taken as a whole or material in the context
of the Acquisition; or(xviii) entered into any agreement, arrangement, commitment or contract or passed any
resolution or made any offer (which remains open for acceptance) with respect to or
announced an intention to, or to propose to, effect any of the transactions, mattersor events referred to in this Condition 4(k);No adverse change, litigation, regulatory enquiry or similar(l)

except as Disclosed, since December 31, 2017 there having been, in each case to an
extent which is material in the context of the Wider Shire Group taken as a whole ormaterial in the context of the Acquisition:(i)no adverse change and no circumstance having arisen which would or mightreasonably be expected to result in any adverse change in, the business, assets,financial or trading position or profits or prospects or operational performance of any
member of the Wider Shire Group;(ii)

no litigation, arbitration proceedings, prosecution or other legal proceedings having
been threatened, announced or instituted by or against or remaining outstanding
against or in respect of, any member of the Wider Shire Group or to which any
member of the Wider Shire Group is or may become a party (whether as claimant,
defendant or otherwise) having been threatened, announced, instituted or remaining
outstanding by, against or in respect of, any member of the Wider Shire Group;(iii)

no enquiry, review or investigation by, or complaint or reference to, any Third Party
against or in respect of any member of the Wider Shire Group having been
threatened in writing, announced or instituted or remaining outstanding by, against
or in respect of any member of the Wider Shire Group;(iv)

no contingent or other liability having arisen or become apparent to Takeda which isor would be reasonably likely to affect adversely the business, assets, financial or
trading position or profits or prospects of any member of the Wider Shire Group; and(v)

no steps having been taken and no omissions having been made which arereasonably likely to result in the withdrawal, cancellation, termination or modificationof any licence held by any member of the Wider Shire Group which is necessary forthe proper carrying on of its business;

No discovery of certain matters regarding information, liabilities and environmental
issues(m)

except as Disclosed, Takeda not having discovered, in each case to an extent which ismaterial in the context of the Wider Shire Group taken as a whole or material in the context
of the Acquisition:(i)that any financial, business or other information concerning the Wider Shire Grouppublicly announced before the date of the Rule 2.7 Announcement by or on behalfof any member of the Wider Shire Group is misleading, contains a material
misrepresentation of any fact, or omits to state a fact necessary to make that
information not misleading where the relevant information has not subsequently
been corrected before the date of the Rule 2.7 Announcement by disclosure, either
publicly or otherwise to Takeda;

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(ii)

that any member of the Wider Shire Group is subject to any liability, contingent orotherwise which is not Disclosed in the annual report and accounts of Shire for thefinancial year ended December 31, 2017;(iii)

that any past or present member of the Wider Shire Group has failed to comply in
any material respect with any applicable legislation, regulations or otherrequirements of any jurisdiction or any Authorisations relating to the use, treatment,
storage, carriage, disposal, discharge, spillage, release, leak or emission of any
waste or hazardous substance or any substance likely to impair the environment(including property) or harm human health or otherwise relating to environmental
matters or the health and safety of humans, which non-compliance would be likely
to give rise to any liability including any penalty for non-compliance (whether actual
or contingent) on the part of any member of the Wider Shire Group; or(iv)

that there is or is reasonably likely to be any obligation or liability (whether actual orcontingent) or requirement to make good, remediate, repair, reinstate or clean up
any property, asset or any controlled waters currently or previously owned,
occupied, operated or made use of or controlled by any past or present member ofthe Wider Shire Group (or on its behalf), or in which any such member may have or
previously have had or be deemed to have had an interest, under any environmental
legislation, common law, regulation, notice, circular, Authorisation or order of any
Third Party in any jurisdiction or to contribute to the cost thereof or associatedtherewith or indemnify any person in relation thereto;

Anti-corruption(n)except as Disclosed, Takeda not having discovered, in each case to an extent which ismaterial in the context of the Wider Shire Group taken as a whole or material in the context
of the Acquisition that:(i)any member of the Wider Shire Group or any person that performs or has performed
services for or on behalf of any such company is or has engaged in any activity,
practice or conduct which would constitute an offence under the Bribery Act 2010,
the United States Foreign Corrupt Practices Act of 1977, as amended, or any otherapplicable anti-corruption legislation; or(ii)

any past or present member of the Wider Shire Group has engaged in any activity
or business with, or made any investments in, or made any payments to any
government, entity or individual covered by any of the economic sanctions
administered by the United Nations or the EU (or any of their respective member
states) or the United States Office of Foreign Assets Control or any othergovernments or supranational body or authority in any jurisdiction; andNo criminal property(o)except as Disclosed, Takeda not having discovered, in each case to an extent which ismaterial in the context of the Wider Shire Group taken as a whole or material in the context
of the Acquisition, any asset of any member of the Wider Shire Group that constitutes
criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (butdisregarding paragraph (b) of that definition).

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Part B: Certain further terms of the Acquisition
1.

Subject to the requirements of the Panel, Takeda reserves the right to waive:(i)

any of the Conditions set out in the above Condition 2 for the timing of the Court Meetingand the Shire General Meeting. If any such deadline is not met, Takeda will make anannouncement by 8.00 a.m. on the Business Day following such deadline confirming
whether it has invoked or waived the relevant Condition or agreed with Shire to extend thedeadline in relation to the relevant Condition. In all other respects, Condition 2 cannot be
waived; and(ii)

in whole or in part, all or any of the above Conditions 4(b) to 4(o) (inclusive) (in the caseof 4(b) with the prior written consent of Shire).

Conditions 3, 4(a) and 4(b) cannot be waived (in the case of 4(b) without the prior written consent
of Shire). Conditions 3 and 4(a) must be fulfilled by, and Conditions 4(b) to 4(o) (inclusive) mustbe fulfilled or waived (in the case of 4(b) with the prior written consent of Shire) by, no later than
11.59 p.m. (London time) on the date immediately preceding the Court Sanction Hearing.
2.

If Takeda is required by the Panel to make an offer for Shire Shares under the provisions ofRule 9 of the Takeover Code, Takeda may make such alterations to any of the above Conditions
and terms of the Acquisition as are necessary to comply with the provisions of that Rule.

3.

The Acquisition will lapse if:(i)insofar as the Acquisition or any matter arising from or relating to the Scheme or
Acquisition constitutes a concentration with a Community dimension within the scope of
the Regulation, the European Commission either initiates proceedings under Article 6(1) of
the Regulation or makes a referral to a competent authority in the United Kingdom under
Article 9(1) of the Regulation and there is then a CMA Phase 2 Reference; or(ii)

the Acquisition or any matter arising from or relating to the Scheme or Acquisition becomessubject to a CMA Phase 2 Reference,in each case, before the date of the Court Meeting.
4.

Save where Takeda has confirmed the satisfaction or waiver of all Conditions (other than
Condition 2) pursuant to the terms of the Co-operation Agreement, Takeda will be under noobligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as
fulfilled any of Conditions 4(a) to 4(c) inclusive and Conditions 4(h) to 4(o) (inclusive) by a dateearlier than the latest date for the fulfilment of that Condition notwithstanding that the otherConditions of the Acquisition may at such earlier date have been waived or fulfilled and that there
are at such earlier date no circumstances indicating that any of such Conditions may not becapable of fulfilment.

5.

Under Rule 13.5(a) of the Takeover Code, Takeda may not invoke a condition to the Acquisition
so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless thecircumstances which give rise to the right to invoke the condition are of material significance toTakeda in the context of the Acquisition. The determination of whether or not such a condition canbe invoked would be determined by the Panel. Each of Conditions 1, 2, 3, 4(a) and 4(c) is not
subject to Rule 13.5(a) of the Takeover Code.

6.

Takeda reserves the right to elect (with the consent of the Panel and subject to the terms of the
Co-operation Agreement) to implement the acquisition of the Shire Shares and Shire ADSs by
way of a Takeover Offer as an alternative to the Scheme: (i) with the consent of Shire; (ii) if a third
party announces a firm intention to make an offer for the issued and to be issued ordinary sharecapital of Shire; (iii) if the Shire Directors have withdrawn, or adversely modified, adversely
qualified or failed to provide, or they have failed to reaffirm (when reasonably requested by
Takeda to do so) their unanimous and unconditional recommendation that the Shire123Shareholders vote in favour of the Scheme and the Special Resolution (including before
publication of the Scheme Document, their intention to do so); or (iv) other than in certain
circumstances specified in the Co-operation Agreement, if the Court Meeting or Shire General
Meeting is not held by December 27, 2018 (or such later date as may, with the consent of the
Panel, be agreed between Takeda and Shire and the Court may allow).

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PART V
TAKEDA SECURITIES
1.

Summary

Takeda is a Japanese company which is listed on the Tokyo Stock Exchange and the Local Japanese
Stock Exchanges. The New Takeda Shares will be listed only in Japan on the Tokyo Stock Exchange
and the Local Japanese Stock Exchanges and the New Takeda ADSs will be listed only in the UnitedStates on the New York Stock Exchange. The New Takeda Securities will not be listed on any stock
exchange in the United Kingdom.
The New Takeda Shares will be issued credited as fully paid and will rank pari passu in all respects with
the Takeda Shares in issue at the time the New Takeda Shares are issued pursuant to the Scheme,
including in relation to the right to receive notice of, and to attend and vote at, general meetings of
Takeda, the right to receive and retain any dividends and other distributions declared, made or paid byreference to a record date falling after the Effective Date, and the right to participate in the assets of
Takeda upon a winding up of Takeda. The New Takeda Shares will be capable of being held in
uncertificated form only.
The New Takeda ADSs will be issued subject to, and on the terms of, the Takeda Deposit Agreement.
A summary of the principal terms of the Takeda Deposit Agreement is set out in paragraph 5 of thisPart V.
2.

Risk factors

Shire Shareholders and Shire ADS Holders should consider fully and carefully the risk factors
associated with the Combined Group, the New Takeda Shares and the New Takeda ADSs. Yourattention is drawn to the risk factors set out in Appendix I (Risk Factors) to this document.
3.

Restrictions on ownership and transfer of Takeda Shares

The Takeda Shares are (and the New Takeda Shares, once allotted, issued and admitted, will be) listed
and traded on the Tokyo Stock Exchange and the Local Japanese Stock Exchanges. Pursuant to theJapanese book-entry system and the Book-Entry Act, all shares of Japanese listed companies,
including those of Takeda, are dematerialised and all transfers of such shares are effected through anentry in the record maintained by JASDEC, which is Japan’s central securities depository and the only
institution designated as a clearing house under the Book-Entry Act.
In order to hold and trade listed Japanese shares, investors must either have an account with JASDEC
or, failing that, an account with an AMI that has been admitted to JASDEC pursuant to the Book-Entry
Act. AMIs are financial instruments business operators (i.e., securities firms), banks, trust companies
and certain other financial institutions that meet the requirements prescribed by the Book-Entry Act.
As such, transfers (and allotments) of Takeda Shares are effected exclusively through entry in therecords maintained by JASDEC and the AMIs. Title to Takeda Shares passes to the transferee (orallottee) at the time at which the transfer (or allotment) is recorded in the transferee’s (or allottee’s)
account at JASDEC or with an AMI.
Takeda follows the “unit share system” (which is mandatory for listed companies in Japan), whereby
Takeda Shareholders have one voting right for each “unit” of shares held by them and sharesconstituting less than a full unit carry no voting rights. The Takeda Articles provide that 100 Takeda
Shares constitute one unit. Under the book-entry transfer system, shares constituting less than one unit
are transferable. However, under the Japanese Listing Rules, shares constituting less than one unit do
not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on theTokyo Stock Exchange or the Local Japanese Stock Exchanges on which the Takeda Shares are listed.

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The attention of Shire Shareholders is drawn to the information set out in paragraphs 19.1 and 19.5 ofPart II (Explanatory Statement) which contains additional information on the settlement of listed
Japanese shares and the effect of the “unit share system”.
As Takeda is a manufacturer of biological drugs, additional levels of scrutiny apply to foreign
investment in Takeda under the Foreign Exchange and Foreign Trade Control Law of Japan (the“FOREX Act”). The manufacture of biological drugs falls into the category of businesses
subject to the pre-filing requirement under the FOREX Act. Any Shire Shareholder qualifying asa “foreign investor” (as defined in the FOREX Act) who will, as a result of the Acquisition, hold10 per cent. or more of the total issued share capital of Takeda, must submit to the Bank ofJapan (as well as the Ministry of Finance and the Ministry of Health, Labour and Welfare) a
notification within the six-month period before the implementation of the Acquisition and be
subject to a 30-day waiting period (unless such waiting period is shortened by the discretion of
the authorities). If they believe that this pre-filing requirement may be applicable to them, Shire
Shareholders are recommended to obtain their own Japanese legal advice.
4.

Comparison of shareholders’ rights

The rights of Shire Shareholders are governed by Jersey law, the Listing Rules, the Disclosure
Guidance and Transparency Rules, the Market Abuse Regulation and the Shire Articles. The rights of
Takeda Shareholders are governed by Japanese law, the Japanese Listing Rules and the Takeda
Articles. The following is a comparison and summary of the material differences between the rights ofShire Shareholders and those of Takeda Shareholders arising from differences between: (i) Jersey andJapanese law; (ii) on the one hand the Listing Rules, the Disclosure Guidance and Transparency Rules
and the Market Abuse Regulation, and on the other hand the Japanese Listing Rules; and (iii) the Shire
Articles and the Takeda Articles.
This is a summary only and therefore does not contain all the information that may be important to you.
For more complete information concerning the rights of Takeda Shareholders, you should review the
Takeda Articles, review applicable Japanese law (including the Japanese Companies Act, the Financial
Instruments and Exchange Act of Japan and the Japanese Listing Rules) and, should you wish to learn
more, obtain your own Japanese legal advice.
Shire Shares

Takeda Shares

ISSUE OF NEW SHARES
Takeda can issue Takeda Shares within the Shire’s practice is to comply with the Investment
authorised maximum provided in the Takeda Association’s share capital management
Articles with approval from the Takeda Board, guidelines with regards to the allotment of shares.
subject to the following requirements.
Shire can accordingly only issue Shire Shares up
to the amount approved by Shire Shareholders by
Under the rules of the Tokyo Stock Exchange, if an ordinary resolution (see “Resolutions ofissue results in a dilution of 25 per cent. or more Shareholders” below) at its annual generalof the total voting rights or an emergence or meeting each year, being an amount equal to onechange of a controlling shareholder, then Takeda third of issued share capital, or two-thirds in themust obtain either: (i) an opinion from an case of a pre-emptive rights issue.
independent person regarding the necessity andadequacy of the allotment; or (ii) approval from Under the Listing Rules, a new issue of shares
Takeda Shareholders by ordinary resolution (see must not be at a discount of more than
“Resolutions of Shareholders” below).
10 per cent. to the market price.
Any issue of new Takeda Shares resulting in a
subscriber for new Takeda Shares holding(directly or indirectly) more than 50 per cent. of thetotal voting rights in Takeda as a result of the issue
must be approved by a simple majority of thevoting rights represented at a general meeting

The creation of a new class of shares requires theapproval of Shire Shareholders by special
resolution (see “Resolutions of Shareholders”
below).

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Takeda Shares
where a simple majority of the total voting rights ispresent or represented if Takeda Shareholders
holding not less than 10 per cent. of the total
voting rights demand a resolution to be proposed
at a general meeting regarding such issue.

Shire Shares

Any issue of new Takeda Shares at a “speciallyfavourable price” (in practice, a discount of morethan 10 per cent. to the market price) requires
shareholder approval by special resolution (see“Resolutions of Shareholders” below) unless theallotment is carried out pre-emptively on a pro rata
basis.
The creation of a new class of shares requires
shareholder approval by special resolution.
RIGHTS OF PURCHASE AND REDEMPTION
Under the Japanese Companies Act and the The FCA and the Jersey Companies Law require
Takeda Articles, Takeda may acquire its own that where a company has issued shares that areshares by: (i) purchase on any stock exchange or admitted to the Official List and are convertible
by way of a voluntary tender offer, pursuant to a into a class of shares to be repurchased, theresolution of the Takeda Board; (ii) by purchase holders of the convertible shares must first pass afrom a specific party other than any of Takeda’s special resolution approving any repurchase at a
subsidiaries, pursuant to a special resolution of separate class meeting.
Takeda Shareholders; or (iii) by purchase fromThe FCA requires that purchases of 15 per cent.
any of Takeda’s subsidiaries, pursuant to aor more of any class of a company’s share capital
resolution of the Takeda Board.
must be by way of a tender offer to all
Under the Financial Instruments and Exchange shareholders of that class.
Act of Japan, purchases by Takeda of its own
shares outside the market must be by way oftender offer. However, this does not apply topurchases of its own shares on the market or froma specific party, other than any of Takeda’s
subsidiaries, pursuant to a special resolution of
Takeda Shareholders.
AMENDMENT TO GOVERNING PROVISIONS
Under the Japanese Companies Act, Takeda Under Jersey law, Shire Shareholders may, by
Shareholders may, by special resolution, alter, special resolution, alter, delete, substitute or amend
delete, substitute, amend or add to the Takeda or add to its articles of association. The Shire Board
Articles. The Takeda Board is not authorised to is not authorised to amend the Shire Articles.
amend the Takeda Articles.
Rights attaching to Shire Shares are set out in the
Rights attaching to Takeda Shares are set out in the Shire Articles and therefore a special resolution
Takeda Articles and therefore a special resolution would be required to amend such rights.
would be required to amend such rights.
Rights of a class of shares may be amended by a
Rights attaching to a class of share may generally special resolution of that class.
be amended by special resolutions by a general
meeting of shareholders and a shareholder
meeting of that class. If such amendment would
undermine the rights of another class of shares, aspecial resolution of such class is also required.

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Takeda Shares

Shire Shares

RIGHT TO DIVIDENDS
Under the Japanese Companies Act, dividends Under the Shire Articles and subject to thetake the form of a distribution of surplus, and a provisions of the Jersey Companies Law: (i) Shire
distribution of surplus may be made in cash or in may by ordinary resolution from time to time
kind, with no restrictions on the timing and declare dividends in accordance with thefrequency of such distributions unless the amount respective rights of the members, but no dividendof dividend exceeds the then-applicable shall exceed the amount recommended by the
distributable amount, the calculation of which is Shire Board; and (ii) the Shire Board may pay such
stipulated under the Japanese Companies Act.
interim dividends as appear to the Shire Board tobe justified by the financial position of Shire andUnder the Japanese Companies Act and the
may also pay any dividend payable at a fixed rate
Takeda Articles, both a meeting of the Takeda
at intervals settled by the Shire Board whenever the
Shareholders and the Takeda Board have thefinancial position of Shire, in the opinion of theauthority to make decisions regarding distributions
Shire Board, justifies its payment.
of surplus, except in respect of the Takeda Board
subject to certain conditions and exceptions. Shire’s past policy has been to pay an interim
Takeda’s past policy has been to declare: (i) annual dividend semi-annually, set in US$ cents per
dividends (for which the record date is set on March ordinary share.
31 of each year under the Takeda Articles) by an
ordinary resolution of the annual general meeting of
Takeda Shareholders; and (ii) interim dividends (forwhich the record date is set on September 30 ofeach year under the Takeda Articles) by aresolution of the Takeda Board set in JPY per
Takeda Share.
APPRAISAL RIGHTSThe Japanese Companies Act generally provides Jersey law does not generally provide for appraisal
appraisal rights if shareholders dissent from a rights.
proposal to implement certain corporate
However, the Jersey Companies Law contains
reorganisations (e.g., a merger, consolidation,
compulsory acquisition or “squeeze-out” provisions
corporate split, share exchange (kabushiki kokan),
in relation to takeover offers. As a result, if an offeror
share transfer (kabushiki iten) or business transfer)
has acquired or contracted to acquire 90 per cent.
or other material corporate actions (e.g., certainor more of the nominal value of the shares to whichamendments to the articles of incorporation, or
the offer relates, it can acquire the remaining up toreverse split of shares as a result of which fractions
10 per cent. of shares by giving notice to theless than one share are produced). Such
relevant shareholders. No such notice shall beshareholders may, by following certain procedural
given after the end of the period of two months
requirements and within a certain time period
beginning with the date on which the offeror hasprescribed by the Japanese Companies Act,acquired or contracted to acquire shares which
demand that the company repurchase their sharessatisfy the 90 per cent. threshold requirement.
at a fair price. If such shareholders and thecompany fail to reach an agreement on the A dissenting shareholder may apply to the Court
repurchase price, such dissenting shareholders as within six weeks of the date of such notice. On suchwell as the company may seek a court’s application, the Court can either: (i) order that theofferor shall not be entitled and bound to acquire thedetermination of the fair price of their shares.
shares; or (ii) specify terms of acquisition different
In addition, the Japanese Companies Act allows afrom those of the offer.
shareholder holding 90 per cent. or more of the total
voting rights, directly or through one or more wholly A minority shareholder is entitled, in circumstances
owned subsidiaries, to acquire the remaining 10 per similar to the “squeeze-out” described above, tocent. of shares with the approval of the company’s require the offeror to acquire their shares on theboard of directors. In this case, the minority terms of the takeover offer.
shareholders are also allowed to seek a court’s
determination of the fair price of their shares.

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Takeda Shares

Shire Shares

PRE-EMPTIVE RIGHTS
Under the Japanese Companies Act, Takeda The Jersey Companies Law does not provide for
Shareholders have no pre-emption rights. pre-emption rights. However, under the Shire
However, the Takeda Board may determine that Articles, new equity securities allotted for cash
Takeda Shareholders shall be given rights to an consideration must be offered to existing Shireallotment regarding a particular issue of new Shareholders pre-emptively. Such pre-emption
Takeda Shares, in which case such rights must be rights can be disapplied by a special resolution
given on uniform terms to all Takeda passed by Shire Shareholders at a shareholders’Shareholders.
meeting.
It is Shire’s practice to comply with the voluntary
UK pre-emption guidelines published by the PreEmption Group. Shire Shareholders are asked ateach annual general meeting to approve the issueof new shares on a non-pre-emptive basis in an
amount equal to 5 per cent. of the issued sharecapital of Shire (less shares held in treasury)(subject to a rolling 7.5 per cent. threshold
applying over any three-year period), plus afurther 5 per cent. for issues of new shares to fundan acquisition or specified capital investment.
CONVENING OF AND ATTENDANCE AT SHAREHOLDERS’ MEETINGS
Under the Japanese Companies Act, a meeting of Under Jersey law, a meeting of Shire
Takeda Shareholders may be called by the Shareholders may be called by the Shire Board
Takeda Board whenever it thinks fit, subject to whenever it thinks fit, subject to relevant notice
relevant notice requirements.
requirements.
Takeda is required to hold an annual general
meeting every year.

Shire is required to hold an annual general
meeting every year.

Takeda Shareholders holding not less than
3 per cent. of voting rights for six months or longer
can require the Takeda Directors to call ashareholders’ meeting.

Under the Shire Articles, Shire Shareholders
holding not less than 10 per cent. of voting rights
may require the Shire Board to call ashareholders’ meeting.

The notice requirement for Takeda is at least two
weeks before the meeting date.

Under the Shire Articles, a shareholders’ meeting
may be called on not less than 21 clear calendar
days’ notice.

Under the Japanese Companies Act and the
Takeda Articles, no quorum is required atshareholders’ meetings for voting on ordinary
resolutions but Takeda Shareholders holding atleast one-third of the total voting rights must bepresent in person or by proxy for certain matters
including: (i) the election of directors; and(ii) special resolutions.
Takeda Shareholders are generally permitted toask questions at shareholders’ meetings.

For shareholders’ meetings (other than annual
general meetings) the notice requirement under
the Shire Articles may be reduced to not less than
14 clear calendar days’ notice if, among otherconditions, such reduction is approved by special
resolution at the immediately preceding annual
general meeting or at a shareholders’ meeting
held since that annual general meeting.
Two Shire Shareholders present in person or byproxy and entitled to vote shall constitute a
quorum for a shareholders’ meeting (provided notless than two individuals are present).
Shire Shareholders are generally permitted to ask
questions at shareholders’ meetings.

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Takeda Shares

Shire Shares

RESOLUTIONS OF SHAREHOLDERS
Special resolutions generally involve proposals for Special resolutions generally involve proposals for
major changes to a company, such as to alter its major changes to a company, such as to alter its
capital structure, to implement a dissolution, capital structure, change or amend the rights ofmerger or consolidation, and/or to amend its shareholders, permit the company to issue new
articles of incorporation. Under the Japanese shares for cash without applying the shareholders’Companies Act and the Takeda Articles, a special pre-emptive rights and/or amend its articles ofresolution means a resolution passed by a association.
majority of at least two-thirds of the voting rights ofall shareholders present or represented at a Under the Shire Articles, a special resolution
shareholders’ meeting where at least one-third of means a resolution passed by a majority of not
the total voting rights are present or represented. less than 75 per cent. of Shire Shareholders or
holders of 75 per cent. of the Shire Shares
Proposals relating to the ordinary course of (depending on whether the vote is by show of
Takeda’s business that do not require a special hands or by a poll) who (being entitled to do so)
resolution may be passed by “ordinary resolution.” vote in person, or by proxy, at a shareholders’
Under the Japanese Companies Act and the meeting of Shire. For a resolution to qualify as a
Takeda Articles, ordinary resolutions are passed special resolution, the notice of the shareholders’
by a simple majority of the voting rights meeting must specify the intention to propose therepresented at a shareholders’ meeting.
resolution as a special resolution.
Takeda Shareholders may vote in person or byproxy, such proxy to be a Takeda Shareholder withvoting rights, and can also vote in writing if a form
is submitted by the end of ordinary business hours
on the date immediately preceding the date of therelevant shareholders’ meeting.

Proposals relating to the ordinary course of
Shire’s business that do not require a special
resolution may be passed by “ordinary resolution”.
Under Jersey law, an ordinary resolution means aresolution that is passed by a simple majority ofshareholders or holders of a simple majority of theshares (depending on whether the vote is by ashow of hands or by a poll) present in person or byproxy and entitled to vote at the shareholders’meeting.

VOTING RIGHTS
Takeda follows the “unit share system” (which is On a show of hands, each Shire Shareholder andmandatory for listed companies in Japan), duly appointed proxy who is present in person atwhereby Takeda Shareholders have one voting a shareholders’ meeting shall have one vote.
right for each “unit” of Takeda Shares held by themand Takeda Shares constituting less than a full On a poll, each Shire Shareholder and duly
unit carry no voting rights. The Takeda Articles appointed proxy who is present in person at a
provide that 100 Takeda Shares constitute one shareholders’ meeting shall have one vote per
Shire Share held by such Shire Shareholder or in
unit.
respect of which such proxy has been so
Under the Japanese Listing Rules, Takeda Shares appointed, as applicable.
constituting less than one unit do not comprise a
trading unit except in limited circumstances and, If a corporate shareholder appoints more than one
accordingly, may not be sold on the Tokyo Stock person to vote on its behalf at a shareholders’Exchange or the Local Japanese Stock meeting, each such representative can exercise
Exchanges on which such Takeda Shares are the votes attaching to the relevant Shire Shares indifferent ways on a poll, provided that eachlisted.
representative is voting in respect of different
Shire Shares.

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Takeda Shares

Shire Shares

EXCLUSIVE AND NON-TRANSFERABLE POWERS OF SHAREHOLDERS’ MEETINGThe following matters, among others and with The following matters, among others, require
certain exceptions and qualifications, require Shire Shareholder approval and therefore have toshareholder approval and therefore have to be be exclusively approved at a meeting of Shire
exclusively approved at a meeting of Takeda Shareholders:Shareholders:
Non-exhaustive list of matters requiring special
Non-exhaustive list of matters requiring special resolution:
resolution:(i) amendments to the Shire Articles;(i) amendments to the Takeda Articles;(ii) reducing the notice period required to call ashareholders’ meeting (other than the annual(ii) a reduction of Takeda’s share capital;
general meeting) from 21 clear calendar(iii) a transfer of the whole or part of Takeda’s
days to not less than 14 clear days;
equity interests in Takeda subsidiaries that(iii) a reduction of Shire’s share capital;
meet certain materiality standards;(iv) implementation of a dissolution, merger orconsolidation;(iv) a disapplication (or renewal of disapplication)of pre-emption rights;

(v)

(v)

a transfer of the whole or a substantial part of
Takeda’s business;a disapplication of the aggregate nominal
limit on the allotment of unissued shares;(vi) a takeover of the whole of the business ofanother company;(vi) a conversion of shares into redeemableshares;(vii) implementation of a corporate split;(vii) assignment of rights to shares issued; and(viii) implementation of a share exchange(kabushiki kokan) or share transfer(kabushiki iten) to establish 100 per cent.
parent-subsidiary relationships;(viii) a variation of rights attaching to Shire
Shares.

(ix) an issue of new shares or transfer of existing
Takeda Shares held as treasury stock at a
“specially favourable” price and issue ofstock acquisition rights or bonds with stockacquisition rights at a “specially favourable”
price or in a “specially favourable” condition
to any persons other than shareholders;(x)an acquisition by Takeda of its own sharesfrom specific persons other than Takeda
subsidiaries;

Non-exhaustive list of matters requiring ordinary
resolution:(i)removal of Shire Directors;(ii)

approval of Shire Directors’ long-term service
contracts;(iii) approval of loans, quasi-loans, credit
transactions and substantial propertytransactions with Shire Directors and theirconnected persons;(iv) authority to make market purchases of Shire
Shares;(xi) implementation of a reverse stock split; and(v)(xii) removal of Takeda Directors who aremembers of Takeda’s Audit and Supervisory
Committee.

(vi) authority of Shire Directors to allot Shire
Shares.

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appointment and removal of Shire’s auditors;
andTakeda Shares
Non-exhaustive list of matters requiring ordinary
resolution(i)a reduction of reserves;(ii)

appointment of Takeda Directors;

Shire Shares(iii) removal of Takeda Directors who are notmembers of Takeda’s Audit and Supervisory
Committee;(iv) appointment and removal of Takeda’s
financial auditors; and(v)

approval of
Directors.

remuneration

for

TakedaIn addition, the shareholders’ meeting may, as set
forth above, declare dividends by an ordinary
resolution.
SHAREHOLDER PROPOSALS
Under the Japanese Companies Act, Takeda Shire Shareholders representing: (i) at least
Shareholders holding not less than 1 per cent. of 5 per cent. of the total voting rights of all Shirethe total voting rights of all Takeda Shareholders Shareholders having the right to vote on theor not less than 300 voting rights for six months or resolution at the annual general meeting to which
longer have the right to propose a matter to be the request relates; or (ii) not less than 100 Shire
included in the agenda of a shareholders’ meeting Shareholders holding shares on which there hasby requesting that Takeda send a notice to Takeda been paid up an average sum per member of at least
Shareholders which includes a description of the £100 may require a resolution to be considered at anrelevant matter and a summary of the proposal.
annual general meeting. Such request must be
received by Shire at least six weeks before theannual general meeting at which the resolution is tobe proposed. Subject to certain conditions, Shire isthen required to give notice of such resolution bysending a copy of it to each Shire Shareholder
entitled to receive notice of the annual general
meeting in the same manner as notice of the meeting
and at the same time as, or as soon as reasonably
practicable after, it gives notice of the meeting.
SHAREHOLDER ACTIONSIn accordance with the Japanese Companies Act, The Jersey Companies Law permits a
any Takeda Shareholder holding at least one shareholder to apply to the Court for relief on theshare in Takeda consecutively for the preceding grounds that: (i) the company’s affairs are being or
six months or more is permitted to bring an action have been conducted in a manner unfairly
against the Takeda Directors: (i) to seek damages prejudicial to the interests of its shareholders(payable to Takeda) for breach of their duties (a generally or some part of them; or (ii) an actual orderivative action) if Takeda fails to bring such proposed act or omission of the company
action on its own within 60 calendar days of (including an act or omission on its behalf) is or
receiving the demand to do so by the Takeda would be so prejudicial or unlawful.
Shareholder; or (ii) to enjoin any act of suchdirectors in breach of applicable laws or theTakeda Articles if such act is likely to cause
irreparable detriment to Takeda.

132

Takeda Shares

Shire Shares

RIGHTS OF INSPECTION
Takeda Shareholders may inspect, for free, during The register and index of names of Shirebusiness hours, and may obtain for a fee copies Shareholders is open to inspection: (i) for free byof, the following documents:
Shire Shareholders; and (ii) for a fee by any otherperson. In both cases, the documents may be(i) the Takeda Articles;
copied for a fee.
(ii) the register of Takeda Shareholders The Shire Shareholders may also inspect, without(however, Takeda may refuse such charge, during business hours: (i) minutes ofinspection in certain cases (i.e., if such meetings of the Shire Shareholders and obtain
Takeda Shareholders made the request for copies of the minutes for a fee; and (ii) service
inspection: (a) for a purpose other than for contracts of Shire Directors, and may obtain
conducting enquiries necessary to secure copies of such documents for a fee.
or exercise their rights; (b) for the purpose ofinterfering with the operations of Takeda or In addition, the published annual accounts ofprejudicing the common interests of Takeda Shire are required to be available for Shire
Shareholders; or (c) in order to report facts Shareholders at a meeting of Shire Shareholders
obtained through such inspection to third and a Shire Shareholder is entitled to a copy ofthese accounts.
parties for profit);(iii) proxies;(iv) minutesofShareholders;(v)meetings

ofTakedafinancial statements of Takeda; and(vi) statutory disclosure documents regarding
certain corporate reorganisations (e.g., amerger, consolidation, corporate split, shareexchange (kabushiki kokan), share transfer(kabushiki iten) or business transfer) andother material corporate actions (e.g., certain
amendments to the articles of incorporation,or reverse split of shares as a result of whichfractions less than one share are produced).

The Shire Articles provide that no Shire
Shareholder shall have any right to inspect any
accounting records or other book or document of
Shire except as conferred by law, ordered by acourt of competent jurisdiction or authorised by
the Shire Board or by ordinary resolution.

Takeda Shareholders may also inspect, withoutcharge, and obtain for a fee copies of, the following
documents with the permission of a court:(i)minutes of meetings of the Takeda Board;
and

(ii)

minutes of meetings of the Audit andSupervisory Committee.

Further, Takeda Shareholders holding not lessthan 3 per cent. of the total voting rights or issued
Takeda Shares may inspect, without charge,
during business hours, and may obtain for a fee
copies of, Takeda’s accounting books and relatedmaterials. However, Takeda may refuse suchinspection in certain cases (i.e., if: (i) such Takeda
Shareholders made the request for inspection:(a) for a purpose other than for conducting
enquiries necessary to secure or exercise theirrights; (b) for the purpose of interfering with the133Takeda Sharesoperations of Takeda or prejudicing the common
interests of Takeda Shareholders; or (c) in order toreport facts obtained through such inspection tothird parties for profit; or (ii) such Takeda
Shareholders have engaged in businesssubstantially competing with the business of
Takeda).

Shire Shares

DISCLOSURE OF INTERESTS
Under the Financial Instruments and Exchange The Shire Articles require Shire Shareholders to
Act of Japan, interests in shares of a listed comply with the notification obligations contained
company must be announced if the shareholding in Chapter 5 of the Disclosure Guidance andratio exceeds 5 per cent. of the total issued share Transparency Rules as if it were a UK issuer.
capital of a listed company. Thereafter, Therefore, each Shire Shareholder is required,shareholders must also announce if their interest subject to certain exceptions, to notify Shire inchanges by 1 per cent. or more.
writing within two trading days of becoming awarethat they have acquired a material interest in
Shire, being 3 per cent. or more of the total issued
Directors and major shareholders
Under the Financial Instruments and Exchange Shire Shares carrying voting rights. Thereafter,
Act of Japan, regulations on officers and major such Shire Shareholder must also notify Shire
shareholders (being shareholders who hold 10 per within two trading days of any increase orcent. or more of the total voting rights of a listed decrease by which their interest crosses a 1 percent. threshold as well as any decrease thatcompany) are as follows:
reduces such Shire Shareholder’s holding below(i) if an officer or a major shareholder sells or the 3 per cent. threshold.
purchases securities, such officer or major
Under the Shire Articles, Shire may by notice inshareholder must file a report relating to such
writing require a person who Shire knows or has
sale or purchase with the Director of thereasonable cause to believe to be interested in thecompetent Local Finance Bureau of theshare capital of Shire or to have been so
Ministry of Finance of Japan;
interested at any time during the three years(ii) if an officer or major shareholder sells and immediately preceding the date on which thepurchases securities within a six-month notice is issued: (i) to confirm the fact or (as theperiod and makes a profit from such sale and case may be) to indicate whether or not it is thepurchase, the relevant listed company may case; and (ii) if he holds, or has during the time
request that the officer or major shareholder held, any such interest, to give certain further
information as may be required by Shire.
return the profits to the listed company; and(iii) it is prohibited for an officer or major
shareholder to engage in short-selling of
securities in an amount or volume which islarger than the amount or volume of shares
held by the officer or major shareholder.

Share ownership of directors and persons closely
associated with them
Under the Market Abuse Regulation, persons
discharging managerial responsibilities (being theShire Directors and senior executives of Shire),and persons closely associated with them, must
notify Shire in writing of the occurrence of alltransactions conducted on their own account inShire Shares, or derivatives or any other financial
instruments relating to those Shire Shares, within
three business days of the day on which thetransaction occurred. The notification must
contain specified information, including the nameof the person involved, the type of transaction, thedate on which it occurred, and the price andvolume of the transaction. Shire must notify a134

Takeda Shares

Shire Shares
Regulatory Information Service (which will makethe information public) of any information notified
to it in accordance with these provisions. The
notification to a Regulatory Information Service
must be made as soon as possible, and in any
event by no later than three business days of the
day on which the transaction occurred.
It has been Shire’s practice to comply with thedisclosure requirements in Listing Rule 9.8.6R in
its annual reports as if it were a UK issuer.

DIRECTORS’ DUTIES
Under the Japanese Companies Act and Civil Under the Jersey Companies Law, directors are
Code, the relationship between directors and the (among other things) required to act honestly andcompany is governed by agency principles. As an in good faith with a view to the best interests of theagent of the company, each director has an company, and to exercise the care, diligence andobligation to conduct the affairs of the company skill that a reasonably prudent person wouldwith the care of a “good manager” (i.e., the exercise in comparable circumstances.
director’s duty of care).
Takeda Directors are also obligated to comply withapplicable laws, the Takeda Articles andresolutions adopted at shareholders’ meetings,
and to perform their duties faithfully on behalf ofTakeda (in accordance with the director’s duty ofloyalty).
TRANSACTIONS WITH INTERESTED PARTIES
Under the Japanese Companies Act, where a Under the Listing Rules, various restrictions andTakeda Director intends to contemplate any procedural requirements govern transactions
competitive or conflicting interest transaction, the between Shire (or its subsidiaries) and a related
relevant transaction must be approved by the party.
Takeda Board. The Takeda Director who has
The definition of a related party includes a Shirecontemplated the transaction must report the
Director and a substantial shareholder (i.e., anymaterial fact thereof to the Takeda Board without
person who is entitled to exercise, or to control the
delay.
exercise of, 10 per cent. or more of the votes abletobe cast on all or substantially all matters at
Where a transaction with a related party isshareholders’meetings of Shire).
contemplated by Takeda, certain matters in
respect of that related party are required to be
Certain tests (known as ‘class tests’) are used toincluded in the notes to Takeda’s financial
assess the impact of the related party transaction
statements.
on the listed company.
Shire’s obligations would depend on the result ofsuch class tests and the applicability of any
relevant exceptions but may include the following:(i) no action being required; (ii) a requirement toobtain an independent adviser’s confirmation thatthe terms of the transaction are fair and reasonableas far as Shire Shareholders are concerned; (iii) a
requirement to notify the transaction to a
Regulatory Information Service; and/or (iv) a
requirement to publish a shareholder circular and135

Takeda Shares

Shire Sharesto obtain the prior approval of Shire Shareholders
by way of ordinary resolution before entering intosuch a transaction (or, if the transaction isconditional on such approval, before completion of
the transaction).
In addition to the requirements under the Listing
Rules, a Shire Director who has, directly or
indirectly, an interest in a transaction entered intoor proposed to be entered into by Shire must
disclose the nature and extent of such interest, tothe extent that he is aware of such interest andsuch interest conflicts or may conflict to a material
extent with the interests of Shire.

MARKET DISCLOSURE
Under the Japanese Listing Rules, unless classed In general, under the Market Abuse Regulation,
as insignificant, Takeda must notify the market in Shire must inform the public as soon as possible
a timely manner of certain decisions, including:of inside information that directly concerns it.
Delay in informing the public of inside information(i) a decrease in its share capital (shihonkin),is permitted in limited circumstances. For thecapital reserve (shihon junbikin) or retained
purposes of the Market Abuse Regulation, inside
earnings reserve (rieki junbikin);
information is information of a precise nature, that:(ii) an issue of new shares or disposition by (i) has not been made public; (ii) relates, directly
or indirectly, to Shire or to one or more financial
Takeda of its own shares;
instruments of Shire; and (iii) if it were made(iii) an acquisition by Takeda of its own shares;
public, would be likely to have a significant effectonthe price of such financial instrument(s) of(iv) a share exchange (kabushikikoukan), sharetransfer (kabusihikiiten), merger, corporate Shire or on the price of related derivative financial
split, transfer or acquisition of all or part of instrument(s).
the business, or dissolution;(v)

an amendment to the Takeda Articles,
including a change in the rights attaching to
Takeda Shares;

In addition to the general requirement, Shire isrequired to disclose to the market and/or the FCA:(i)

any changes regarding its capital (forexample, the results of any new issue ofshares);(ii)

any purchase or redemption by Shire of its
own equity securities;(vi) a change in representative directors; and(vii) any other important matters related to theoperation, business or assets of Takeda
which have a material effect on investors’
investment decisions.

(iii) notifications of dealings received by Shirefrom persons holding an interest in 3 percent. or more of any class of Shire’s sharecapital;(iv) any changes to the membership of the Shire
Board;(v)

dealings by persons discharging managerial
responsibilities of Shire or their closely
associated persons, in shares or related
securities of Shire; and(vi) any changes to rights attaching to Shire
Shares.

136

Takeda Shares

Shire Shares

FINANCIAL REPORTING
Under the Financial Instruments and Exchange Shire must publish its annual financial report
Act of Japan, Takeda must submit its annual within four months of the end of each financial
securities reports, including financial statements year. This report is prepared in US GAAP and
independently audited by appropriately qualified must be independently audited by appropriately
auditors, within three months after the end of the qualified auditors. It must also be accompanied byrelevant business year. Under the Regulation on directors’ reports and a corporate governanceTerminology, Forms, and Preparation Methods of statement.
Consolidated Financial Statements of Japan,
Takeda may prepare its consolidated financial Shire must also publish a half-yearly financial
statements in accordance with Japan GAAP, US report covering the first six months of the financial
GAAP, IFRS or modified IFRS. In Takeda’s annual year within three months after the end of the halfsecurities reports, its financial statements are year. This must contain condensed financial
prepared in accordance with Japan GAAP and its statements, in accordance with US GAAP (orconsolidated financial statements are prepared in equivalent information) and, if it has been audited,the audit report must be published, together with aaccordance with IFRS.
management statement and information about
Under the Japanese Listing Rules, Takeda must significant events that have occurred and risks
submit its earnings report (Kessan Tanshin), remaining for the year.
including a summary of financial statements,
within 45 calendar days after the end of the Shire files reports with the SEC in accordance with
relevant business year or preferably within 30 obligations arising from the listing of the Shire
calendar days of the end of the relevant business ADSs on NASDAQ, and its debt listing on the New
year. The summary of financial statements is not York Stock Exchange.
required to be independently audited byappropriately qualified auditors.
Under the Financial Instruments and Exchange
Act of Japan, Takeda must submit its quarterly
securities reports, including financial statements
independently audited by appropriately qualified
auditors, within 45 days after each three-month
period of the relevant business year.
Under the Japanese Listing Rules, Takeda must
submit its quarterly earnings report (Kessan
Tanshin), including a summary of financial
statements, before submitting its quarterly
securities reports. The summary of financial
statements is not required to be independently
audited by appropriately qualified auditors.
5.

The New Takeda ADSs

5.1

Description of Takeda American Depositary Shares
The Bank of New York Mellon, as Takeda Depositary, will register and deliver the New Takeda
ADSs. Each New Takeda ADS will represent one-half of one Takeda Share deposited with
Sumitomo Mitsui Banking Corporation, as custodian for the Takeda Depositary in Japan. The
New Takeda ADSs issued under the Scheme will only represent the underlying New Takeda
Shares. However, once issued, each New Takeda ADS will also represent any other securities,
cash or other property which may be held by the Takeda Depositary from time to time. The
deposited Takeda Shares together with any other securities, cash or other property held by the
Takeda Depositary are referred to as the deposited securities. The Takeda Depositary’s office atwhich the Takeda ADSs will be administered and its principal executive office are located at
240 Greenwich Street, New York, New York 10286.

137Holders of Takeda ADSs may hold Takeda ADSs either: (i) directly (a) by having an ADR, which
is a certificate evidencing a specific number of Takeda ADSs, registered in their name, or (b) byhaving uncertificated Takeda ADSs registered in their name; or (ii) indirectly by holding a security
entitlement in Takeda ADSs through a broker or other financial institution that is a direct or indirect
participant in DTC. Holders of Takeda ADSs who hold Takeda ADSs directly are registered
Takeda ADS holders (“Takeda ADS holders”). This description applies to such registered Takeda
ADS holders only. If a holder of Takeda ADSs holds the Takeda ADSs indirectly, he or she must
rely on the procedures of his or her broker or other financial institution to assert the rights of
Takeda ADS holders described herein. Holders of Takeda ADSs who hold their Takeda ADSs
indirectly should consult with their respective brokers or financial institutions to determine what
those procedures are.
Takeda ADS holders who hold uncertificated Takeda ADSs will receive statements from theTakeda Depositary confirming their holdings.
Takeda will not treat Takeda ADS holders as Takeda Shareholders and they will not haveshareholder rights. Japanese law governs the shareholder rights attached to the Takeda Shares.
The Takeda Depositary will be treated as the holder of the Takeda Shares underlying the Takeda
ADSs. The Takeda Deposit Agreement between Takeda, the Takeda Depositary, Takeda ADS
holders and all other persons indirectly or beneficially holding Takeda ADSs will set out the rights
of Takeda ADS holders as well as the rights and obligations of the Takeda Depositary. New Yorklaw governs the Takeda Deposit Agreement and the Takeda ADSs.
The following is a summary of the material provisions of the Takeda Deposit Agreement.
5.2

Dividends and other distributions
How will holders of Takeda ADSs receive dividends and other distributions on the Takeda
Shares?
The Takeda Depositary has agreed to pay or distribute to Takeda ADS holders the cash dividends
or other distributions it or the custodian receives on Takeda Shares or other deposited securities,
upon payment or deduction of its fees and expenses. Takeda ADS holders will receive these
distributions in proportion to the number of Takeda Shares their Takeda ADSs represent.
Cash. The Takeda Depositary will convert any cash dividend or other cash distribution Takeda
pays on the Takeda Shares into US Dollars, if it can do so on a reasonable basis and can transfer
the US Dollars to the United States. If that is not possible or if any government approval isneeded and cannot be obtained, the Takeda Deposit Agreement allows the Takeda Depositary to
distribute the foreign currency only to those Takeda ADS holders to whom it is possible to do so.
It will hold the foreign currency it cannot convert for the account of the Takeda ADS holders who
have not been paid. It will not invest the foreign currency and it will not be liable for any interest.
Before making a distribution, any withholding taxes or other governmental charges that must be
paid will be deducted. The Takeda Depositary will distribute only whole US Dollars and cents andwill round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time
when the Takeda Depositary cannot convert the foreign currency, Takeda ADS holders may lose
some of the value of the distribution.
Takeda Shares. The Takeda Depositary may distribute additional Takeda ADSs representing any
Takeda Shares distributed by Takeda as a dividend or free distribution. The Takeda Depositary
will only distribute whole Takeda ADSs. It will sell Takeda Shares which would require it to delivera fraction of a Takeda ADS (or Takeda ADSs representing those Takeda Shares) and distributethe net proceeds in the same way as it does with cash. If the Takeda Depositary does not
distribute additional Takeda ADSs, the outstanding Takeda ADSs will also represent the new
Takeda Shares. The Takeda Depositary may sell a portion of the distributed Takeda Shares (orTakeda ADSs representing those Takeda Shares) sufficient to pay its fees and expenses inconnection with that distribution.

138

Rights to purchase additional Takeda Shares. If Takeda offers holders of Takeda Shares any
rights to subscribe for additional Takeda Shares or any other rights, the Takeda Depositary may:(i) exercise those rights on behalf of Takeda ADS holders; (ii) distribute those rights to Takeda
ADS holders; or (iii) sell those rights and distribute the net proceeds to Takeda ADS holders, ineach case after deduction or upon payment of its fees and expenses. To the extent the Takeda
Depositary does not do any of those things, it will allow the rights to lapse. In that case, Takeda
ADS holders will receive no value for them. The Takeda Depositary will exercise or distributerights only if Takeda asks it to and provides satisfactory assurances to the Takeda Depositary that
it is lawful to do so. If the Takeda Depositary will exercise rights, it will purchase the securities towhich the rights relate and distribute those securities or, in the case of new Takeda Shares, newTakeda ADSs representing the new Takeda Shares to subscribing Takeda ADS holders, but only
if Takeda ADS holders have paid the exercise price to the Takeda Depositary. US securities laws
may restrict the ability of the Takeda Depositary to distribute rights or Takeda ADSs or othersecurities issued on exercise of rights to all or certain Takeda ADS holders, and the securities
distributed may be subject to restrictions on transfer.
Other Distributions. The Takeda Depositary will send to Takeda ADS holders anything else
Takeda distributes on deposited securities by any means it thinks is legal, fair and practical. If it
cannot make the distribution in that way, the Takeda Depositary has a choice either: (i) to sellwhat Takeda distributed and distribute the net proceeds, in the same way as it does with cash;or (ii) to hold what Takeda distributed, in which case Takeda ADSs will also represent the newly
distributed property. However, the Takeda Depositary is not required to distribute any securities(other than Takeda ADSs) to Takeda ADS holders unless it receives satisfactory evidence fromTakeda that it is lawful to make that distribution. The Takeda Depositary may sell a portion of the
distributed securities or property sufficient to pay its fees and expenses in connection with that
distribution. US securities laws may restrict the ability of the Takeda Depositary to distributesecurities to all or certain Takeda ADS holders, and the securities distributed may be subject torestrictions on transfer.
The Takeda Depositary is not responsible if it decides that it is unlawful or impractical to make a
distribution available to any Takeda ADS holders. Takeda has no obligation to register Takeda
ADSs, Takeda Shares, rights or other securities under the US Securities Act. Takeda also has no
obligation to take any other action to permit the distribution of Takeda ADSs, Takeda Shares,
rights or anything else to Takeda ADS holders. This means that Takeda ADS holders may notreceive the distributions Takeda makes on Takeda Shares or any value for them if it is illegal or
impractical for Takeda to make them available to the holders of Takeda ADSs.
5.3

Deposit, withdrawal and cancellation
How are Takeda ADSs issued?
The Takeda Depositary will deliver Takeda ADSs if holders of Takeda Shares or their respective
brokers deposit Takeda Shares or evidence of rights to receive Takeda Shares with thecustodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp
taxes or stock transfer taxes or fees, the Takeda Depositary will register the appropriate numberof Takeda ADSs in the names such holder requests and will deliver the Takeda ADSs to or upon
the order of the person or persons that made the deposit.
How can Takeda ADS holders withdraw the deposited securities?
Takeda ADS holders may surrender their Takeda ADSs to the Takeda Depositary for the purposeof withdrawal. Upon payment of its fees and expenses and of any taxes or charges, such as
stamp taxes or stock transfer taxes or fees, the Takeda Depositary will deliver the Takeda Shares
and any other deposited securities underlying the Takeda ADSs to the Takeda ADS holder or aperson the Takeda ADS holder designates at the office of the custodian. Or, at the request, risk
and expense of the requesting Takeda ADS holder, the Takeda Depositary will deliver thedeposited securities at its office, if feasible. However, the Takeda Depositary is not required toaccept surrender of Takeda ADSs to the extent it would require delivery of a fraction of a139

deposited share or other security. The Takeda Depositary may charge Takeda ADS holders a fee
and its expenses for instructing the custodian regarding delivery of deposited securities.
How do Takeda ADS holders interchange between certificated Takeda ADSs and uncertificated
Takeda ADSs?
A Takeda ADS holder may surrender his or her Takeda ADR to the Takeda Depositary for the
purpose of exchanging his or her Takeda ADR for uncertificated Takeda ADSs. The Takeda
Depositary will cancel that Takeda ADR and will send to the Takeda ADS holder a statement
confirming that the Takeda ADS holder is the registered holder of uncertificated Takeda ADSs.
Upon receipt by the Takeda Depositary of a proper instruction from a registered holder of
uncertificated Takeda ADSs requesting the exchange of uncertificated Takeda ADSs forcertificated Takeda ADSs, the Takeda Depositary will execute and deliver to the Takeda ADS
holder a Takeda ADR evidencing those Takeda ADSs.
5.4

Voting rights
How do Takeda ADS holders vote?
Takeda ADS holders may instruct the Takeda Depositary how to vote the number of deposited
Takeda Shares their Takeda ADSs represent. If Takeda requests the Takeda Depositary to solicit
the voting instructions of the Takeda ADS holders (Takeda is not required to do so), the Takeda
Depositary will notify Takeda ADS holders of a shareholders’ meeting and send or make voting
materials available to them. Those materials will describe the matters to be voted on and explain
how Takeda ADS holders may instruct the Takeda Depositary how to vote. For instructions to bevalid, they must reach the Takeda Depositary by a date set by the Takeda Depositary. The Takeda
Depositary will endeavour, as far as practical, subject to the laws of Japan and the provisions of theTakeda Articles or similar documents, to vote or to have its agents vote the Takeda Shares or otherdeposited securities as instructed by Takeda ADS holders. If Takeda does not request the Takeda
Depositary to solicit the voting instructions of the Takeda ADS holders, Takeda ADS holders can still
send voting instructions and, in that case, the Takeda Depositary may try to vote as the Takeda ADS
holders instruct, but it is not required to do so.
Except by instructing the Takeda Depositary as described above, Takeda ADS holders will not beable to exercise voting rights unless they surrender their Takeda ADSs and withdraw the underlying
Takeda Shares. However, Takeda ADS holders may not know about the meeting enough inadvance to withdraw the Takeda Shares. In any event, the Takeda Depositary will not exercise any
discretion in voting deposited securities and it will only vote or attempt to vote as instructed or as
described in the following sentence. If: (i) Takeda asked the Takeda Depositary to solicit the
instructions of the Takeda ADS holders at least 28 days before the meeting date; (ii) the Takeda
Depositary does not receive voting instructions from a Takeda ADS holder by the specified date;and (iii) Takeda confirms to the Takeda Depositary that, as of the instruction cut-off date:•

Takeda wishes to receive a proxy to vote uninstructed Takeda Shares;•

Takeda reasonably does not know of any substantial shareholder opposition to a particularquestion; and•the particular question is not materially adverse to the interests of shareholders,the Takeda Depositary will consider such Takeda ADS holder to have authorised and directed it to
give, and it will give, a discretionary proxy to a person designated by Takeda to vote the number ofdeposited securities represented by the Takeda ADSs of such Takeda ADS holder as to thatquestion. However, such discretionary proxy will not apply in relation to any Takeda ADSs that are
represented by CDIs.
Takeda cannot assure Takeda ADS holders that they will receive the voting materials in time toensure that they can instruct the Takeda Depositary to vote their Takeda Shares. In addition, theTakeda Depositary and its agents are not responsible for failing to carry out voting instructions or140

for the manner of carrying out voting instructions. This means that Takeda ADS holders may not beable to exercise voting rights and there may be nothing Takeda ADS holders can do if their Takeda
Shares are not voted as requested.
Holders of CDIs representing Takeda ADSs may not receive notices of Takeda shareholder
meetings and will not be able to instruct the Takeda Depositary how to vote.
If Takeda will request the Takeda Depositary to send a notice regarding a Takeda shareholder
meeting, Takeda will endeavour to give the Takeda Depositary at least 30 days’ prior notice of theshareholder meeting and the details of the matters to be voted upon, unless such advance notice
is not possible because less than 30 days’ notice of the meeting has been given in accordance with
Takeda’s Articles and Japanese law, in which case Takeda will provide to the Takeda Depositarysuch advance notice of the shareholder meeting as may be possible under the circumstances.
5.5

Fees and expenses
Persons depositing or withdrawing
Takeda Shares or Takeda ADS holders
must pay:For:$5.00 (or less) per 100 Takeda ADSs
(or portion of 100 Takeda ADSs)

Issue of Takeda ADSs, including issues resulting
from a distribution of Takeda Shares or rights orother property
Cancellation of Takeda ADSs for the purpose ofwithdrawal, including if the Takeda Deposit
Agreement terminates$0.05 (or less) per Takeda ADS

Any cash distribution to Takeda ADS holders

A fee equivalent to the fee that would bepayable if securities distributed to Takeda
ADS holders had been Takeda Sharesand the Takeda Shares had been
deposited for issuance of Takeda ADSs

Distribution of securities distributed to holders ofdeposited securities (including rights) that are
distributed by the Takeda Depositary to Takeda
ADS holders$0.05 (or less) per Takeda ADS per
calendar year

Depositary services

Registration or transfer fees

Transfer and registration of Takeda Shares on
Takeda’s share register to or from the name of
the Takeda Depositary or its agent when persons
deposit or withdraw Takeda Shares

Expenses of the Takeda Depositary

Cable and facsimile transmissions (whenexpressly provided in the Takeda Deposit
Agreement)
Converting foreign currency to US Dollars

Taxes and other governmental charges
the Takeda Depositary or the custodian
has to pay on any Takeda ADSs or Takeda
Shares underlying Takeda ADSs, such as
stock transfer taxes, stamp duty orwithholding taxes

As necessary

Any charges incurred by the Takeda
Depositary or its agents for servicing thedeposited securities

As necessary

141

The Takeda Depositary collects its fees for delivery and surrender of Takeda ADSs directly frominvestors depositing Takeda Shares or surrendering Takeda ADSs for the purpose of withdrawal
or from intermediaries acting for them. The Takeda Depositary collects fees for making
distributions to investors by deducting those fees from the amounts distributed or by selling a
portion of distributable property to pay the fees. The Takeda Depositary may collect its annual fee
for depositary services by deduction from cash distributions or by directly billing investors or bycharging the book-entry system accounts of participants acting for them. The Takeda Depositary
may collect any of its fees by deduction from any cash distribution payable (or by selling a portionof securities or other property distributable) to Takeda ADS holders that are obligated to pay
those fees. The Takeda Depositary may generally refuse to provide fee-attracting services until
its fees for those services are paid.
From time to time, the Takeda Depositary may make payments to Takeda to reimburse Takeda
for costs and expenses generally arising out of establishment and maintenance of the Takeda
ADS programme, waive fees and expenses for services provided to Takeda by the Takeda
Depositary or share revenue from the fees collected from Takeda ADS holders. In performing its
duties under the Takeda Deposit Agreement, the Takeda Depositary may use brokers, dealers,foreign currency dealers or other service providers that are owned by or affiliated with the Takeda
Depositary and that may earn or share fees, spreads or commissions.
The Takeda Depositary may convert currency itself or through any of its affiliates and, in thosecases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on
behalf of any other person and earns revenue, including, without limitation, transaction spreads,
that it will retain for its own account. The revenue is based on, among other things, the difference
between the exchange rate assigned to the currency conversion made under the Takeda Deposit
Agreement and the rate that the Takeda Depositary or its affiliate receives when buying or selling
foreign currency for its own account. The Takeda Depositary makes no representation that theexchange rate used or obtained in any currency conversion under the Takeda Deposit Agreement
will be the most favourable rate that could be obtained at the time or that the method by whichthat rate will be determined will be the most favourable to Takeda ADS holders, subject to theTakeda Depositary’s obligations under the Takeda Deposit Agreement. The methodology used todetermine exchange rates used in currency conversions is available upon request.
5.6

Payment of taxes
Takeda ADS holders will be responsible for any taxes or other governmental charges payable on
their Takeda ADSs or on the deposited securities represented by any of their Takeda ADSs. The
Takeda Depositary may refuse to register any transfer of Takeda ADSs or allow a Takeda ADS
holder to withdraw the deposited securities represented by his or her Takeda ADSs until thosetaxes or other charges are paid. It may apply payments owed to such Takeda ADS holder or sell
deposited securities represented by such Takeda ADS holder’s Takeda ADSs to pay any taxes
owed and such Takeda ADS holder will remain liable for any deficiency. If the Takeda Depositary
sells deposited securities, it will, if appropriate, reduce the number of Takeda ADSs to reflect thesale and pay to Takeda ADS holders any proceeds, or send to Takeda ADS holders any property,
remaining after it has paid the taxes.

5.7

Tender and exchange offers; redemption, replacement or cancellation of deposited
securities
The Takeda Depositary will not tender deposited securities in any voluntary tender or exchange
offer unless instructed to do so by a Takeda ADS holder surrendering Takeda ADSs and subject
to any conditions or procedures the Takeda Depositary may establish.
If deposited securities are redeemed for cash in a transaction that is mandatory for the Takeda
Depositary as a holder of deposited securities, the Takeda Depositary will call for surrender of acorresponding number of Takeda ADSs and distribute the net redemption money to the holdersof called Takeda ADSs upon surrender of those Takeda ADSs.

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If there is any change in the deposited securities such as a sub-division, combination or otherreclassification, or any merger, consolidation, recapitalisation or reorganisation affecting theissuer of deposited securities in which the Takeda Depositary receives new securities inexchange for or in lieu of the old deposited securities, the Takeda Depositary will hold those
replacement securities as deposited securities under the Takeda Deposit Agreement. However,if the Takeda Depositary decides it would not be lawful and practical to hold the replacement
securities because those securities could not be distributed to Takeda ADS holders or for any
other reason, the Takeda Depositary may instead sell the replacement securities and distributethe net proceeds upon surrender of the Takeda ADSs.
If there is a replacement of the deposited securities and the Takeda Depositary will continue tohold the replacement securities, the Takeda Depositary may distribute new Takeda ADSs
representing the new deposited securities or ask holders of Takeda ADRs to surrender theiroutstanding Takeda ADRs in exchange for new Takeda ADRs identifying the new deposited
securities.
If there are no deposited securities underlying the Takeda ADSs, including if the deposited
securities are cancelled, or if the deposited securities underlying the Takeda ADSs have become
apparently worthless, the Takeda Depositary may call for the surrender of those Takeda ADSs orcancel those Takeda ADSs upon notice to the Takeda ADS holders.
5.8

Amendment and termination
How may the Takeda Deposit Agreement be amended?
Takeda may agree with the Takeda Depositary to amend the Takeda Deposit Agreement and the
Takeda ADRs without the consent of Takeda ADS holders for any reason. If an amendment adds
or increases fees or charges, except for taxes and other governmental charges or expenses of
the Takeda Depositary for registration fees, facsimile costs, delivery charges or similar items, or
prejudices a substantial right of Takeda ADS holders, it will not become effective for outstanding
Takeda ADSs until 30 days after the Takeda Depositary notifies Takeda ADS holders of theamendment. At the time an amendment becomes effective, Takeda ADS holders will beconsidered, by continuing to hold their Takeda ADSs, to agree to the amendment and to be boundby the Takeda ADRs and the Takeda Deposit Agreement as amended.
How may the Takeda Deposit Agreement be terminated?
The Takeda Depositary will initiate termination of the Takeda Deposit Agreement if Takeda
instructs it to do so. The Takeda Depositary may initiate termination of the Takeda Deposit
Agreement if:•

90 days have passed since the Takeda Depositary told Takeda it wants to resign but asuccessor depositary has not been appointed and accepted its appointment;•

Takeda delists Takeda ADSs from an exchange on which they were listed and does not list
the Takeda ADSs on another exchange;•

Takeda appears to be insolvent or enters insolvency proceedings;•

all or substantially all the value of the deposited securities has been distributed either incash or in the form of securities;•

there are no deposited securities underlying the Takeda ADSs or the underlying deposited
securities have become apparently worthless; or•there has been a replacement of deposited securities.

If the Takeda Deposit Agreement will terminate, the Takeda Depositary will notify Takeda ADS
holders at least 90 days before the termination date. At any time after the termination date, theTakeda Depositary may sell the deposited securities and the Takeda Depositary will hold the143

proceeds it received from such sale, as well as any other cash it is holding under the Takeda
Deposit Agreement, and without liability for interest, for the pro rata benefit of the Takeda ADS
holders that have not surrendered their Takeda ADSs. Normally, the Takeda Depositary will sell
the deposited securities as soon as practicable after the termination date.
After the termination date and before the Takeda Depositary sells the deposited securities,
Takeda ADS holders can still surrender their Takeda ADSs and receive delivery of deposited
securities, except that the Takeda Depositary may refuse to accept a surrender for the purposeof withdrawing deposited securities or reverse previously accepted surrenders of that kind if itwould interfere with the selling process. The Takeda Depositary may refuse to accept a surrender
for the purpose of withdrawing sale proceeds until all the deposited securities have been sold.
The Takeda Depositary will continue to collect distributions on deposited securities, but, after thetermination date, the Takeda Depositary is not required to register any transfer of Takeda ADSs
or distribute any dividends or other distributions on deposited securities to the Takeda ADS
holders (until they surrender their Takeda ADSs) or give any notices or perform any other duties
under the Takeda Deposit Agreement except as described in this paragraph.
5.9

Limitations on obligations and liability
Limits on Takeda’s obligations and the obligations of the Takeda Depositary; Limits on liability to
Takeda ADS holders
The Takeda Deposit Agreement expressly limits Takeda’s obligations and the obligations of theTakeda Depositary. It also limits Takeda’s liability and the liability of the Takeda Depositary.
Takeda and the Takeda Depositary:•

are only obligated to take the actions specifically set forth in the Takeda Deposit
Agreement without negligence or bad faith, and the Takeda Depositary will not be afiduciary or have any fiduciary duty to holders of Takeda ADSs;•

are not liable if Takeda or the Takeda Depositary is prevented or delayed by law or by
events or circumstances beyond Takeda’s or the Takeda Depositary’s ability to prevent or
counteract with reasonable care or effort from performing Takeda’s or the Takeda
Depositary’s obligations under the Takeda Deposit Agreement;•

are not liable if Takeda or the Takeda Depositary exercises discretion permitted under theTakeda Deposit Agreement;•

are not liable for the inability of any Takeda ADS holder to benefit from any distribution on
deposited securities that is not made available to Takeda ADS holders under the terms of
the Takeda Deposit Agreement, or for any special, consequential or punitive damages forany breach of the terms of the Takeda Deposit Agreement, or for any;•

have no obligation to become involved in a lawsuit or other proceeding related to theTakeda ADSs or the Takeda Deposit Agreement on behalf of Takeda ADS holders or on
behalf of any other person;•

may rely upon any documents Takeda believes or the Takeda Depositary believes in goodfaith to be genuine and to have been signed or presented by the proper person;•

are not liable for the acts or omissions of any securities depository, clearing agency orsettlement system; and•the Takeda Depositary has no duty to make any determination or provide any information
as to Takeda’s tax status, or any liability for any tax consequences that may be incurred by
Takeda ADS holders as a result of owning or holding Takeda ADSs or be liable for theinability or failure of a Takeda ADS holder to obtain the benefit of a foreign tax credit,
reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax
benefit.

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In the Takeda Deposit Agreement, Takeda and the Takeda Depositary agree to indemnify eachother under certain circumstances.
5.10 Requirements for Takeda Depositary actions
Before the Takeda Depositary will deliver or register a transfer of Takeda ADSs, make a
distribution on Takeda ADSs, or permit withdrawal of Takeda Shares, the Takeda Depositary may
require:•payment of stock transfer or other taxes or other governmental charges and transfer orregistration fees charged by third parties for the transfer of any Takeda Shares or otherdeposited securities;•

satisfactory proof of the identity and genuineness of any signature or other information it
deems necessary; and•compliance with regulations it may establish, from time to time, consistent with the Takeda
Deposit Agreement, including presentation of transfer documents.

The Takeda Depositary may refuse to deliver Takeda ADSs or register transfers of Takeda ADSs
when the transfer books of the Takeda Depositary or Takeda’s transfer books are closed or at any
time if the Takeda Depositary or Takeda thinks it advisable to do so.
5.11 Rights of Takeda ADS holders to receive the Takeda Shares underlying their Takeda ADSs
Takeda ADS holders have the right to cancel their Takeda ADSs and withdraw the underlying
Takeda Shares at any time except:•

when temporary delays arise because: (i) the Takeda Depositary has closed its transfer
books or Takeda has closed Takeda’s transfer books; (ii) the transfer of Takeda Shares isblocked to permit voting at a shareholders’ meeting; or (iii) Takeda is paying a dividend on
Takeda Shares;•

when withdrawing Takeda ADS holders owe money to pay fees, taxes and similar charges;or•when it is necessary to prohibit withdrawals in order to comply with any laws orgovernmental regulations that apply to Takeda ADSs or to the withdrawal of Takeda Sharesor other deposited securities.

This right of withdrawal may not be limited by any other provision of the Takeda Deposit
Agreement.
5.12 Direct Registration System
In the Takeda Deposit Agreement, all parties to the Takeda Deposit Agreement acknowledge thatthe Direct Registration System, also referred to as DRS, and Profile Modification System, also
referred to as Profile, will apply to the Takeda ADSs. DRS is a system administered by DTC thatfacilitates interchange between registered holding of uncertificated Takeda ADSs and holding of
security entitlements in Takeda ADSs through DTC and a DTC participant. Profile is featureof DRS that allows a DTC participant, claiming to act on behalf of a registered holder of
uncertificated Takeda ADSs, to direct the Takeda Depositary to register a transfer of those Takeda
ADSs to DTC or its nominee and to deliver those Takeda ADSs to the DTC account of that DTC
participant without receipt by the Takeda Depositary of prior authorisation from the Takeda ADS
holder to register that transfer.
In connection with and in accordance with the arrangements and procedures relating to the
DRS/Profile system, the parties to the Takeda Deposit Agreement understand that the Takeda
Depositary will not determine whether the DTC participant that is claiming to be acting on behalfof a Takeda ADS holder in requesting registration of transfer and delivery as described in the145paragraph above has the actual authority to act on behalf of the Takeda ADS holder(notwithstanding any requirements under the Uniform Commercial Code). In the Takeda Deposit
Agreement, the parties agree that the Takeda Depositary’s reliance on and compliance with
instructions received by the Takeda Depositary through the DRS/Profile system and inaccordance with the Takeda Deposit Agreement will not constitute negligence or bad faith on thepart of the Takeda Depositary.
5.13 Shareholder communications; inspection of register of holders of Takeda ADSs
The Takeda Depositary will make available for the inspection of Takeda ADS holders at its office
all communications that it receives from Takeda as a holder of deposited securities that Takeda
makes generally available to holders of deposited securities. The Takeda Depositary will send
Takeda ADS holders copies of those communications or otherwise make those communications
available to Takeda ADS holders if Takeda asks it to. Takeda ADS holders have a right to inspect
the register of Takeda ADS holders, but not for the purpose of contacting those holders about amatter unrelated to Takeda’s business or the Takeda ADSs.
6.

CDIs representing New Takeda ADSs

The CDIs representing New Takeda ADSs reflect the economic rights attached to the New Takeda
ADSs. However, the holders of CDIs representing New Takeda ADSs will not be the holders of
those New Takeda ADSs and the CDIs representing New Takeda ADSs will not carry any voting
rights in Takeda. The terms on which CDIs (such as the CDIs representing New Takeda ADSs) are
issued and held in CREST are set out in the CREST Manual (and, in particular, the deed poll set out in
the CREST International Manual) and the CREST Terms and Conditions issued by Euroclear. Further
details are set out in paragraph 19.3(c)(ii) of Part II (Explanatory Statement) of this document.
Furthermore, the holders of CDIs representing New Takeda ADSs may not be able to claim
either: (i) a reduction, pursuant to a double taxation convention, of the rate of 15.315 per cent.
at which it is expected that tax will be withheld under Japanese law from dividends (or other
distributions deemed to be dividends for Japanese tax purposes) made or paid by Takeda inrespect of New Takeda Shares underlying New Takeda ADSs represented by CDIs; or (ii) a refundof such tax withheld in excess of the rate provided for in a double taxation convention. If holdersof CDIs representing New Takeda ADSs intend to claim the benefit of any applicable double taxation
convention, they may wish to cancel their CDIs as soon as practicable after the Effective Date so as toreceive the underlying New Takeda ADSs. Your attention is drawn to paragraph 3.2(a) of Part VII(Taxation) of this document, which contains certain general comments on the Japanese tax treatment
of dividends (or other distributions deemed to be dividends for Japanese tax purposes) made or paidby Takeda.

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PART VI
FINANCIAL AND RATINGS INFORMATIONPart A: Financial information relating to Shire
The following sets out financial information in respect of Shire as required by Rule 24.3 of the Takeover
Code. The documents referred to below, the contents of which have previously been announced
through a Regulatory Information Service, are incorporated into this document by reference pursuant toRule 24.15 of the Takeover Code:•the audited accounts of Shire for the financial year ended December 31, 2016, as set out on
pages 119 to 184 (inclusive) of Shire’s annual report for the financial year ended December 31,
2016, available from Shire’s website at www.shire.com;•

the audited accounts of Shire for the financial year ended December 31, 2017, as set out on
pages 114 to 178 (inclusive) of Shire’s annual report for the financial year ended December 31,
2017, available from Shire’s website at www.shire.com; and•copies of Shire’s First Quarter Results 2018, Shire’s Second Quarter Results 2018 and Shire’s
Third Quarter Results 2018 are available from Shire’s website at www.shire.com.

Part B: Shire ratings information
Before the Offer Period, Shire had been assigned a rating of Baa3 (outlook stable) by Moody’s and
BBB- (outlook stable) by Standard & Poor’s.
Since the start of the Offer Period, Moody’s has placed Shire’s rating under review for upgrade, noting
that, if consummated, the Acquisition will form a large, diverse global pharmaceutical company withstrong positions in rare diseases, gastroenterology, oncology and neuroscience Moody’s publicly statedrationale was based on Shire’s significant revenue base and its strong market positions in hemophilia,
immunology and neuroscience. Moody’s also noted that Shire’s focus on products that treat rarediseases is positive as these products garner high price points. Moody’s has stated that the ratings
review of Shire will be tied to the ongoing ratings review of Takeda. Full details can be found on Moody’s
website at www.moodys.com.
Since the start of the Offer Period, Standard & Poor’s has placed Shire’s rating on CreditWatch Positive.
Standard & Poor’s has stated that it believes that the Combined Group’s credit profile will likely improvecompared to Shire’s current credit profile. Full details can be found on Standard & Poor’s website atwww.standardandpoors.com.
Part C: Financial information relating to Takeda
The following sets out the financial information in respect of Takeda required by Rule 24.3 of the Code.
The documents referred to below are incorporated into this document by reference pursuant toRule 24.15 of the Code:•the audited accounts of Takeda for the year ended March 31, 2017, as set out in excerpts fromthe translation of the Japanese Consolidated Financial Statements submitted to FSA (Financial
Services Agency) with the Independent Auditor’s Report for the year ended March 31, 2017,
available from Takeda’s website at www.takeda.com;•

the audited accounts of Takeda for the year ended March 31, 2018, as set out in excerpts fromthe translation of the Japanese Consolidated Financial Statements submitted to FSA (Financial
Services Agency) with the Independent Auditor’s Report for the year ended March 31, 2018,available from Takeda’s website at www.takeda.com; and

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•

copies of Takeda’s Summary of Financial Statements for the Three Months Period Ended
June 30, 2018 and Takeda’s Summary of Financial Statements for the Six Months Period Ended
September 30, 2018 are available from Takeda’s website at www.takeda.com.

Part D: Takeda ratings information
Before the Offer Period, Takeda had been assigned a rating of A1 (outlook negative) by Moody’s andA- (outlook negative) by Standard & Poor’s.
Since the start of the Offer Period, Takeda’s rating with Moody’s has been downgraded to A2, withreview for further downgrade. Moody’s has stated that it believes that the Acquisition will enhance
Takeda’s business profile. However, Moody’s stated reason for the downgrade was that, even without
the Acquisition, it did not expect Takeda to maintain a financial profile consistent with its previous ratingof A1. In particular, Moody’s cited concerns over Takeda’s levels of gross debt/EBITDA. The rating is onreview for a further downgrade due to the anticipated further impact of the Acquisition on levels of grossdebt/EBITA. Moody’s stated that to the extent that Takeda generates free cash flow that is used toreduce debt, it is possible that its review will result in ratings in the mid- to high-Baa range. Moody’s has
also assigned A2 (under review for downgrade) ratings to the unsecured EUR denominated seniornotes proposed to be issued by Takeda as part of the financing for the Acquisition. Full details can befound on Moody’s website at www.moodys.com.
Since the start of the Offer Period, Takeda’s A- rating with Standard & Poor’s has been placed on
CreditWatch Negative and Standard & Poor’s has stated that it is likely to lower this rating to BBBfollowing completion of the Acquisition. Standard & Poor’s has stated that the Acquisition will
substantially improve Takeda’s business but will also markedly increase its financial burden, therefore
exerting downward pressure on its rating. Standard & Poor’s has also noted, however, that Takeda’s
intended acceleration of asset sales could somewhat ease this pressure. Standard & Poor’s has also
assigned A- (CreditWatch Negative) issue credit ratings to the unsecured EUR denominated seniornotes proposed to be issued by Takeda as part of the financing for the Acquisition. Full details can befound on Standard & Poor’s website at www.standardandpoors.com.
Part E: No incorporation of website information
Except as expressly referred to in this document, neither the content of Shire’s or Takeda’s website, nor
the content of any website accessible from hyperlinks on Shire’s or Takeda’s website, is incorporated
into, or forms part of, this document.

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PART VIITAXATION
The following paragraphs relate only to certain categories of Shire Shareholders and Shire ADS Holders
who are resident in the UK or the US and certain Japanese, Jersey and Irish tax consequences ofholding New Takeda Shares and New Takeda ADSs (or CDIs representing New Takeda ADSs). Shire
Shareholders and Shire ADS Holders who are in any doubt as to their tax position or who are resident
or otherwise subject to taxation in a jurisdiction other than the UK or the US should consult an
appropriately qualified independent professional tax adviser immediately.
1.

UK taxation

The comments set out below summarise certain limited aspects of the UK taxation treatment of certain
Shire Shareholders and Shire ADS Holders under the Scheme and do not purport to be a complete
analysis of all tax considerations relating to the Scheme. They are based on current UK legislation andwhat is understood to be current HMRC practice, both of which are subject to change, possibly withretrospective effect. The comments are intended as a general guide and, except insofar as express
reference is made to the treatment of non-UK residents, apply only to Shire Shareholders and ShireADS Holders who are resident for tax purposes in the UK and, in the case of an individual, domiciledfor tax purposes in the UK and to whom “split year” treatment does not apply, who hold their Shire
Shares and Shire ADSs as an investment (otherwise than through an individual savings account or apension arrangement) and who are the absolute beneficial owners of their Shire Shares or their Shire
ADSs. In the remainder of this paragraph 1: (i) such Shire Shareholders and Shire ADS Holders will bereferred to as “UK Holders”; and (ii) references to “Shire Shares” and “New Takeda Shares” shall beread as including references to, respectively, Shire ADSs, and New Takeda ADSs and CDIs
representing New Takeda ADSs (unless the context requires otherwise). The comments do not deal
with certain types of UK Holders including pension funds, charities, dealers in securities, insurancecompanies, persons who have or could be treated for tax purposes as having acquired their Shire
Shares by reason of their employment, persons who are connected with Shire or a member of the Shire
Group, collective investment schemes and persons holding 10 per cent. or more of voting power in
Takeda. The comments do not deal with the treatment of individuals considered non-UK domiciled for
UK tax purposes and who may therefore be entitled to elect for taxation on a remittance basis.
1.1

UK capital gains tax and corporation tax on chargeable gains (“CGT”)(a)Consequences of the Scheme for UK Holders within the charge to CGT
Subject to the following paragraph, to the extent that a UK Holder receives New Takeda
Shares under the terms of the Scheme, he is not expected to be treated as having madea disposal of his Shire Shares for CGT purposes. Instead, the New Takeda Shares soreceived should be treated as the same asset, acquired at the same time and for the sameconsideration, as Shire Shares.
Under section 138 of the Taxation of Chargeable Gains Act 1992, the aforementioned “rollover” treatment shall be denied to UK Holders who, alone or together with persons
connected with them, hold more than 5 per cent. of, or of any class of, Shire Shares ordebentures of Shire unless the Scheme is effected for bona fide commercial reasons anddoes not form part of a scheme or arrangements of which the main purpose, or one of themain purposes, is an avoidance of liability to capital gains tax or corporation tax. UK
Holders are advised that no application for clearance has been made or will be madeunder section 138 of the Taxation of Chargeable Gains Act 1992 for confirmation that
HMRC is satisfied that the Scheme will be effected for bona fide commercial reasons andwill not form part of any such scheme or arrangements.
To the extent that a UK Holder receives cash under the terms of the Scheme (including inrespect of fractional entitlements to New Takeda Shares), he should, except to the extent
149referred to in the following paragraph, be treated as making a disposal or part disposal of
the relevant Shire Shares for CGT purposes which may, depending on the holder’sindividual circumstances (including the availability of exemptions, reliefs and allowable
losses), give rise to a liability to CGT.
If a UK Holder receives New Takeda Shares as well as cash consideration and the amountof cash received is “small” in comparison with the value of his Shire Shares, the UK Holder
may elect to be treated as not having disposed of the Shire Shares in respect of which the
cash was received. Instead, the cash should be treated as a deduction from the base costof his Shire Shares rather than as a part disposal thereof (unless the cash received
exceeds such base cost, in which case this treatment would not be available). Under
current HMRC practice, any cash payment of £3,000 or less or which is 5 per cent. or lessof the market value of a UK Holder’s holding of Shire Shares should generally be treatedas “small” for these purposes.
References to “cash” in this paragraph 1.1 shall be read as references to the amount ofpounds Sterling received by a UK Holder who receives the cash portion of theConsideration payable to him under the Scheme in pounds Sterling pursuant to theCurrency Conversion Facility and, in any other case, as references to the pounds Sterling
equivalent, calculated by reference to the applicable spot rate, of the cash portion of theConsideration payable to the relevant UK Holder in US Dollars under the Scheme.
(b)

Future disposals of New Takeda Shares
If a Shire Shareholder who has received CDIs representing New Takeda ADSs pursuant
to the Scheme cancels those CDIs to receive the underlying New Takeda ADSs, suchcancellation should not give rise to a disposal for the purposes of UK capital gains tax or
corporation tax on chargeable gains.
(i)

Individual UK Holders
A disposal or deemed disposal of New Takeda Shares by a UK Holder who is anindividual may give rise to a chargeable gain (or allowable loss) for the purposes of
UK capital gains tax, depending on the circumstances and subject to any available
exemption or relief. The capital gains tax annual exemption (which is £11,700 for
individuals in the 2018/19 tax year) will be available to exempt any chargeable gain,
to the extent it has not already been utilised by the individual UK Holder.
Capital gains tax will generally be charged at 10 per cent. to the extent that the total
chargeable gains and, generally, total taxable income arising in a tax year, after all
allowable deductions (including losses, the income tax personal allowance and thecapital gains tax annual exempt amount), fall below the threshold for the higher rateof income tax. To the extent that any chargeable gains (or part of any chargeable
gains) arising in a tax year exceed the threshold for the higher rate of income tax
when aggregated with any such income (in the manner referred to above), capitalgains tax will generally be charged at 20 per cent.

(ii)

Individual Shire Shareholders or Shire ADS Holders not resident in the UK
Subject to the paragraph below, an individual Shire Shareholder or Shire ADS
Holder who is not resident in the UK for tax purposes at the time of the disposal of
their New Takeda Shares and who realises a gain on such a disposal will notnormally be liable to UK capital gains tax. However, such a Shire Shareholder orShire ADS Holder may be liable to UK tax on chargeable gains if, at the relevanttime, that Shire Shareholder or Shire ADS Holder carries on a trade, profession or
vocation in the UK through a branch or agency and the New Takeda Shares are,or have been, used, held or acquired for the purposes of such trade, profession or
vocation or for the purposes of such branch or agency.

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An individual Shire Shareholder or Shire ADS Holder who has been resident for tax
purposes in the UK but who ceases to be so resident or becomes treated as resident
outside the UK for the purposes of a double tax treaty for a period of five years orless and who disposes of all or part of his New Takeda Shares during that period
may be liable to UK capital gains tax on his return to the UK, subject to any available
exemptions or reliefs.

1.2

(iii)

Corporate UK Holders
A disposal or deemed disposal of New Takeda Shares may give rise to a chargeable
gain (or allowable loss) for the purposes of UK corporation tax (the current rate ofwhich is 19 per cent.), depending on the circumstances and subject to any available
exemption or relief.

(iv)

Corporate Shire Shareholders or Shire ADS Holders not resident in the UK
A corporate Shire Shareholder or Shire ADS Holder which is not resident in the UK
for tax purposes and which realises a gain will not normally be liable to UK
corporation tax on chargeable gains on a disposal of their New Takeda Shares.
However, a corporate Shire Shareholder or Shire ADS Holder which is not a UK
resident but carries on a trade in the UK through a permanent establishment may
be liable to UK corporation tax on chargeable gains if it disposes of New Takeda
Shares which are, at or before the time the gain accrues, used in or for the purposesof that trade or for the purposes of the permanent establishment.

UK stamp duty and stamp duty reserve tax (“SDRT”)
No UK stamp duty or SDRT will be payable by Shire Shareholders or Shire ADS Holders on theexchange of their Shire Shares for cash and New Takeda Shares under the Scheme.
On the basis that no physical instrument of transfer is executed to transfer New Takeda Shares,
no UK stamp duty should be payable on a future transfer of New Takeda Shares. It is noted that,in practice, New Takeda Shares, New Takeda ADSs and CDIs representing New Takeda ADSs
should be transferred electronically, in which case there should not be a physical instrument oftransfer. An agreement to transfer New Takeda Shares should not give rise to SDRT.

1.3

Withholding tax on dividends paid in respect of New Takeda Shares
There will be no UK withholding tax on dividends paid on New Takeda Shares.
As described in paragraph 3.2(a) of this Part VII, dividends on New Takeda Shares will, however,generally be subject to Japanese dividend withholding tax.
The current double tax treaty between Japan and the UK (the “UK-Japan Treaty”) makes
provision in respect of withholding tax on dividends. Generally, assuming that the relevant UK
Holder is entitled to the benefit of the UK-Japan Treaty, he should be entitled to:•apply for a reduction of the Japanese withholding tax rate to 10 per cent. (the “Japanese
Tax Reduction”); and•claim credit against any liability to UK tax on the dividend for the tax that was so withheld
at a rate of 10 per cent. (a “Withholding Tax Credit”).

See paragraph 3.2(a) of this Part VII for a discussion of how to obtain the applicable UK-Japan
Treaty rate; UK Holders should note that they may not be able to claim the UK-Japan Treaty ratedepending on whether or not they have made a Securities Election and which type of Securities
Election has been made. In particular, UK Holders should note that there is some doubt over theavailability of benefits under the UK-Japan Treaty to UK Holders of CDIs representing New
Takeda ADSs.

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To the extent that the Withholding Tax Credit cannot be used against any liability to UK tax on thedividend, it will be lost. This means that a UK Holder who is not liable to UK tax on dividends fromTakeda will not be entitled to claim payment of the Withholding Tax Credit in respect of those
dividends.
1.4

UK taxation of dividends paid in respect of New Takeda Shares
For the purpose of this paragraph 1.4, references to a dividend from or paid by Takeda shall beread as references to the pounds Sterling equivalent of the amount of the dividend before thededuction of any Japanese withholding tax (as to which see paragraphs 1.3 and 3.2(a) of thisPart VII).
(a)

Individual UK Holders within the charge to UK income tax
(i)

(ii)

GeneralThe general tax treatment of dividends paid by Takeda to UK Holders who areindividuals is as follows:•

All dividends received by an individual UK Holder from Takeda (or from othersources) will form part of the UK Holder’s total income for income tax
purposes and will represent the highest part of that income.

•A nil rate of income tax applies to the first £2,000 of taxable dividend income
received by an individual UK Holder in a tax year (the “Nil Rate Amount”),
regardless of what tax rate would otherwise apply to that dividend income.
A UK Holder who is entitled to the benefit of the UK-Japan Treaty and whose
taxable dividend income does not exceed the Nil Rate Amount, should be
able to apply for the Japanese Tax Reduction, but his Withholding Tax Credit
would be lost.

•

Any taxable dividend income received by an individual UK Holder in a tax
year in excess of the Nil Rate Amount is taxed at a special rate, as set out
below.

Dividend Income in excess of the Nil Rate Amount
Where an individual UK Holder’s taxable dividend income for a tax year exceeds the
Nil Rate Amount, the excess amount (the “Relevant Dividend Income”) will be
subject to income tax:•

at the rate of 7.5 per cent., to the extent that the Relevant Dividend Income
falls below the threshold for the higher rate of income tax;•

at the rate of 32.5 per cent., to the extent that the Relevant Dividend Income
falls above the threshold for the higher rate of income tax but below thethreshold for the additional rate of income tax; and•at the rate of 38.1 per cent., to the extent that the Relevant Dividend Income
falls above the threshold for the additional rate of income tax.

In determining whether and, if so, to what extent the Relevant Dividend Income falls
above or below the threshold for the higher rate of income tax or, as the case may
be, the additional rate of income tax, the UK Holder’s total taxable dividend income
for the tax year in question (including the part within the Nil Rate Amount) will, as
noted above, be treated as the highest part of the UK Holder’s total income forincome tax purposes.
A UK Holder who is entitled to the benefit of the UK-Japan Treaty and whose taxable
dividend income exceeds the Nil Rate Amount, should be able to apply for theJapanese Tax Reduction and use his Withholding Tax Credit to the extent that it is152

equal to or lower than the tax payable on the Relevant Dividend Income. To theextent that the Withholding Tax Credit exceeds such tax, it would be lost.
(b)

Corporate UK Holders within the charge to UK corporation tax
UK Holders within the charge to corporation tax which are “small companies” (for the
purposes of the UK taxation of dividends) will not generally be subject to tax on
dividends from Takeda.
Other UK Holders within the charge to corporation tax will not be subject to tax on
dividends from Takeda so long as the dividends fall within an exempt class andcertain conditions are met. Dividends paid on non-redeemable shares that do notcarry any present or future preferential rights to dividends or to the relevant
company’s assets on its winding up is an example of dividends that should fall within
an exempt class.
A UK Holder who is entitled to the benefit of the UK-Japan Treaty and is not subject
to tax on dividends from Takeda should be able to apply for the Japanese Tax
Reduction, but its Withholding Tax Credit would be lost.

2.

US taxation

The following is a description of certain US federal income tax consequences of the exchange of Shire
Shares or Shire ADSs for the Consideration under the Scheme and the ownership and disposition of
New Takeda Shares or New Takeda ADSs received as Consideration. This description addresses only
the US federal income tax consequences applicable to US Holders (as defined below) that hold Shire
Shares or Shire ADSs, and will hold New Takeda Shares or New Takeda ADSs, as capital assets(generally, assets held for investment). This description does not describe all of the tax consequencesthat may be relevant to US Holders in light of their particular circumstances, including alternative
minimum tax consequences, the application of the “Medicare contribution tax” and differing tax
consequences applicable to US Holders subject to special tax rules, such as:•certain financial institutions;•insurance companies;•

real estate investment trusts or regulation investment companies;•

dealers or certain traders in securities;•

tax-exempt entities;•

persons that hold Shire Shares or Shire ADSs, or will hold the New Takeda Shares or New
Takeda ADSs received as Consideration, as part of a “straddle” or an integrated transaction;•

persons that own or are deemed to own Shire Shares or Shire ADSs representing 10 per cent.
or more of Shire’s stock by vote or value;•

persons that will own or be deemed to own after the Acquisition New Takeda Shares or New
Takeda ADSs representing 10 per cent. or more of Takeda’s stock by vote or value;•

persons that acquired Shire Shares or Shire ADSs pursuant to the exercise of an employee stock
option or otherwise as compensation;•

persons the “functional currency” of which is not the US Dollar; or•

partnerships or other entities classified as partnerships for US federal income tax purposes.

This description does not address the US federal income tax consequences to a US Holder of holding
Takeda ADSs in the form of CDIs. A US Holder that holds Takeda ADSs in the form of CDIs should

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consult its own tax advisor regarding the US federal income tax consequences of holding Takeda ADSs
in the form of CDIs.
No ruling has been or will be sought from the IRS regarding any US federal income tax consequences
relating to the matters discussed herein. Consequently, no assurance can be given that the IRS will not
assert, or that a court will not sustain, a position with respect to any US federal income tax
consequences contrary to any of those described below.
This description is based on the Internal Revenue Code of 1986, as amended (the “US Code”), final,
proposed and temporary US Treasury regulations, judicial and administrative interpretations thereof, all
as of the date hereof, and the income tax treaty between Japan and the United States (the “US-Japan
Treaty”). Changes to any of the foregoing subsequent to the date hereof may affect the US federal
income tax consequences described herein, possibly with retroactive effect. This discussion does notaddress any aspect of state, local or non-US taxation, or any US federal tax considerations other thanincome taxation. US Holders should consult their tax advisors concerning the US federal, state andlocal, and non-US, tax consequences of the exchange of Shire Shares or Shire ADSs for theConsideration pursuant to the Scheme and the ownership and disposition of New Takeda Shares or
New Takeda ADSs received as Consideration in their particular circumstances.
For purposes of this discussion, a “US Holder” is, for US federal income tax purposes, a beneficial
owner of Shire Shares or Shire ADSs, or New Takeda Shares or New Takeda ADSs received as
Consideration, that is eligible for the benefits of the US-Japan Treaty and is:•a citizen or individual resident of the United States;•

a corporation, or other entity treated as a corporation for US federal income tax purposes,
created or organized in or under the laws of the United States or any state therein, or the Districtof Columbia; or•an estate or trust the income of which is subject to US federal income taxation regardless of its
source.

The US federal income tax treatment of a partner in a partnership (for US federal income tax purposes)that holds Shire Shares or Shire ADSs, or will hold New Takeda Shares or New Takeda ADSs received
as Consideration, will depend on the status of the partner and the activities of the partnership. Partners
in any such partnership should consult their tax advisors concerning the US federal income tax
consequences to them of the exchange of Shire Shares or Shire ADSs for the Consideration pursuant
to the Scheme and the ownership and disposition of New Takeda Shares or New Takeda ADSs
received as Consideration.
Shire believes that it is not, and has not been for any recent taxable year, a passive foreign investmentcompany (a “PFIC”) for US federal income tax purposes. However, there can be no assurance in thisregard, and US Holders should consult their tax advisors concerning the consequences of theirdisposition of Shire Shares or Shire ADSs if Shire were a PFIC for any year during which they owned
Shire Shares or Shire ADSs, including the effect of any previous relevant elections that such US
Holders may have made. The remainder of this discussion assumes that Shire has not been a PFIC for
any taxable year up to and including the taxable year in which the Acquisition is completed.
2.1

Exchange of Shire Shares or Shire ADSs for the Consideration(a)

GeneralThe receipt of the Consideration by US Holders in exchange for Shire Shares or Shire
ADSs pursuant to the Scheme will be a taxable transaction for US federal income tax
purposes. In general, subject to the discussion below relating to the potential applicationof Section 304 of the US Code, for US federal income tax purposes, a US Holder willrecognize taxable gain or loss in an amount equal to the difference, if any, between: (i) thesum of the amount of cash and the fair market value of the New Takeda Shares or New

154

Takeda ADSs received in the exchange; and (ii) such US Holder’s adjusted basis in its
Shire Shares or Shire ADSs exchanged therefor.
If the US Holder’s holding period in the Shire Shares or Shire ADSs surrendered in theexchange is more than one year as of the date of the exchange, the capital gain or loss
will be long-term capital gain or loss. Long-term capital gains of certain non-corporate US
Holders, including individuals, are generally subject to US federal income tax at
preferential rates. The deductibility of a capital loss is subject to limitations under the US
Code. If a US Holder acquired different blocks of Shire Shares or Shire ADSs at different
times or different prices, such US Holder must determine its adjusted basis and holding
period separately with respect to each block of Shire Shares or Shire ADSs that it holds.
A US Holder’s aggregate tax basis in the New Takeda Shares or New Takeda ADSs
received in the exchange will equal the fair market value of such New Takeda Shares or
New Takeda ADSs as of the date of the exchange. The holding period of the New Takeda
Shares or New Takeda ADSs will begin on the day after the exchange.
(b)

Potential application of Section 304 of the US CodeNotwithstanding the discussion in paragraph 2.1(a) of this Part VII above, the receipt of the
cash portion of the Consideration by US Holders will likely be subject to Section 304 of the
US Code. If persons who actually and constructively own 50 per cent. or more (by vote orvalue) of the stock of Shire before the Acquisition actually and constructively own 50 per
cent. or more (by vote or value) of the stock of Takeda immediately after the Acquisition,
Section 304 of the US Code could cause the entire amount of the cash portion of theConsideration received by a US Holder to be treated as a dividend regardless of theamount of gain or loss realized in the exchange. If Section 304 of the US Code applies to
the Acquisition, the cash portion of the Consideration received by a US Holder would betreated as the proceeds of a redemption of stock deemed issued by Takeda to such US
Holder. This deemed redemption would be treated either as a distribution, with the tax
consequences described below, or, alternatively, a sale or exchange of shares if thedeemed redemption were “substantially disproportionate” or “not essentially equivalent toa dividend” with respect to a particular US Holder.
The deemed redemption would generally be “substantially disproportionate” with respect
to a US Holder if the percentage described in (2) below is less than 80 per cent. of thepercentage described in (1) below. Whether the deemed redemption is “not essentiallyequivalent to a dividend” with respect to a US Holder will depend on the US Holder’sparticular circumstances. At a minimum, however, for the deemed redemption to be “notessentially equivalent to a dividend,” the deemed redemption must result in a “meaningful
reduction” in the US Holder’s deemed percentage of stock ownership of Shire. In general,that determination requires a comparison of (1) the percentage of the outstanding stock of
Shire that the US Holder is deemed actually and constructively to have owned immediately
before the deemed redemption and (2) the percentage of the outstanding stock of Shirethat is constructively owned (through actual and constructive ownership of Takeda after theAcquisition) by the US Holder immediately after the deemed redemption. The IRS has
indicated in a revenue ruling that a minority stockholder in a publicly traded corporation will
experience a “meaningful reduction” if the minority stockholder: (i) has a minimal
percentage stock interest; (ii) exercises no control over corporate affairs; and (iii)experiences any reduction in its percentage stock interest. In applying the above tests, aholder may, under the constructive ownership rules, be deemed to own stock that is owned
by other persons or stock underlying a holder’s option to purchase stock in addition to
stock actually owned by the holder. In general, if a US Holder: (i) owns a small percentageof the total outstanding Shire Shares and Shire ADSs immediately before the Acquisitionand does not have any control over Shire’s corporate affairs; (ii) does not own, actually or
constructively, New Takeda Shares or New Takeda ADSs after the Acquisition other than155

New Takeda Shares or New Takeda ADSs received as Consideration; and (iii) receives
both cash and New Takeda Shares or New Takeda ADSs as Consideration, the deemed
redemption should not be “essentially equivalent to a dividend,” and accordingly should betreated as a sale or exchange rather than a distribution.
A distribution under Section 304 of the US Code will be taxable as a dividend to a US
Holder to the extent of such US Holder’s allocable share of the earnings and profits of
Takeda and Shire. Because Shire does not currently maintain calculations of its earnings
and profits, and believes that Takeda does not currently maintain calculations of its
earnings and profits, in each case under US federal income tax principles, it is expectedthat distributions generally will be reported to US Holders as dividends. While there is nocontrolling authority, assuming certain holding period requirements are satisfied, a reduced
US federal income tax rate may be available for a dividend that a non-corporate US Holder
is deemed to receive under Section 304 of the US Code. The portion of the deemed
distribution not paid out of earnings and profits of Takeda and Shire will be applied against
such US Holder’s tax basis in the stock deemed issued by Takeda and in the New Takeda
Shares or New Takeda ADSs received as Consideration on a pro rata basis, and, to theextent in excess thereof, will be treated as gain from the sale thereof.
If the distribution under Section 304 of the US Code is taxable as a sale or exchange to a
US Holder, the results for such US Holder should be similar to those described inparagraph 2.1(a) of this Part VII above.
Section 304 of the US Code and the regulations and guidance thereunder are complex andtheir application to the exchange of Shire Shares or Shire ADSs for the Consideration is
unclear. A US Holder that actually or constructively owns both Shire Shares or Shire ADSs
and New Takeda Shares or New Takeda ADSs should consult its own tax advisor withrespect to the application of Section 304 of the US Code in light of its particular
circumstances (including as to its tax basis in the shares subject to Section 304 of the US
Code). A US Holder of Shire Shares or Shire ADSs that also owns, actually or
constructively, New Takeda Shares or New Takeda ADSs should consult its tax advisor
regarding the advisability of selling its shares or ADSs in either Shire or Takeda prior to thecompletion of the Acquisition or in Takeda immediately after the Acquisition.
(c)

Information reporting and backup withholding
Payment of the Consideration to a US Holder generally will be subject to information
reporting, and may be subject to backup withholding, if made within the United States or
through certain US-related financial intermediaries, unless: (i) the US Holder is a
corporation or other exempt recipient; or (ii) in the case of backup withholding, the US
Holder provides a correct taxpayer identification number and certifies that it is not subject
to backup withholding.
The amount of any backup withholding from a payment to a US Holder will be allowed asa credit against the US Holder’s US federal income tax liability and may entitle it to arefund, provided that the required information is timely furnished to the IRS.

2.2

Ownership and disposition of New Takeda Shares and New Takeda ADSs(a)

Taxation of distributions
Subject to the PFIC rules described in paragraph 2.2(a) of this Part VII below, distributions
paid on New Takeda Shares or New Takeda ADSs, other than certain pro rata distributionsof New Takeda Shares, will be treated as dividends to the extent paid out of Takeda’s
current or accumulated earnings and profits (as determined under US federal income tax
principles). Because Shire believes that Takeda does not maintain calculations of its
earnings and profits under US federal income tax principles, it is expected that distributions
generally will be reported to US Holders as dividends. Subject to applicable limitations,156

dividends paid to certain non-corporate US Holders may be eligible for taxation as“qualified dividend income” and therefore may be taxable at rates applicable to long-term
capital gains. US Holders should consult their tax advisors regarding the availability of the
reduced tax rate on dividends in their particular circumstances. The amount of a dividend
will include any amounts withheld by Takeda in respect of Japanese taxes. The amount of
the dividend will not be eligible for the dividends-received deduction generally available to
US corporations under the US Code. Dividends will be included in a US Holder’s incomeon the date of the US Holder’s or, in the case of New Takeda ADSs, the Takeda
Depositary’s receipt of the dividend. The amount of any dividend income paid in Japanese
Yen will be the US Dollar amount calculated by reference to the exchange rate in effect on
the date of receipt, regardless of whether the payment is in fact converted into US Dollars.
If the dividend is converted into US Dollars on the date of receipt, a US Holder should not
be required to recognize foreign currency gain or loss in respect of the dividend income. A
US Holder may have foreign currency gain or loss if the dividend is converted into US
Dollars after the date of receipt.
Subject to applicable limitations, some of which vary depending on a US Holder’sparticular circumstances, Japanese taxes withheld from dividends on New Takeda Sharesor New Takeda ADSs at a rate not exceeding the rate provided by the US-Japan Treaty
may be creditable against a US Holder’s US federal income tax liability. A dividend on New
Takeda Shares or Takeda ADSs will generally be treated as foreign-source “passive”
income for US foreign tax credit purposes. Japanese taxes withheld in excess of the rateapplicable under the US-Japan Treaty will not be eligible for credit against a US Holder’sfederal income tax liability. See paragraph 3.2(a) of this Part VII for a discussion of how to
obtain the applicable US-Japan Treaty rate. The rules governing foreign tax credits arecomplex, and a US Holder should consult its own tax advisor regarding the creditability offoreign taxes in its particular circumstances.
(b)

Sale, exchange or other Taxable disposition
Subject to the PFIC rules described in paragraph 2.2(c) of this Part VII below, for US
federal income tax purposes, gain or loss realized on the sale or other disposition of New
Takeda Shares or New Takeda ADSs will be capital gain or loss, and will be long-term
capital gain or loss if the US Holder held the New Takeda Shares or New Takeda ADSs formore than one year. The amount of the gain or loss will equal the difference between the
US Holder’s tax basis in the New Takeda Shares or New Takeda ADSs disposed of andthe amount realized on the disposition, in each case as determined in US Dollars. This
gain or loss will generally be US-source gain or loss for foreign tax credit purposes.

(c)Passive Foreign Investment Company (PFIC) Rules
Takeda has informed Shire that Takeda believes it is not a PFIC for US federal income tax
purposes. However, because PFIC status depends on the composition of a company’s
income and assets and the market value of its assets from time to time, there can be noassurance that Takeda will not be a PFIC for any taxable year.
If Takeda were a PFIC for any taxable year during which a US Holder held New Takeda
Shares or New Takeda ADSs, gain recognized by a US Holder on a sale or otherdisposition (including certain pledges) of the New Takeda Shares or New Takeda ADSs
would be allocated rateably over the US Holder’s holding period for the New Takeda
Shares or New Takeda ADSs. The amounts allocated to the taxable year of the sale orother disposition and to any year before Takeda became a PFIC would be taxed asordinary income. The amount allocated to each other taxable year would be subject to tax
at the highest rate in effect for individuals or corporations, as appropriate, for that taxable
year, and an interest charge would be imposed on the tax on such amount. Further, to theextent that any distribution received by a US Holder on its New Takeda Shares or New
Takeda ADSs exceeds 125 per cent. of the average of the annual distributions on the New
157

Takeda Shares or New Takeda ADSs received during the preceding three years or the US
Holder’s holding period, whichever is shorter, that distribution would be subject to taxationin the same manner as gain, described immediately above. Certain elections may beavailable that would result in alternative treatments (such as mark-to-market treatment) of
the New Takeda Shares or New Takeda ADSs. US Holders should consult their tax
advisors to determine whether any of these elections would be available and, if so, what
the consequences of the alternative treatments would be in their particular circumstances.
(d)

Information reporting and backup withholding
Payments of dividends and sales proceeds that are made within the United States or
through certain US-related financial intermediaries generally will be subject to information
reporting, and may be subject to backup withholding, unless: (i) the US Holder is a
corporation or other exempt recipient; or (ii) in the case of backup withholding, the US
Holder provides a correct taxpayer identification number and certifies that it is not subject
to backup withholding.
The amount of any backup withholding from a payment to a US Holder will be allowed asa credit against the US Holder’s US federal income tax liability and may entitle it to arefund, provided that the required information is timely furnished to the IRS.

3.

Japanese taxation

The following is a general description of certain Japanese tax consequences for Non-Resident UK/US
Holders under the Scheme and the ownership and disposition of New Takeda Shares or New Takeda
ADSs (or CDIs representing New Takeda ADSs). “Non-Resident UK/US Holders” means UK Holders(as defined in paragraph 1 of this Part VII) and US Holders (as defined in paragraph 2 of this Part VII)
who will hold New Takeda Shares or New Takeda ADSs (or CDIs representing New Takeda ADSs)
representing less than 5 per cent. of the total number of shares issued by Takeda and who have nopermanent establishment in Japan for Japanese tax purposes.
The statements regarding Japanese tax laws set forth below are based on the laws and regulations inJapan and tax treaties executed by Japan, all as in effect on the date hereof and all of which are subject
to change or differing interpretations (possibly with retroactive effect). No rulings or other confirmations
have been sought from the Japanese tax authorities as to the Japanese tax consequences described
below, and there is no guarantee that the Japanese tax authorities will respect the Japanese tax
treatment described below. This summary does not include all possible tax considerations which may
apply to a particular Non-Resident UK/US Holder and does not deal with certain types of Non-Resident
UK/US Holders such as pension funds. It is provided only for information purposes and is not intended
to provide any tax advice to any Non-Resident UK/US Holders. Non-Resident UK/US Holders areadvised to satisfy themselves as to the tax consequences of the Scheme and of the ownership anddisposition of New Takeda Shares or New Takeda ADSs (or CDIs representing New Takeda ADSs) byconsulting their own appropriately qualified independent professional Japanese tax advisers.
For the purpose of Japanese taxation, Non-Resident UK/US Holders of New Takeda ADSs will
generally be treated as the owners of New Takeda Shares underlying New Takeda ADSs. On the other
hand, due to a lack of guidance from the Japanese tax authorities, it is not clear whether Non-Resident
UK/US Holders of CDIs representing New Takeda ADSs will generally be treated as the owners of New
Takeda ADSs and then as the owners of New Takeda Shares for Japanese tax purposes.
For the purposes of this paragraph 3, “UK-Japan Treaty” shall have the meaning given to it inparagraph 1.3 of this Part VII and “US-Japan Treaty” shall have the meaning given to it in paragraph 2of this Part VII.
3.1

Consequences of the Scheme
For Japanese tax purposes, the transaction contemplated under the Scheme would be treatedas a disposal by Non-Resident UK/US Holders of their Shire Shares or Shire ADSs in exchange

158

for the Consideration. However, Non-Resident UK/US Holders will not be subject to: (i) Japaneseincome tax (whether by way of withholding or otherwise) or Japanese corporation tax on any
capital gains arising from the exchange of their Shire Shares or Shire ADSs for the Consideration;or (ii) any Japanese transactional tax, consumption tax, VAT or stamp duty, as a consequence of
the Scheme. No filings are required to enjoy the foregoing consequences.
3.2

Ownership and disposition of Takeda shares(a)Taxation of dividends and other distributions
Generally, Non-Resident UK/US Holders of New Takeda Shares or New Takeda ADSs
(including New Takeda ADSs underlying CDIs) will be subject to Japanese income tax
collected by way of withholding on dividends (meaning distributions from the retained
earnings of Takeda for Japanese corporate law purposes) paid by Takeda.
In the absence of the application of the UK-Japan Treaty or the US-Japan Treaty, underJapanese domestic tax law, the rate of Japanese withholding tax in respect of dividends
due and payable on New Takeda Shares or New Takeda ADSs (including New Takeda
ADSs underlying CDIs) on or before December 31, 2037 is generally 15.315 per cent.; inrespect of dividends paid to a Non-Resident UK/US Holder who is an individual owning
3 per cent. or more of the total number of shares issued by Takeda, the withholding tax
rate will, however, be 20.42 per cent. on or before December 31, 2037. Due to theimposition of a special additional withholding tax (2.1 per cent. of the original withholding
tax amount) to secure funds for reconstruction from the Great East Japan Earthquake, theoriginal withholding tax rate of 15 per cent. and 20 per cent., as applicable, has beeneffectively increased, respectively, to 15.315 per cent. and 20.42 per cent., for the period
beginning on January 1, 2013 and ending on December 31, 2037.
If distributions are made from the capital surplus, rather than the retained earnings, ofTakeda for Japanese corporate law purposes, the portion of such distributions in excess of
the amount corresponding to a pro rata portion of the return of capital as determined underJapanese domestic tax law would be deemed to be dividends for Japanese tax purposes,
while the rest would be treated as a return of capital for Japanese tax purposes. The
deemed dividend portion, if any, would generally be subject to the same tax treatment as
dividends as described above, and the return of capital portion would generally be treatedas proceeds derived from the sale of New Takeda Shares or New Takeda ADSs (including
New Takeda ADSs underlying CDIs) and subject to the same tax treatment as the sale of
New Takeda Shares or New Takeda ADSs (including New Takeda ADSs underlying CDIs)
as described in paragraph 3.2(b) of this Part VII. Distributions made in consideration of the
repurchase by Takeda of New Takeda Shares or New Takeda ADSs (including New Takeda
ADSs underlying CDIs) or in connection with certain reorganization transactions by Takeda
will be treated substantially in the same manner.
Under the UK-Japan Treaty or the US-Japan Treaty, the above-mentioned withholding tax
rate under Japanese domestic tax law may be reduced to 10 per cent. (the “Treaty Rate”).
Non-Resident UK/US Holders who are US Holders are required to satisfy certain
conditions under the limitation on benefits article of the US-Japan Treaty in order to enjoy
the benefits of reduction of the withholding tax rate to 10 per cent., while Resident UK/US
Holders who are UK Holders are generally not required to fulfil equivalent conditions under
the UK-Japan Treaty, but they may be denied the benefit of the UK-Japan Treaty if one ofthe principal purposes of such UK Holders’ ownership structure is determined to beobtaining the benefit under the UK-Japan Treaty.
In order for the Treaty Rate to apply in respect of the payment of a dividend, certain
procedural formalities have to be completed in advance of the payment. Non-Resident
UK/US Holders of New Takeda Shares or New Takeda ADSs should refer to paragraphs
3.2(a)(i) and 3.2(a)(ii) of this Part VII for further details on the possibility of claiming, and159

the procedural formalities to be completed in order to claim, the Treaty Rate in advance ofa dividend payment.
Non-Resident UK/US Holders of New Takeda Shares or New Takeda ADSs who areentitled to the Treaty Rate, but fail to complete the procedural formalities within the relevanttime limit may nevertheless be entitled to claim a refund from the relevant Japanese tax
authorities of withholding taxes withheld in excess of the Treaty Rate, by complying withcertain subsequent filing procedures in respect of which Non-Resident UK/US Holders
should consult their own appropriately qualified independent professional Japanese tax
advisers. It is expected that, in particular, Non-Resident UK/US Holders of New Takeda
Shares who are entitled to the Treaty Rate would face significant practical difficulties if they
were to try and apply for a refund of any tax withheld in excess of the Treaty Rate and theyfall into one of the following categories:•

Non-Resident UK/US Holders to the extent that they hold their New Takeda Sharesthrough the No Action Sub-Account;•

Non-Resident UK/US Holders holding their New Takeda Shares through the
Corporate Nominee Facility; and•Non-Resident UK/US Holders who have elected that their New Takeda Shares shallbe sold on their behalf under the Dealing Facility.

Non-Resident UK/US Holders of CDIs representing New Takeda ADSs should readparagraph 3.2(a)(iii) of this Part VII.
(i)

Procedural formalities for Non-Resident UK/US Holders of New Takeda Shares
Non-Resident UK/US Holders of New Takeda Shares who hold their New Takeda
Shares through their own JASDEC Account and are entitled to the Treaty Rate are
required to submit an “Application Form for Income Tax Convention Regarding
Relief from Japanese Income Tax and Special Income Tax for Reconstruction on
Dividends” (together with any other required forms and documents), through thewithholding agent, to the relevant tax authorities before the payment of dividends.
In addition, given that the New Takeda Shares will be listed on the Tokyo Stock
Exchange, a simplified special filing procedure is available for Non-Resident UK/US
Holders who hold their New Takeda Shares through their own JASDEC Account toclaim the Treaty Rate by submitting, through the relevant withholding agent, to therelevant tax authorities a “Special Application Form for Income Tax Convention
Regarding Relief from Japanese Income Tax and Special Income Tax for
Reconstruction on Dividends of Listed Stocks” (together with any other required
forms and documents).
It is expected that Non-Resident UK/US Holders of New Takeda Shares who holdtheir New Takeda Shares through the Corporate Nominee Facility should be able toclaim the Treaty Rate through the Fiduciary if they complete the relevant form which
will be sent to them by the Fiduciary within 14 calendar days from the Effective Dateand they return such form to the Fiduciary within the time limit specified thereon. In
addition, they may be required to submit the “Application Form for Income Tax
Convention Regarding Relief from Japanese Income Tax and Special Income Tax
for Reconstruction on Dividends” or the “Special Application Form for Income Tax
Convention Regarding Relief from Japanese Income Tax and Special Income Tax
for Reconstruction on Dividends of Listed Stocks” mentioned above, each together
with any other required forms and documents.
It is expected that Non-Resident UK/US Holders of New Takeda Shares would facesignificant practical difficulties if they were to try and claim the Treaty Rate in respectof their New Takeda Shares to the extent that they are held through the No Action160

Sub-Account or if they have elected that their New Takeda Shares shall be sold on
their behalf under the Dealing Facility.
(ii)

Procedural formalities for Non-Resident UK/US Holders of New Takeda ADSs
It is expected that the Takeda Depositary will make available a process to allow NonResident UK/US Holders of New Takeda ADSs to claim the Treaty Rate. It is
expected that, before a dividend payment date, the Takeda Depositary will request
certain information (such as information on the beneficial ownership of the New
Takeda ADSs) from Non-Resident UK/US Holders of New Takeda ADSs andprocure in accordance with applicable Japanese tax regulations that the applicable
Treaty Rate is applied in respect of dividends payable to Non-Resident UK/US
Holders of New Takeda ADSs who have provided the requested information or
documents within the time limit notified by the Takeda Depositary. Non-Resident
UK/US Holders of New Takeda ADSs should note that additional fees may bepayable to make use of this process.

(iii)

Non-Resident UK/US Holders of CDIs representing New Takeda ADSs
As noted above, due to a lack of guidance from the Japanese tax authorities, it is
not clear whether Non-Resident UK/US Holders of CDIs representing New Takeda
ADSs will generally be treated as the owners of New Takeda ADSs and then as theowners of New Takeda Shares for Japanese tax purposes, including whether NonResident UK/US Holders of CDIs representing New Takeda ADSs are entitled to theTreaty Rate and under what procedural formalities. Accordingly, as a worst casescenario, it is possible that Non-Resident UK/US Holders of CDIs representing New
Takeda ADSs may be unable to enjoy the benefit of the Treaty Rate but end up with
the New Takeda ADSs underlying their CDIs being subject to the Japanese
withholding tax mentioned above at the Japanese domestic tax law rate of
15.315 per cent. and being unable to claim refund from the relevant Japanese tax
authorities of withholding taxes withheld in excess of the Treaty Rate.
If Non-Resident UK/US Holders of CDIs representing New Takeda ADSs intend toclaim the Treaty Rate, they may wish to cancel their CDIs as soon as practicable
after the Effective Date so as to receive the underlying New Takeda ADSs. The
application of the Treaty Rate with respect to Non-Resident UK/US Holders of New
Takeda ADSs is discussed in general terms at paragraph 3.2(a)(ii) of this Part VII.

(b)

Sale of New Takeda Shares or New Takeda ADSs (including New Takeda ADSs
underlying CDIs)
Gains derived from the sale of New Takeda Shares or New Takeda ADSs (including New
Takeda ADSs underlying CDIs) outside Japan by Non-Resident UK/US Holders are, in
general, not subject to Japanese income tax or Japanese corporation tax.

4.

Jersey taxation

The following summary is based on current Jersey taxation law and practice, both of which are subject
to change, possibly with retrospective effect. The summary does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to each Shire Shareholder or Shire ADS
Holder. It does not constitute legal or tax advice and does not address all aspects of Jersey tax law andpractice.
4.1

Jersey stamp duty
No Jersey stamp duty will be payable by Shire Shareholders or Shire ADS Holders on theexchange of their Shire Shares or Shire ADSs for cash and New Takeda Shares or New Takeda
ADSs (or CDIs representing New Takeda ADSs) under the Scheme.

161

4.2

Shire Shareholders and Shire ADS Holders (in each case, other than residents of Jersey)
Shire Shareholders and Shire ADS Holders (in each case, other than residents of Jersey) will not
be liable to any Jersey tax on the exchange of their Shire Shares or Shire ADSs for cash and
New Takeda Shares or New Takeda ADSs (or CDIs representing New Takeda ADSs) under the
Scheme.

5.

Irish taxation

The following summary is based on current Irish taxation law and practice, both of which are subject tochange, possibly with retrospective effect. The summary does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to each Shire Shareholder or Shire ADS
Holder. It does not constitute legal or tax advice and does not address all aspects of Irish tax law andpractice.
5.1

Irish stamp duty
No Irish stamp duty should be payable by Shire Shareholders or Shire ADS Holders on theexchange of their Shire Shares or Shire ADSs for cash and New Takeda Shares or New Takeda
ADSs (or CDIs representing New Takeda ADSs) under the Scheme.

5.2

Shire Shareholders and Shire ADS Holders (in each case, other than tax residents orordinarily tax residents of Ireland)
Shire Shareholders and Shire ADS Holders (in each case, other than tax residents or ordinarily
tax residents of Ireland) who do not hold, and have never held, their Shire Shares or Shire ADSs
in connection with a trade carried on by such shareholders through an Irish branch or agency,
should not be within the charge to any Irish tax on capital gains on the exchange of their Shire
Shares or Shire ADSs for cash and New Takeda Shares or New Takeda ADSs (or CDIs
representing New Takeda ADSs) under the Scheme.

162PART VIII
ADDITIONAL INFORMATION
1.

Responsibility

1.1

The Shire Directors, whose names are set out in paragraph 2.1 of this Part VIII, accept
responsibility for the information contained in this document (including any expressions of opinion
and all information in respect of Shire which has been incorporated by reference into thisdocument), except for that information for which the Takeda Directors accept responsibility inaccordance with paragraph 1.2 below. To the best of the knowledge and belief of the Shire
Directors (who have taken all reasonable care to ensure that such is the case), the information
contained in this document for which they are responsible is in accordance with the facts anddoes not omit anything likely to affect the import of such information.

1.2

The Takeda Directors, whose names are set out in paragraph 2.2 of this Part VIII, accept
responsibility for the information contained in this document, including any expressions of
opinion, relating to the Takeda Group (including, but not limited to, the sections headed“Background to, and Takeda’s reasons for, the Acquisition”, “Synergy potential of the Acquisition”,“Financial effects of the Acquisition”, “Takeda’s intentions and strategic plans for the CombinedGroup”, “Financing arrangements”, “Takeda dividend policy” and “Risk Factors” in Part II(Explanatory Statement) of this document, Appendix I (Risk Factors) and Appendix III (Statementof Quantified Financial Benefits) and Appendix IV (Notes to the unaudited pro forma condensed
combined financial data, and all information in respect of the Takeda Group which has been
incorporated by reference into this document) and the Takeda Directors, their close relatives,
related trusts and other connected persons and persons acting in concert with Takeda (as suchterm is used in the Takeover Code). To the best of the knowledge and belief of the Takeda
Directors (who have taken all reasonable care to ensure that such is the case), the information
contained in this document for which they are responsible is in accordance with the facts anddoes not omit anything likely to affect the import of such information.

2.

Directors

2.1

The Shire Directors and their respective positions are as follows:
Director–––––––––––––––
Susan Kilsby
Flemming Ornskov
Thomas Dittrich
Olivier Bohuon
Ian Clark
Gail Fosler
Steven Gillis
David Ginsburg
Sara Mathew
Albert Stroucken

Position–––––––––––––––––––––––––––––––––––
Chairman (Non-Executive Director)
Chief Executive Officer (Executive Director)
Chief Financial Officer (Executive Director)
Senior Non-Executive Independent Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Shire’s registered office is at 22 Grenville Street, St Helier JE4 8PX, Jersey, Channel Islands.
Shire is headquartered at Block 2, Miesian Plaza, 50-58 Baggot Street Lower, Dublin 2, Ireland.

163

2.2

The Takeda Directors and their respective positions are as follows:
Director–––––––––––––––
Christophe Weber
Masato Iwasaki
Andrew S. Plump
Yoshiaki Fujimori
Emiko Higashi
Michel Orsinger
Masahiro Sakane
Toshiyuki Shiga
Yasuhiko Yamanaka
Shiro Kuniya
Jean-Luc Butel
Koji Hatsukawa

Position–––––––––––––––––––––––––––––––––––
Representative Director President and CEO
Director President
Director
External Director
External Director
External Director
External Director
External Director
Director
External Director
External Director
External Director

Takeda’s registered office is at 1-1 Doshomachi 4-chome, Chuo-ku, Osaka, 540-8645, Japan.
3.

Persons acting in concert

3.1

In addition to the Shire Directors (together with their close relatives and related trusts) andmembers of the Shire Group (and their related pension schemes), the persons who, for the
purposes of the Takeover Code, are acting in concert with Shire in respect of the Acquisition and
who are required to be disclosed are:
Name

3.2

Registered office

Relationship with Shire–––––––––––––––––––––––––––––––
Citigroup Global Markets Limited––––––––––––––––––
Citigroup Centre,
Canada Square,
Canary Wharf,
London E14 5LB––––––––––––––––––
Joint Financial Adviser

Goldman Sachs InternationalPeterborough Court,
133 Fleet Street,
London EC4A 2BB

Joint Financial Adviser

Morgan Stanley & Co. International plc

25 Cabot Square,
Canary Wharf,
London E14 4QA

Joint Financial Adviser

In addition to the Takeda Directors (together with their close relatives and related trusts) andmembers of the Takeda Group (and their related pension schemes), the persons who, for the
purposes of the Takeover Code, are acting in concert with Takeda in respect of the Acquisition
and who are required to be disclosed are:
Name

Registered office

Relationship with Takeda–––––––––––––––––––––––––––––––
Evercore Partners International LLP––––––––––––––––––
15 Stanhope Gate,
LondonW1K 1LN––––––––––––––––––
Joint Financial Adviser

JP Morgan Securities Japan Co., Ltd

Tokyo Building,
7-3 Marunouchi 2-chome,
Chiyoda-Ku,
Tokyo 100-6432

Joint Financial Adviser

J.P. Morgan Securities plc

25 Bank Street,
Canary Wharf,
London E14 5JP

Joint Financial Adviser

Nomura International plc

1 Angel Lane,
London EC4R 3AB

Joint Financial Adviser

164

4.

Market quotations
The following table shows the closing middle market quotations for Shire Shares on the London
Stock Exchange and Takeda Shares on the Tokyo Stock Exchange on:(a)March 23, 2018, being the last Business Day before rumours of Takeda’s possible interest
in an offer for Shire;(b)

March 27, 2018, being the last Business Day before the commencement of the Offer
Period;(c)the first Business Day of each of the six months immediately before the date of thisdocument; and(d)the Latest Practicable Date.
Shire Share(pence)Date–––––––––––––––––––March 23, 2018
March 27, 2018
June 1, 2018
July 2, 2018
August 1, 2018
September 3, 2018
October 1, 2018
November 1, 2018
Latest Practicable Date––––––––
2,980.5
3,070.0
4,035.0
4,215.0
4,404.0
4,488.0
4,543.5
4,610.5
4,599.0

5.

Interests and dealings in relevant securities

5.1

Definitions used in this section

Takeda Share(Yen)–––––––––
5,487.0
5,640.0
4,300.0
4,560.0
4,844.0
4,638.0
4,723.0
4,587.0
4,647.0

For the purposes of this paragraph 5:“acting in concert” with Takeda or Shire, as the case may be, means any such person acting or
deemed to be acting in concert with Takeda or Shire, as the case may be, for the purposes of the
Takeover Code;“arrangement” includes indemnity or option arrangements, and any agreement or
understanding, formal or informal, of whatever nature, relating to relevant securities which may
be an inducement to deal or refrain from dealing (other than irrevocable commitments and lettersof intent to vote in favour of the Scheme and/or related resolutions, details of which are set out
in paragraph 6 of this Part VIII);“connected adviser” has the meaning given to it in the Takeover Code;“connected person” in relation to a director of Takeda or Shire includes: (a) such director’s
spouse or civil partner and children or step-children under the age of 18; (b) the trustee(s) of any
trust for the benefit of such director and/or any person mentioned in (a); (c) any company in whichsuch director and/or any person mentioned in (a) or (b) is entitled to exercise or control theexercise of one-third or more of the voting power, or which is accustomed to act in accordancewith the directions of such director or any such person; and (d) any other person whose interests
in shares are taken to be interests of such director pursuant to Part 22 of the UK Companies Act
2006;“control” means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of
the voting rights (as defined in the Takeover Code) attributable to the share capital of a company
which are currently exercisable at a general meeting, irrespective of whether such interest(s)give(s) de facto control;“dealing” has the meaning given to it in the Takeover Code and “dealt” has the corresponding
meaning;165

“derivative” includes any financial product the value of which, in whole or in part, is determined
directly or indirectly by reference to the price of an underlying security;“Disclosure Period” means the period commencing on March 28, 2017 (being the date
12 months before the date of commencement of the Offer Period) and ending on the Latest
Practicable Date;“exempt fund manager” and “exempt principal trader” have the meanings given to them in the
Takeover Code;“financial collateral arrangements” are arrangements of the kind referred to in Note 4 onRule 4.6 of the Takeover Code;“interest” in relevant securities has the meaning given to it in the Takeover Code;“Offer Period” means, in this context, the period commencing on March 28, 2018 and ending on
the Latest Practicable Date;“relevant securities of Shire” means:(A)

Shire Shares and any other securities of Shire which carry voting rights;(B)equity share capital of Shire; and(C)securities of Shire carrying conversion or subscription rights into any of the foregoing;“relevant securities of Takeda” means:(A)

Takeda Shares and any other securities of Takeda which carry voting rights;(B)equity share capital of Takeda;(C)securities of Takeda which carry substantially the same rights as the New Takeda
Securities; and(D)securities of Takeda carrying conversion or subscription rights into any of the foregoing;and“short position” means any short position (whether conditional or absolute and whether in themoney or otherwise), including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to purchase or take delivery.
5.2

Interests in relevant securities of Shire(a)

As at the Latest Practicable Date, the interests of the Shire Directors and their connected
persons in relevant securities of Shire (apart from options, which are described inparagraph (b) below) were as follows:

Shire Director–––––––––––––––
Susan Kilsby
Flemming Ornskov
Thomas Dittrich
Olivier Bohuon
Ian Clark
Gail Fosler
Steven Gillis
David Ginsburg
Sara Mathew
Albert Stroucken

Number of
Shire Shares––––––––––––––––––––––
26,487 (held as Shire ADSs)
227,874(1)
9,400
2,889
1,119 (held as Shire ADSs)
24,846 (held as Shire ADSs)
5,391 (held as Shire ADSs)
3,624 (held as Shire ADSs)
9,012 (held as Shire ADSs)
60,957 (held as Shire ADSs)(2)Percentage of Shire
issued share capital(excluding treasury shares)(% to 3 d.p.)––––––––––––––––––
0.003
0.025
0.001
<0.001<0.0010.003
0.001<0.001
0.001
0.007(1) 181,974 Shire Shares held in the form of Shire ADSs.
(2) 10,205 Shire ADSs (representing 30,615 Shire Shares) beneficially owned jointly by Albert Stroucken
and his spouse, Gerda Stroucken. 4,563 Shire ADSs (representing 13,689 Shire Shares) are held on
trust by Albert Stroucken for his sons.

166

(b)

As at the Latest Practicable Date, the Shire Directors and their connected persons held thefollowing outstanding options and awards over relevant securities of Shire under the Shire
Share Plans:

Shire Director

Shire Share
Plan

Award
Type

Shire Deferred
Bonus
Plan 2015

Restricted
stock
units

Shire Deferred
Bonus
Plan 2015

Restricted
stock
units

Shire Deferred
Bonus
Plan 2015–––––––––––– –––––––––
Flemming Ornskov

Thomas Dittrich––––––––

Maximum
number of
Shire
Sharesawarded(1)–––––––

12,735(2)Date of
grant

Exercise
price pergrant ($)

Normalexerciseperiod/vesting date–––––––– ––––––– –––––––––March 11,
2016

Nil

March 11,2019

11,163(2)March 10,
2017

Nil

March 10,2020

Restricted
stock
units

10,470(2)March 9,2018

NilMarch 9,2021

Shire Long
Term Incentive
Plan 2015

Performance
stock
units

97,491(2)February 26,
2016

Nil

February 26,
2019

Shire Long
Term Incentive
Plan 2015

Performance
stock
units

68,706(2)February 28,
2017

Nil

February 28,
2020

Shire Long
Term Incentive
Plan 2015

Performance
stock
units

134,346(2)May 1,2018

Nil

May 1,
2021

Shire Long
Term Incentive
Plan 2015

Stockappreciationrights30,093(2)April 30,2015

245.48(3)April 30,
2018(4)

Shire Long
Term Incentive
Plan 2015

Stockappreciationrights129,987(2)February 26,
2016

161.42(3)February 26,
2019

Shire Long
Term Incentive
Plan 2015

Stockappreciationrights91,608(2)February 28,
2017

181.63(3)February 28,
2020

Shire Portfolio
Share Plan

Stockappreciationrights136,803(2)February 28,
2013

95.04(3)February 28,
2016(4)

Shire Portfolio
Share Plan

Stockappreciationrights56,952(2)May 2,
2013

91.59(3)

May 2,
2016(4)

Shire Portfolio
Share Plan

Stockappreciationrights102,522(2)February 28,
2014

168.54(3)February 28,
2017(4)

Shire Long
Term Incentive
Plan 2015

Performance
stock
units

7,584

March 29,
2018

Nil

March 29,2021

Shire Long
Term Incentive
Plan 2015

Performance
stock
units

50,518May 1,2018

Nil

May 1,
2021(1) All unvested awards are subject to the achievement of performance conditions, adjusted at the dateof vesting, with the exception of restricted stock unit awards. Vested but unexercised stock
appreciation rights are no longer subject to the achievement of performance conditions. Restricted
stock unit and performance stock unit awards are subject to adjustment pursuant to the relevant Shire
Share Plan’s dividend equivalence provisions, to reflect dividends paid between date of grant and dateof vesting.
(2) Shire Shares subject to award in the form of Shire ADSs.
(3) Subscription price applicable to exercise of award in the form of Shire ADSs.
(4) Vested but not yet exercised.

167

(c)

As at the Latest Practicable Date, the interests of persons acting in concert with Shire in
relevant securities of Shire were as follows:
SHIRE SHARESName––––––––––––––––––––
Citibank N.A. Zurich
Citibank Channel Islands
Citibank London
Citibank Switzerland
Cititrust Bahamas

Number of
Shire securities–––––––––––––
867.0031,139.00
339,535.00
98,394.00
160.00Nature ofinterest

————–
Long
Long
Long
Long
Long

Interest in Shire issued
share capital (excluding
treasury shares) as at theLatest Practicable Date(% to 3 d.p.)––––––––––––––––––<0.001
0.003
0.037
0.012
<0.001SHIRE ADSs

Name––––––––––––––––––––––CITICORP TRUST, NA (FL)
Citicorp Trust South Dakota

(d)

(e)

Number of
Shire securities––––––––––––
96.00
4,368.00

Nature ofinterest

————–
Long
Long

Interest in Shire issued
share capital (excluding
treasury shares) as at theLatest Practicable Date(% to 3 d.p.)––––––––––––––––––<0.001<0.001As at the Latest Practicable Date, the interests of Takeda and persons acting in concert
with Takeda in relevant securities of Shire were as follows:
Interest in Shire issued
share capital (excluding
treasury shares) as at theLatest Practicable Date(% to 3 d.p.)Name–––––––––––––––––
J.P. Morgan
Securities LLC (PCS)––––––––––––––––––––––
2,331 (Equity Depositary
Receipt (Long)) (other thanRule 8 exempt entities)

Number of Shire securities––––––––––––––––––<0.001

J.P. Morgan Chase
Bank (Custody)

2 (Equity Common Shares(Long))<0.001

J.P. Morgan Chase
Bank (Custody)

165 (Equity Depositary
Receipt (Long)) (other thanRule 8 exempt entities)<0.001

Prior to the completion of the Baxalta Merger, Shire held 100 shares in the issued common
stock of Baxalta which were converted into the right to receive a combination of cash andnew Shire Shares on the Baxalta Merger becoming effective. As a result, Shire’s nominee
currently holds approximately $2,000 in cash and 14 Shire ADSs, representing 42 Shire
Shares, on Shire’s behalf. Shire intends to procure that its nominee sells the relevant Shire
ADSs on Shire’s behalf and donates the proceeds (net of any applicable customarytransaction and dealing costs), together with the associated cash balance, to charity
before the Voting Record Time.

168

5.3

Dealings of relevant securities in Shire(a)During the Offer Period, the following dealings in relevant securities of Shire by Shire
Directors and their connected persons, and persons acting in concert with Shire havetaken place:(i)

Shire Directors and their connected persons

Nature ofdealings

Number of
Shire Shares(or Shire Shares
underlying
Shire ADSs)

Price perShire Share(£) orShire ADS ($)

Name

Date(s)Susan Kilsby

March 29, 2018

Acquisition of Shire
ADSs, being the partof Ms. Kilsby’s total
fees that are paid in
Shire ADSs for theperiod of service fromJanuary 1 toMarch 31, 2018.

615$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Ms. Kilsby’s total
fees that are paid in
Shire ADSs for theperiod of service
from April 1 toJune 30, 2018.

549$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Ms. Kilsby’s total
fees that are paid in
Shire ADSs for theperiod of service from
July 1 to
September 30, 2018.

468$179.99

April 30, 2018

Receipt of Shire ADSs
following the vesting of
performance stock
units granted under the
Shire Long Term
Incentive Plan 2015

22,926

Nil

April 30, 2018

Automated sale tosettle income tax
liability in respect ofthe vesting of
performance stock
units granted under
the Shire Long Term
Incentive Plan 2015

10,809$160.01

April 30, 2018

Adjustment on vesting
to the maximum
number of sharessubject to an
unexercised shareoption awarded under
the Shire Long Term
Incentive Plan 2015 toreflect achievement of
performance conditions

Lapse of 49,101
Shire Sharessubject to award(in the formof Shire ADSs)

Subscription
price perShire ADS
remains$245.48

May 1, 2018

Receipt of performancestock units in respectof notional Shire ADSs
awarded under the
Shire Long Term
Incentive Plan 2015

134,346

Nil–––––––––––– ––––––––––

Flemming Ornskov––––––––––––––

169––––––––––––––––––––

Name

Olivier Bohuon

Ian Clark

Price perShire Share(£) orShire ADS ($)

Date(s)––––––––––––––

October 31,
2018

Receipt of Shire ADSs
following the vesting
and automatic exercise
of an option granted
under the Shire Global
Employee Stock
Purchase Plan

297

$125.49

March 29, 2018

Receipt of performancestock units in respectof notional Shire Sharesawarded under the
Shire Long Term
Incentive Plan 2015

7,584

Nil

May 1, 2018

Receipt of performancestock units in respectof notional Shire
Shares awarded under
the Shire Long Term
Incentive Plan 2015

50,518Nil

29 March, 2018

Acquisition of Shire
Shares, being the partof Mr. Bohuon’s total
fees that are paid in
Shire Shares for theperiod of service fromJanuary 1 toMarch 31, 2018.

163£34.55June 29, 2018

Acquisition of Shire
Shares, being the partof Mr. Bohuon’s total
fees that are paid in
Shire Shares for theperiod of service from
April 1 to June 30, 2018.

171£42.99September 28,
2018

Acquisition of Shire
Shares, being the partof Mr. Bohuon’s total
fees that are paid in
Shire Shares for theperiod of service from
July 1 2018 toSeptember 30, 2018.

141£46.35

March 29, 2018

Acquisition of Shire
ADSs, being the partof Mr. Clark’s total feesthat are paid in Shire
ADSs for the period ofservice from January 1
to March 31, 2018.

195$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Mr. Clark’s total feesthat are paid in Shire
ADSs for the period ofservice from April 1 toJune 30, 2018.

207$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Mr. Clark’s total feesthat are paid in Shire
ADSs for the period ofservice from July 1 to
September 30, 2018.

153$179.99–––––––––––– ––––––––––

Thomas Dittrich

Nature ofdealings

Number of
Shire Shares(or Shire Shares
underlying
Shire ADSs)

170––––––––––––––––––––

Nature ofdealings

Number of
Shire Shares(or Shire Shares
underlying
Shire ADSs)

Price perShire Share(£) orShire ADS ($)

Name

Date(s)Gail Fosler

March 29, 2018

Acquisition of Shire
ADSs, being the part ofMs. Fosler’s total feesthat are paid in Shire
ADSs for the period ofservice from January 1
to March 31, 2018.

186$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Ms. Fosler’s total
fees that are paid in
Shire ADSs for theperiod of service from
April 1 to June 30, 2018.

240$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Ms. Fosler’s total
fees that are paid in
Shire ADSs for theperiod of service from
July 1 to
September 30, 2018.

171$179.99

March 29, 2018

Acquisition of Shire
ADSs, being the partof Dr. Gillis’ total feesthat are paid in Shire
ADSs for the periodof service fromJanuary 1 toMarch 31, 2018.

213$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Dr. Gillis’ total feesthat are paid in Shire
ADSs for the period ofservice from April 1 toJune 30, 2018.

219$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Dr. Gillis’ total feesthat are paid in Shire
ADSs for the period ofservice from July 1 to
September 30, 2018.

174$179.99

March 29, 2018

Acquisition of Shire
ADSs, being the partof Dr. Ginsburg’s total
fees that are paid in
Shire ADSs for theperiod of service fromJanuary 1 toMarch 31, 2018.

198$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Dr. Ginsburg’s total
fees that are paid in
Shire ADSs for theperiod of service from
April 1 to June 30, 2018.

210$168.80–––––––––––– ––––––––––

Steven Gillis

David Ginsburg––––––––––––––

171––––––––––––––––––––Name

Nature ofdealings

Number of
Shire Shares(or Shire Shares
underlying
Shire ADSs)

Price perShire Share(£) orShire ADS ($)

Date(s)–––––––––––– ––––––––––––––––––––––––

September 28,
2018

Acquisition of Shire
ADSs, being the partof Dr. Ginsburg’s total
fees that are paid in
Shire ADSs for theperiod of service from
July 1 to
September 30, 2018.

159$179.99

March 29, 2018

Acquisition of Shire
ADSs, being the partof Ms. Mathew’s total
fees that are paid in
Shire ADSs for theperiod of service fromJanuary 1 toMarch 31, 2018.

171$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Ms. Mathew’s total
fees that are paid in
Shire ADSs for theperiod of service from
April 1 toJune 30, 2018.

219$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Ms. Mathew’s total
fees that are paid in
Shire ADSs for theperiod of service from
July 1 to
September 30, 2018.

171$179.99

March 29, 2018

Acquisition of Shire
ADSs, being the partof Mr. Stroucken’s total
fees that are paid in
Shire ADSs for theperiod of service fromJanuary 1 toMarch 31, 2018.

258$146.50

June 29, 2018

Acquisition of Shire
ADSs, being the partof Mr. Stroucken’s total
fees that are paid in
Shire ADSs for theperiod of service from
April 1 to June 30, 2018.

261$168.80

September 28,
2018

Acquisition of Shire
ADSs, being the partof Mr. Stroucken’s total
fees that are paid in
Shire ADSs for theperiod of service from
July 1 to
September 30, 2018.

183$179.99

March 29, 2018

Acquisition of Shire
Shares, being the partof Mr. Burns’ total feesthat are paid in Shire
Shares for the periodof service fromJanuary 1 toMarch 31, 2018.

187£34.55

Sara Mathew

Albert Stroucken

William Burns

172––––––––––––––––––––Name

Nature ofdealings

Date(s)–––––––––––– ––––––––––(ii)––––––––––––––

Number of
Shire Shares(or Shire Shares
underlying
Shire ADSs)

Price perShire Share(£) orShire ADS ($)––––––––––––––––––––

Dominic Blakemore March 29, 2018

Acquisition of Shire
Shares, being the partof Mr. Blakemore’s total
fees that are paid in
Shire Shares for theperiod of service fromJanuary 1 toMarch 31, 2018.

184£34.55

Anne Minto

Acquisition of Shire
Shares, being the partof Ms. Minto’s total
fees that are paid in
Shire Shares for theperiod of service fromJanuary 1 toMarch 31, 2018.

184£34.55

March 29, 2018

Persons acting in concert with Shire
Name––––––––––––

Date(s)Nature of dealings

Number of Shire Shares Price per share (£)

Citibank Switzerland

November 7, 2018

Sale of shares

29,351£45.3950

Citibank Switzerland

November 7, 2018

Sale of shares

7,337£45.6970

Citibank Switzerland

November 7, 2018

Sale of shares

5,132£45.4250

Citibank Switzerland

November 6, 2018

Sale of shares

16,009£45.3538

Citibank Switzerland

November 2, 2018

Sale of shares

145£45.3200

Citibank Switzerland

November 1, 2018

Sale of shares

13£46.2400

Citibank Switzerland

October 12, 2018

Sale of shares

23£42.9650

Citibank Switzerland

September 27, 2018

Sale of shares

546£46.1600

Citibank Switzerland

September 19, 2018

Sale of shares

28£44.7150

Citibank Switzerland

September 19, 2018

Sale of shares87£44.6850

Citibank Switzerland

September 19, 2018

Sale of shares

79£44.6800

Citibank Switzerland

August 6, 2018

Sale of shares

321£44.2950

Citibank Switzerland

July 31, 2018

Sale of shares

287£43.4013

Citibank Switzerland

July 27, 2018

Sale of shares

129£44.9260

Citibank Switzerland

July 19, 2018

Sale of shares

68£44.3281

Citibank Switzerland

July 13, 2018

Sale of shares

119£43.5871

Citibank Switzerland

July 6, 2018

Sale of shares

312£42.7852

Citibank Switzerland

June 21, 2018

Sale of shares

736£40.8771

Citibank Switzerland

May 15, 2018

Sale of shares

261£41.9915

Citibank Zurich

November 7, 2018

Sale of shares

410£45.3950

Citibank Zurich

November 7, 2018

Sale of shares

102£45.6970

Citibank Zurich

November 7, 2018

Sale of shares

71£45.4250

Citibank Zurich

November 6, 2018

Sale of shares

255£45.3538

Citibank Zurich

October 8, 2018

Sale of shares

2,112£43.9274

Citibank Zurich

September 28, 2018

Sale of shares489£46.2363

Citibank Zurich

September 24, 2018

Sale of shares

1,074£45.1445

Citibank Channel Islands November 7, 2018

Sale of shares

12,106£45.3950

Citibank Channel Islands November 7, 2018

Sale of shares

2,127£45.4250

Citibank Channel Islands November 7,2018

Sale of Shares

3,028£45.6970

Citibank Channel Islands November 6, 2018

Sale of shares

7,564£45.3538

Citibank Channel Islands October 8, 2018

Sale of shares

1,186£43.9274

Citibank Channel Islands October 8, 2018

Sale of shares

2,278£43.9274

Citibank Channel Islands August 28, 2018

Sale of shares

141£45.6051

Citibank Channel Islands May 11, 2018

Sale of shares

108£40.4388

Citibank London

November 7, 2018

Sale of shares

158,133£45.3950

Citibank London

November 7, 2018

Sale of shares

27,680£45.4250

Citibank London

November 7, 2018

Sale of shares

39,533£45.6970

Citibank London

November 6, 2018

Sale of shares

98,785£45.3538––––––––––– ––––––––––– ––––––––––––––– –––––––––––

173

Name

––––––––––––

Date(s)Nature of dealings

Citibank London

October 24, 2018

Sale of shares

Number of Shire Shares Price per share (£)
1,101£44.9431

Citibank London

October 24, 2018

Sale of shares

226£44.8891

Citibank London

October 18, 2018

Sale of shares

777£45.1604

Citibank London

October 12, 2018

Sale of shares

6,518£43.0450

Citibank London

October 12, 2018

Sale of shares

17£43.1600

Citibank London

October 11, 2018

Sale of shares

67£42.7175

Citibank London

October 9, 2018

Sale of shares

163£43.7701

Citibank London

October 9, 2018

Sale of shares

21£43.9900

Citibank London

October 8, 2018

Sale of shares

56£44.0000

Citibank London

October 8, 2018

Sale of shares

390£43.9274

Citibank London

October 8, 2018

Sale of shares

427£43.9274

Citibank London

October 8, 2018

Sale of shares

185£43.9274

Citibank London

October 8, 2018

Sale of shares

343£43.9274

Citibank London

October 8, 2018

Sale of shares

313£43.9274

Citibank London

October 8, 2018

Sale of shares

357£43.9274

Citibank London

October 8, 2018

Sale of shares

388£43.9274

Citibank London

October 8, 2018

Sale of shares

1,901£43.9274

Citibank London

October 8, 2018

Sale of shares

218£43.9274

Citibank London

October 8, 2018

Sale of shares

308£43.9274

Citibank London

October 8, 2018

Sale of shares

203£43.9274

Citibank London

October 8, 2018

Sale of shares

189£43.9274

Citibank London

October 8, 2018

Sale of shares

880£43.9274

Citibank London

October 8, 2018

Sale of shares

318£43.9274

Citibank London

October 8, 2018

Sale of shares

1,565£43.9274

Citibank London

October 8, 2018

Sale of shares

1,169£43.9274

Citibank London

October 8, 2018

Sale of shares

464£43.9274

Citibank London

October 8, 2018

Sale of shares

726£43.9274

Citibank London

October 8, 2018

Sale of shares

120£43.8805

Citibank London

September 28, 2018

Sale of shares

33£46.2500

Citibank London

September 28, 2018

Sale of shares

98£46.3900

Citibank London

September 27, 2018

Sale of shares30£46.1600

Citibank London

September 27, 2018

Sale of shares

43£46.1600

Citibank London

September 27, 2018

Sale of shares

31£46.1600

Citibank London

September 27, 2018

Sale of shares

175£46.1600

Citibank London

September 27, 2018

Sale of shares

20£46.1600

Citibank London

September 27, 2018

Sale of shares

103£46.1600

Citibank London

September 27, 2018

Sale of shares

38£46.1600

Citibank London

September 25, 2018

Sale of shares

10£45.2900

Citibank London

September 24, 2018

Sale of shares

127£45.2124

Citibank London

September 21, 2018

Sale of shares

1,815£45.5065

Citibank London

September 19, 2018

Sale of shares

1,251£44.8801

Citibank London

August 30, 2018

Sale of shares

409£45.0400

Citibank London

August 28, 2018

Sale of shares

310£45.5494

Citibank London

August 17, 2018

Sale of shares

151£44.3750

Citibank London

August 15, 2018

Sale of shares

392£44.2657

Citibank London

August 2, 2018

Sale of shares

234£43.9400

Citibank London

July 26, 2018

Sale of shares

1,543£43.5572

Citibank London

July 18, 2018

Sale of shares

19,389£43.9656

Citibank London

July 16, 2018

Sale of shares

317£43.1567

Citibank London

July 10, 2018

Sale of shares291£43.2900

Citibank London

June 22, 2018

Sale of shares

1,079£40.6825

Citibank London

May 17, 2018

Sale of shares212£42.1422

Citibank London

May 11, 2018

Sale of shares

1,065£40.4388––––––––––– ––––––––––– ––––––––––––––– –––––––––––

174

(b)

During the Disclosure Period, the following dealings in relevant securities of Shire by
Takeda Directors and their connected persons have taken place:
Number of
Shire
ADSs sold

Equivalent
number of
Shire Shares

Price perShire Share(£) or ShireADS ($)Name––––––––––

Date

–––––

––––––––––––––––––––––––––––––––––

Jean-Luc Butel

May 11,
2018
May 14,
2018

N/A

3,692

11,076$165.27

N/A

3,691

11,073$168.73

Jean-Luc Butel

5.4

Number of
Shire Sharespurchased

Interests in relevant securities of Takeda(a)As at the Latest Practicable Date, the interests of the Takeda Directors and their connected
persons in relevant securities of Takeda (apart from options, which are described inparagraph (b) below) were as follows:

Takeda Director––––––––––––––––
Christophe Weber
Masato Iwasaki
Yoshiaki Fujimori
Masahiro Sakane
Toshiyuki Shiga
Yasuhiko Yamanaka
Shiro Kuniya
Koji Hatsukawa(b)Number of Takeda Shares––––––––––––––––––
148,200
13,096
1,800
900
1,300
17,9001,800
900Percentage of Takeda issued sharecapital (excluding treasury shares)(% to 3 d.p.)––––––––––––––––––––––––
0.019
0.002
<0.001<0.001<0.001
0.002<0.001<0.001As at the Latest Practicable Date, the Takeda Directors and their connected persons held
the following outstanding options and awards over relevant securities of Takeda under theTakeda share plans:
Maximum
number of
TakedaSharesawardedTakeda Director––––––––––––– –––––––––––––– ––––––– ––––––––––– ––––––– ––––––––––––

Christophe Weber

BIP

Allotment ofshares145,392

September 1,
2016, July 1,
2017, July 1, 2018

N/A

June 1, 2019,
June 1, 2020and June 1, 2021

Masato Iwasaki

BIP

Allotment ofshares8,634

September 1,
2016, July 1,
2017, July 1, 2018

N/A

June 1, 2019,
June 1, 2020and June 1, 2021

Yoshiaki Fujimori

BIP

Allotment ofshares2,713

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Emiko Higashi

BIP

Allotment ofshares6,532

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Michel Orsinger

BIP

Allotment ofshares6,532

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Masahiro Sakane

BIP

Allotment ofshares2,713

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Toshiyuki Shiga

BIP

Allotment ofshares2,713

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Yasuhiko Yamanaka BIP

Allotment ofshares7,601

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Award type

175

Date
of grant

Exercise
price pergrant (¥)

Normalexerciseperiod/vesting date

Takedashareplan

Maximumnumber of
TakedaSharesawardedExercise
price pergrant (¥)

Normalexerciseperiod/vesting date

Takeda Director

Takedashare
plan––––––––––––– –––––––––––––– ––––––– ––––––––––– ––––––– ––––––––––––

Shiro Kuniya

BIP

Allotment ofshares2,713

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Jean-Luc Butel

BIP

Allotment ofshares6,532

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Koji Hatsukawa

BIP

Allotment ofshares2,713

September 1,
2016, July 1,
2017, July 1, 2018

N/A

On retirement

Andrew S. Plump

ESOP

Allotment ofshares52,831

July 1, 2016,
July 1, 2017,
July 1, 2018

Yasuhiko Yamanaka Stock
Stock Option
7,000
Acquisition
ordinary
Rightshares (70Stock
Acquisition
Rights)June 25,
2010

Payment
value:
3,028
per share
Financialvalue to beinvested
upon
execution:
1 per share

July 11, 2013
to July 10, 2020

Yasuhiko Yamanaka Stock
Stock Option
10,100Acquisition
ordinary
Rightshares (101Stock
Acquisition
Rights)June 24,2011(Series 1)

Payment
value:
2,726
per share
Financialvalue to beinvested
upon
execution:
1 per share

July 16, 2014
to July 15, 2021

Masato Iwasaki

Stock
Stock Option
42,900Acquisition
ordinary
Rightshares (429
StockAcquisition
Rights)June 24,2011(Series 2)

Payment
value:
427 pershare
Financialvalue to beinvested
upon
execution:
3,705 pershare

July 16, 2014
to July 15, 2031

Masato Iwasaki

Stock
Stock Option
7,900
Acquisition
ordinary
Rightshares (79StockAcquisition
Rights)June 26,
2012(Series 1)

Payment
value:
2,678
per share
Financialvalue to beinvested
upon
execution:
1 per share

July 18, 2015
to July 17, 2022

Yasuhiko Yamanaka Stock
Stock Option
10,700Acquisition
ordinary
Rightshares (107
Stock
Acquisition
Rights)June 26,
2012(Series 1)

Payment
value:
2,678
per share
Financialvalue to beinvested
upon
execution:
1 per share

July 18, 2015
to July 17, 2022

Award type

176

Date
of grant

June 1, 2019,
June 1, 2020and June 1, 2021

Takeda Director

Takedashare
plan––––––––––––– ––––––
Masato Iwasaki

Award type

Maximum
number of
TakedaSharesawardedDateof grant

Exercise
price pergrant (¥)

Normalexerciseperiod/vesting date–––––––– ––––––– ––––––––––– ––––––– ––––––––––––

Stock
Stock Option
6,100
Acquisition
ordinary
Rightshares (61StockAcquisition
Rights)June 26,
2013(Series 1)

Payment
value:
3,709
per share
Financialvalue to beinvested
upon
execution:
1 per share

July 20, 2016
to July 19, 2023

Yasuhiko Yamanaka Stock
Stock Option
8,200
Acquisition
ordinary
Rightshares (82StockAcquisition
Rights)June 26,
2013(Series 1)

Payment
value:
3,709
per share
Financialvalue to beinvested
upon
execution:
1 per share

20 July 2016
to 19 July 2023

Board Incentive Plan (“BIP”)
Under the BIP, Takeda Shares are acquired under a trust and are granted to Takeda
Directors based on their achievement of certain performance indicators. Takeda Sharesallotted to the external directors (being Yoshiaki Fujimori, Emiko Higashi, Michel Orsinger,
Masahiro Sakane and Toshiyuki Shiga) and directors who are Audit and Supervisory
Committee members (being Yasuhiko Yamanaka, Shiro Kuniya, Jean-Luc Butel and Koji
Hatsukawa, of whom all but Yasuhiko Yamanaka are also external directors) under the BIP
are held on trust until the retirement of those directors. Takeda Shares allotted to nonJapan resident directors are sold in the market and those directors receive cash in lieu ofshares. As shares are automatically allocated as part of a share compensation
programme, there is no exercise price or expiry date.
Employee Stock Ownership Plan (“ESOP”)
Under the ESOP, Takeda Shares are granted to employees based on their position andachievement of certain performance indicators (among other criteria). Beneficiaries may
opt to convert shares to be allotted to them into cash under the provisions of the trust
agreement. Vesting is generally conditional on continued service from the date of grant to
the date of vesting. Takeda Shares allotted to non-Japan resident beneficiaries are sold in
the market and those employees receive cash in lieu of Takeda Shares. As shares areautomatically allocated as part of a share compensation programme, there is no exercise
price or expiry date.
Stock Acquisition Rights
Takeda issued stock options (“Stock Acquisition Rights”) to its directors and senior
employees until 2013, when this programme was replaced by the BIP/ESOP programmes
referred to above. It is a condition of execution of all Stock Acquisition Rights that theperson exercising that Stock Acquisition Right is a Takeda Director at the time the right is
exercised, unless that director: (i) has resigned; (ii) has retired due to expiration of term ofoffice; or (iii) there is any other valid reason.

177

(c)

As at the Latest Practicable Date, the interests of persons acting in concert with Takeda in
relevant securities of Takeda were as follows:
TAKEDA SHARESName–––––––––––––––––––––––––
12,000

Number of Takeda securities––––––––––––––––––
0.002

Amato Pharmaceutical
Products Ltd

275,000

0.035

J.P. Morgan Securities
LLC (PCS)

168 (Equity Depositary Receipt(Long)) (other than Rule 8
exempt entities)<0.001––––––––––––––––––––––
Watanabe Chemical Co Ltd(d)Interest in Takeda issued
share capital (excluding
treasury shares) as at theLatest Practicable Date(% to 3 d.p.)

As at the Latest Practicable Date, the interests of Shire and persons acting in concert with
Shire in relevant securities of Takeda were as follows:Type––––––––
OTC
Derivatives

Number––––––––
213,973.43

Nature ofinterest––––––––Long

Interest in Takeda
issued share capital(excluding treasury
shares) as at theLatest Practicable
Date(% to 3 d.p.)––––––––––––––––
0.027

Citigroup Global Markets
Hong Kong

Ordinary shares

210,328

Long

0.026

Citigroup Global Markets
Hong Kong

Ordinary shares

13,800

Short

0.002

Details of
Takeda securities––––––––––––––––––Name––––––––––––––––––––––––––––––
Citigroup Global Markets Funding
Luxembourg S.C.A.

Citigroup Global Markets Japan

Ordinary shares

666,400

Long

0.084

Citigroup Global Markets Japan

Ordinary shares

166,501

Short

0.021

CITICORP TRUST, NA (FL)

ADRs (1.0:0.5)

1,665.50

Long<0.001

Citicorp Trust South Dakota

ADRs (1.0:0.5)

16,193.50

Long<0.001(GS) Goldman Sachs
Japan Co., LTD.

Ordinary shares

1,855,400

Long

0.236

(GS) Goldman Sachs
Japan Co., LTD.

Ordinary shares

8,500

Short

0.001

Goldman Sachs & Co. LLC

Ordinary shares

19,791

Long

0.002

Goldman Sachs & Co. LLC

Ordinary shares

221,300

Short

0.028

Goldman Sachs & Co. LLC

ADRs (1.0:0.5)

221,300

Long

0.028
0.026

Goldman Sachs & Co. LLC

ADRs (1.0:0.5)

210,947

Short

Goldman Sachs & Co. LLC

Swaps (1.0:0.5)

53,200

Short

0.006

Goldman Sachs & Co. LLC

CFD (1.0:0.5)

210,947

Long

0.026

(GS) Goldman Sachs
Japan Co., LTD.

Ordinary shares

11,824,800

Borrowed

1.507(GS) Goldman Sachs
Japan Co., LTD.

Ordinary shares

13,921,800

Lent

1.775

178

5.5

Dealings of relevant securities in Takeda(a)During the Disclosure Period, the following dealings in relevant securities of Takeda by
Takeda Directors and their connected persons have taken place:
Name–––––––––––––

Date(s)––––––––––––Nature of dealings

Koji Hatsukawa

April 25, 2017

Yasuhiko Yamanaka––––––––––––––––––––

Number of
Takeda Shares

Price–––––––––––––––––

Acquisition of shares under
the SOPEO

44.444

JPY 1,000

April 25, 2017

Acquisition of shares under
the SOPEO

11.111

JPY 1,000

Toshiyuki Shiga

April 25, 2017

Acquisition of shares under
the SOPEO

66.667

JPY 1,000

Masato Iwasaki

April 25, 2017

Acquisition of shares under
the SOPEO

22.223

JPY 1,000

Koji Hatsukawa

May 25, 2017

Acquisition of shares under
the SOPEO

29.629JPY 1,000

Yasuhiko Yamanaka

May 25, 2017

Acquisition of shares under
the SOPEO

7.407

JPY 1,000

Toshiyuki Shiga

May 25, 2017

Acquisition of shares under
the SOPEO

44.444

JPY 1,000

Masato Iwasaki

May 25, 2017

Acquisition of shares under
the SOPEO

14.815

JPY 1,000

Koji Hatsukawa

June 25, 2017

Acquisition of shares under
the SOPEO

41.187

JPY 1,000

Yasuhiko Yamanaka

June 25, 2017

Acquisition of shares under
the SOPEO

10.213

JPY 1,000

Toshiyuki Shiga

June 25, 2017

Acquisition of shares under
the SOPEO

61.835

JPY 1,000

Masato Iwasaki

June 25, 2017

Acquisition of shares under
the SOPEO

20.538JPY 1,000

Christophe Weber

July 1, 2017

Automatic vesting ofshares under the BIP

64,429N/A

Masato Iwasaki

July 1, 2017

Automatic vesting of shares
under the BIP

3,634

N/A

Andrew S. Plump

July 1, 2017

Automatic vesting of shares
under the ESOP

23,643N/A

Masahiro Sakane

July 1, 2017

Automatic vesting of shares
under the BIP

788

N/A

Toshiyuki Shiga

July 1, 2017

Automatic vesting of shares
under the BIP

788

N/A

Yoshiyaki Fujimori

July 1, 2017

Automatic vesting of shares
under the BIP

788

N/A

Emiko Higashi

July 1, 2017

Automatic vesting of shares
under the BIP

1,967

N/A

Michael Orsinger

July 1, 2017

Automatic vesting of shares
under the BIP

1,967

N/A

Yasuhiko Yamanaka

July 1, 2017

Automatic vesting of shares
under the BIP

2,207

N/A

Jean-Luc Butel

July 1, 2017

Automatic vesting of shares
under the BIP

1,967

N/A

Shiro Kuniya

July 1, 2017

Automatic vesting of shares
under the BIP

788

N/A

Koji Hatsukawa

July 1, 2017

Automatic vesting of shares
under the BIP

788

N/A

Christophe Weber

July 10, 2017

Automatic vesting of shares
under the BIP

47,900

N/A

Christophe Weber

July 10, 2017

Automatic vesting of shares
under the BIP (and immediate sale
thereof for cash in lieu of shares)

48,159N/A

Masato Iwasaki

July 10, 2017

Automatic vesting of shares
under the BIP

3,300

N/A

179

Number ofTakeda Shares

Name–––––––––––––

Date(s)––––––––––––Nature of dealings

Masato Iwasaki

July 10, 2017

Automatic vesting of shares
under the BIP (and immediate sale
thereof for cash in lieu of shares)

3,530

N/A

Yasuhiko Yamanaka

July 10, 2017

Automatic vesting of shares
under the BIP

2,200

N/A

Yasuhiko Yamanaka

July 10, 2017

Automatic vesting of shares
under the BIP (and immediate sale
thereof for cash in lieu of shares)

2,320

N/A

Andrew S. Plump

July 10, 2017

Sale of shares vested under the
ESOP for cash in lieu of shares

13,434

N/A

Koji Hatsukawa

July 25, 2017

Acquisition of shares under
the SOPEO

34.44

JPY 1,000

Yasuhiko Yamanaka

July 25, 2017

Acquisition of shares under
the SOPEO

9.38

JPY 1,000

Toshiyuki Shiga

July 25, 2017

Acquisition of shares under
the SOPEO

50.488JPY 1,000

Masato Iwasaki

July 25, 2017

Acquisition of shares under
the SOPEO

16.923

JPY 1,000

Koji Hatsukawa

August 25, 2017

Acquisition of shares under
the SOPEO

20.419JPY 1,000

Yasuhiko Yamanaka

August 25, 2017

Acquisition of shares under
the SOPEO

5.131

JPY 1,000

Toshiyuki Shiga

August 25, 2017

Acquisition of shares under
the SOPEO

30.589JPY 1,000

Yoshiaki Fujimori

August 25, 2017

Acquisition of shares under
the SOPEO

33.663

JPY 1,000

Masato Iwasaki

August 25, 2017

Acquisition of shares under
the SOPEO

10.199JPY 1,000

Koji Hatsukawa

September 25, 2017

Acquisition of shares under
the SOPEO

40.257

JPY 1,000

Yasuhiko Yamanaka

September 25, 2017

Acquisition of shares under
the SOPEO

10.08

JPY 1,000

Toshiyuki Shiga

September 25, 2017

Acquisition of shares under
the SOPEO

60.361

JPY 1,000

Yoshiaki Fujimori

September 25, 2017

Acquisition of shares under
the SOPEO

69.181

JPY 1,000

Masato Iwasaki

September 25, 2017

Acquisition of shares under
the SOPEO

20.122

JPY 1,000

Koji Hatsukawa

October 25, 2017

Acquisition of shares under
the SOPEO

20.022

JPY 1,000

Yasuhiko Yamanaka

October 25, 2017

Acquisition of shares under
the SOPEO

5.006

JPY 1,000

Toshiyuki Shiga

October 25, 2017

Acquisition of shares under
the SOPEO

30.031

JPY 1,000

Yoshiaki Fujimori

October 25, 2017

Acquisition of shares under
the SOPEO

34.93

JPY 1,000

Masato Iwasaki

October 25, 2017

Acquisition of shares under
the SOPEO

10.01

JPY 1,000

Koji Hatsukawa

November 25, 2017

Acquisition of shares under
the SOPEO

40.016

JPY 1,000

Yasuhiko Yamanaka

November 25, 2017

Acquisition of shares under
the SOPEO

10.005

JPY 1,000

Toshiyuki Shiga

November 25, 2017

Acquisition of shares under
the SOPEO

60.023

JPY 1,000

Yoshiaki Fujimori

November 25, 2017

Acquisition of shares under
the SOPEO

69.95

JPY 1,000

Masato Iwasaki

November 25, 2017

Acquisition of shares under
the SOPEO

20.007

JPY 1,000

Koji Hatsukawa

December 25, 2017

Acquisition of shares under
the SOPEO

40.487

JPY 1,000––––––––––––––––––––

180––––––––––

Price–––––––Name–––––––––––––

Date(s)––––––––––––Nature of dealings

Yasuhiko Yamanaka

December 25, 2017

Toshiyuki Shiga––––––––––––––––––––

Number of
Takeda Shares

Price–––––––––––––––––

Acquisition of shares under
the SOPEO

10.297

JPY 1,000

December 25, 2017

Acquisition of shares under
the SOPEO

59.652

JPY 1,000

Yoshiaki Fujimori

December 25, 2017

Acquisition of shares under
the SOPEO

69.592

JPY 1,000

Masato Iwasaki

December 25, 2017

Acquisition of shares under
the SOPEO

19.969JPY 1,000

Shiro Kuniya

December 31, 2017

Acquisition of shares under
CSIP

100

N/A

Koji Hatsukawa

January 25, 2018

Acquisition of shares under
the SOPEO

20.01

JPY 1,000

Yasuhiko Yamanaka

January 25, 2018

Acquisition of shares under
the SOPEO

5.005

JPY 1,000

Toshiyuki Shiga

January 25, 2018

Acquisition of shares under
the SOPEO

29.994

JPY 1,000

Yoshiaki Fujimori

January 25, 2018

Acquisition of shares under
the SOPEO

34.993

JPY 1,000

Masato Iwasaki

January 25, 2018

Acquisition of shares under
the SOPEO

9.999

JPY 1,000

Koji Hatsukawa

February 25, 2018

Acquisition of shares under
the SOPEO

40.006

JPY 1,000

Yasuhiko Yamanaka

February 25, 2018

Acquisition of shares under
the SOPEO

10.003

JPY 1,000

Toshiyuki Shiga

February 25, 2018

Acquisition of shares under
the SOPEO

59.997

JPY 1,000

Yoshiaki Fujimori

February 25, 2018

Acquisition of shares under
the SOPEO

69.997

JPY 1,000

Masato Iwasaki

February 25, 2018

Acquisition of shares under
the SOPEO

20

JPY 1,000

Koji Hatsukawa

March 25, 2018

Acquisition of shares under
the SOPEO

40

JPY 1,000

Yasuhiko Yamanaka

March 25, 2018

Acquisition of shares under
the SOPEO

10

JPY 1,000

Toshiyuki Shiga

March 25, 2018

Acquisition of shares under
the SOPEO

59.999JPY 1,000

Yoshiaki Fujimori

March 25, 2018

Acquisition of shares under
the SOPEO

69.999JPY 1,000

Masato Iwasaki

March 25, 2018

Acquisition of shares under
the SOPEO

19.999JPY 1,000

Koji Hatsukawa

April 25, 2018

Acquisition of shares under
the SOPEO

40

JPY 1,000

Yasuhiko Yamanaka

April 25, 2018

Acquisition of shares under
the SOPEO

10

JPY 1,000

Toshiyuki Shiga

April 25, 2018

Acquisition of shares under
the SOPEO

60.001

JPY 1,000

Yoshiaki Fujimori

April 25, 2018

Acquisition of shares under
the SOPEO

70.001

JPY 1,000

Masato Iwasaki

April 25, 2018

Acquisition of shares under
the SOPEO

20

JPY 1,000

Koji Hatsukawa

May 25, 2018

Acquisition of shares under
the SOPEO

40

JPY 1,000

Yasuhiko Yamanaka

May 25, 2018

Acquisition of shares under
the SOPEO

9.999

JPY 1,000

Toshiyuki Shiga

May 25, 2018

Acquisition of shares under
the SOPEO

60

JPY 1,000

Yoshiaki Fujimori

May 25, 2018

Acquisition of shares under
the SOPEO

70

JPY 1,000

Masato Iwasaki

May 25, 2018

Acquisition of shares under
the SOPEO

20

JPY 1,000

181

Name

–––––––––––––

Date(s)––––––––––––Nature of dealings

Koji Hatsukawa

June 25, 2018

Yasuhiko Yamanaka––––––––––––––––––––

Number of
Takeda Shares

Price–––––––––––––––––

Acquisition of shares under
the SOPEO

40

JPY 1,000

June 25, 2018

Acquisition of shares under
the SOPEO

9.918

JPY 1,000

Toshiyuki Shiga

June 25, 2018

Acquisition of shares under
the SOPEO

60.055

JPY 1,000

Yoshiaki Fujimori

June 25, 2018

Acquisition of shares under
the SOPEO

70.082

JPY 1,000

Masato Iwasaki

June 25, 2018

Acquisition of shares under
the SOPEO

19.945

JPY 1,000

Toshiyuki Shiga

July 1, 2018

Automatic vesting of shares
under the BIP

961

N/A

Yoshiaki Fujimori

July 1, 2018

Automatic vesting of shares
under the BIP

961

N/A

Andrew S. Plump

July 1, 2018

Automatic vesting of shares
under the ESOP

29,899N/A

Christophe Weber

July 1, 2018

Automatic vesting of shares
under the BIP

82,003

N/A

Emiko Higashi

July 1, 2018

Automatic vesting of shares
under the BIP

2,361

N/A

Jean-Luc Butel

July 1, 2018

Automatic vesting of shares
under the BIP

2,361

N/A

Koji Hatsukawa

July 1, 2018

Automatic vesting of shares
under the BIP

961

N/A

Masahiro Sakane

July 1, 2018

Automatic vesting of shares
under the BIP

961

N/A

Masato Iwasaki

July 1, 2018

Automatic vesting of shares
under the BIP

4,878

N/A

Michel Orsinger

July 1, 2018

Automatic vesting of shares
under the BIP

2,361

N/A

Shiro Kuniya

July 1, 2018

Automatic vesting of shares
under the BIP

961

N/A

Yasuhiko Yamanaka

July 1, 2018

Automatic vesting of shares
under the BIP

2,693

N/A

Christophe Weber

July 10, 2018

Automatic vesting of shares
under the BIP

66,500

N/A

Christophe Weber

July 10, 2018

Automatic vesting of shares
under the BIP (and immediate sale
thereof for cash in lieu of shares)

66,794N/A

Masato Iwasaki

July 10, 2018

Automatic vesting of shares
under the BIP

4,000

N/A

Masato Iwasaki

July 10, 2018

Automatic vesting of shares
under the BIP (and immediate sale
thereof for cash in lieu of shares)

4,146

N/A

Andrew S. Plump

July 10, 2018

Sale of shares vested toAndrew Plump under the ESOPfor cash in lieu of shares

48,965

N/A

Koji Hatsukawa

July 25, 2018

Acquisition of shares under
the SOPEO

40.28

JPY 1,000

Yasuhiko Yamanaka

July 25, 2018

Acquisition of shares under
the SOPEO

10.772

JPY 1,000

Toshiyuki Shiga

July 25, 2018

Acquisition of shares under
the SOPEO

59.326

JPY 1,000

Yoshiaki Fujimori

July 25, 2018

Acquisition of shares under
the SOPEO

69.773

JPY 1,000

Masato Iwasaki

July 25, 2018

Acquisition of shares under
the SOPEO

19.847

JPY 1,000

Koji Hatsukawa

August 25, 2018

Acquisition of shares under
the SOPEO

40.076

JPY 1,000

Yasuhiko Yamanaka

August 25, 2018

Acquisition of shares under
the SOPEO

10.208JPY 1,000

182

Name

–––––––––––––

Date(s)––––––––––––Nature of dealings

Toshiyuki Shiga

August 25, 2018

Yoshiaki Fujimori––––––––––––––––––––

Number of
Takeda Shares

Price–––––––––––––––––

Acquisition of shares under
the SOPEO

59.819JPY 1,000

August 25, 2018

Acquisition of shares under
the SOPEO

69.940

JPY 1,000

Masato Iwasaki

August 25, 2018

Acquisition of shares under
the SOPEO

19.959JPY 1,000

Koji Hatsukawa

September 25, 2018

Acquisition of shares under
the SOPEO

60.035

JPY 1,000

Masato Iwasaki

September 25, 2018

Acquisition of shares under
the SOPEO

29.981

JPY 1,000

Toshiyuki Shiga

September 25, 2018

Acquisition of shares under
the SOPEO

89.917

JPY 1,000

Yoshiaki Fujimori

September 25, 2018

Acquisition of shares under
the SOPEO

104.972

JPY 1,000

Yasuhiko Yamanaka

September 25, 2018

Acquisition of shares under
the SOPEO

15.096

JPY 1,000

Shiro Kuniya

September 30, 2018

Acquisition of shares under CSIP

100

N/A

Koji Hatsukawa

October 25, 2018

Acquisition of shares under
the SOPEO

40

JPY 1,000

Masato Iwasaki

October 25, 2018

Acquisition of shares under
the SOPEO

19.999JPY 1,000

Toshiyuki Shiga

October 25, 2018

Acquisition of shares under
the SOPEO

59.999JPY 1,000

Yoshiaki Fujimori

October 25, 2018

Acquisition of shares under
the SOPEO

70

JPY 1,000

Yasuhiko Yamanaka

October 25, 2018

Acquisition of shares under
the SOPEO

10.001

JPY 1,000

Stock Ownership Plan for Executive Officers (“SOPEO”)
The SOPEO was established as a method for executive officers to acquire treasury stocks
without concerns of violating Japanese insider trading regulations. Executive officers who
opt into the plan make monthly contributions of JPY 1,000 in blocks of between 10 units(JPY 10,000) and 990 units (JYP 990,000) (with such contributions being deducted fromthat officer’s monthly remuneration). The acquisition of treasury stocks is then entrusted tosecurities companies who make the acquisitions on the officers’ behalf without the
influence of individual investment decisions and according to a specified stock ownership
plan. The dealing undertaken by the securities companies on behalf of the executive officer
under the SOPEO normally occurs on or around the 25th of every month (but this is not a
fixed date, and the exact date is not confirmed to Takeda). Dividends received from the
SOPEO are used to acquire further Takeda Shares. If the member’s remaining equity
reaches 100 Takeda Shares or more, the member may withdraw shares at any time withno additional cost. Withdrawn shares will be transferred to the member’s account.
Cumulative Stock Investment Programme (“CSIP”)
Mr Kuniya makes a monthly contribution of JPY 50,000 into a private CSIP. The acquisitionof Takeda shares is entrusted to a securities company which makes the acquisitions on
Mr Kuniya’s behalf without the influence of individual investment decisions and according
to the rules set by the securities company. Once Mr Kuniya’s interest under the CSIP
reaches one Takeda share unit (i.e. 100 Takeda shares), the securities company willtransfer such unit to Mr Kuniya’s account.
(b)

During the Offer Period, the following dealings in relevant securities of Takeda by Shire
Directors and their connected persons, Shire and persons acting in concert with Shire
have taken place:

183

(i)

Persons acting in concert with Shire
High Price

Low Price

Takeda securities

per Takeda

per Takeda

security

security

Name

Date

dealings

Type(GS) Goldman Sachs
Japan Co., LTD.

(GS) Goldman Sachs
Japan Co., LTD.

––––––––––––––

5.6

Details of
Nature of––––––––

Number

28/03/2018 –07/11/2018———— ———

Purchase

Ordinaryshares———— ————— —————

28/03/2018 –07/11/2018

Sale

Ordinaryshares30,946,799 5532.0000 JPY 4243.0000 JPY

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Purchase

Ordinaryshares746,380

43.1600 USD

39.1100 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Sale

Ordinaryshares221,300

41.6500 USD

39.6000 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Purchase

Ordinaryshares

18,984,740 5532.0000 JPY 4203.0000 JPY

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Sale

Ordinaryshares

20,557,350 5500.0000 JPY 4203.0000 JPY

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Purchase

ADRs(1.0:0.5)

2,966,964

21.8100 USD

19.4000 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Sale

ADRs
(1.0:0.5)

1,326,571

21.6900 USD

19.0300 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Purchase

CFD(1.0:0.5)

542,735

21.6500 USD

19.3268 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Sale

CFD
(1.0:0.5)

120,842

21.8100 USD

19.4400 USD

Goldman Sachs & Co. LLC 28/03/2018 –07/11/2018

Sale

Swaps
(1.0:0.5)

53,20041.8389 USD

41.0390 USD(GS) Goldman Sachs
Japan Co., LTD.

28/03/2018 –07/11/2018

Borrow

Ordinaryshares29,588,730––(GS) Goldman Sachs
Japan Co., LTD.

28/03/2018 –07/11/2018

Borrow
Ordinary
Return/Partial shares
Return17,763,930––(GS) Goldman Sachs
Japan Co., LTD.

28/03/2018 –07/11/2018

Loan

Ordinaryshares244,561,646––(GS) Goldman Sachs
Japan Co., LTD.

28/03/2018 –07/11/2018

Loan Return/ Ordinary
Partial Return shares

230,639,846––

30,105,699 5285.0000 JPY 4243.0000 JPY

GeneralExcept as disclosed in this document, as at the Latest Practicable Date:(a)no member of the Takeda Group had any interest in, right to subscribe in respect of, any
short position (whether conditional or absolute or whether in the money or otherwise),including any short position under a derivative, any agreement to sell or any delivery
obligation or right to require another person to take delivery of relevant securities of Shirenor has any such person dealt in any relevant securities of Shire or in any relevant
securities of Takeda during the Disclosure Period;(b)none of the Takeda Directors and their connected persons had any interest in, right tosubscribe in respect of, any short position (whether conditional or absolute or whether inthe money or otherwise), including any short position under a derivative, any agreement tosell or any delivery obligation or right to require another person to take delivery of relevant
securities of Shire or relevant securities of Takeda nor has any such person dealt in any
relevant securities of Shire or in any relevant securities of Takeda during the Disclosure
Period;(c)no person deemed to be acting in concert with Takeda had any interest in, right tosubscribe in respect of, any short position (whether conditional or absolute or whether inthe money or otherwise), including any short position under a derivative, any agreement tosell or any delivery obligation or right to require another person to take delivery of relevant
securities of Shire or relevant securities of Takeda nor has any such person dealt in any184relevant securities of Shire or in any relevant securities of Takeda during the Disclosure
Period;6.

(d)no person who has an arrangement with Takeda had any interest in, right to subscribe inrespect of, any short position (whether conditional or absolute or whether in the money orotherwise), including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to take delivery of relevant securitiesof Shire or relevant securities of Takeda nor has any such person dealt in any relevant
securities of Shire or in any relevant securities of Takeda during the Disclosure Period;(e)neither Takeda, nor any person acting in concert with it, has borrowed or lent any relevant
securities of Shire or relevant securities of Takeda, save for any borrowed shares whichhave been either on-lent or sold;(f)no member of the Shire Group had any interest in, right to subscribe in respect of, any
short position (whether conditional or absolute or whether in the money or otherwise),including any short position under a derivative, any agreement to sell or any delivery
obligation or right to require another person to take delivery of relevant securities of Takeda
nor has any such person dealt in any relevant securities of Takeda or any relevant
securities of Shire during the Offer Period;(g)none of the Shire Directors and their connected persons had any interest in, right tosubscribe in respect of, any short position (whether conditional or absolute or whether inthe money or otherwise), including any short position under a derivative, any agreement tosell or any delivery obligation or right to require another person to take delivery of relevant
securities of Takeda or relevant securities of Shire nor has any such person dealt in any
relevant securities of Takeda or any relevant securities of Shire during the Offer Period;(h)no person deemed to be acting in concert with Shire had any interest in, right to subscribe
in respect of, any short position (whether conditional or absolute or whether in the moneyor otherwise), including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to take delivery of relevant securities
of Takeda or relevant securities of Shire nor has any such person dealt in any relevant
securities of Takeda or any relevant securities of Shire during the Offer Period;i)no person who has an arrangement with Shire had any interest in, right to subscribe inrespect of, any short position (whether conditional or absolute or whether in the money orotherwise), including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to take delivery of relevant securities
of Takeda or relevant securities of Shire nor has any such person dealt in any relevant
securities of Takeda or any relevant securities of Shire during the Offer Period; and(j)neither Shire, nor any person acting in concert with it, has borrowed or lent any relevant
securities of Shire or relevant securities of Takeda, save for any borrowed shares whichhave been either on-lent or sold.

Irrevocable undertakings

Takeda has received irrevocable undertakings from those of the Shire Directors who hold Shire Sharesto vote in favour of the Scheme at the Court Meeting and the Special Resolution relating to theAcquisition to be proposed at the Shire General Meeting in respect of their own beneficial holdings
totalling 371,599 Shire Shares (including such Shire Shares underlying Shire ADSs) (representing
approximately 0.041 of the ordinary issued share capital of Shire on the Latest Practicable Date)comprised as follows:

185

Shire Director

Number of Shire Shares–––––––––––––––
Susan Kilsby
Flemming Ornskov
Thomas Dittrich
Olivier Bohuon
Ian Clark
Gail Fosler
Steven Gillis
David Ginsburg
Sara Mathew
Albert Stroucken
Total––––––––––––––––––––––––––––––––––––––
26,487 (held as Shire ADSs)
227,874 (including 181,974 held as Shire ADSs)
9,400
2,889
1,119 (held as Shire ADSs)
24,846 (held as Shire ADSs)
5,391 (held as Shire ADSs)
3,624 (held as Shire ADSs)
9,012 (held as Shire ADSs)
60,957 (held as Shire ADSs)
371,599

The obligations of the Shire Directors under the irrevocable undertakings shall lapse and cease to haveeffect on and from the earlier of the following occurrences:(a)

Takeda announces that it does not intend to proceed with the Acquisition and no new, revised or
replacement Scheme or Takeover Offer is announced by Takeda in accordance with Rule 2.7 of
the Takeover Code at the same time;(b)in circumstances where the Acquisition is being implemented by way of the Scheme and Takeda
elects to exercise its right to effect a Switch (as defined in the Co-operation Agreement) inaccordance with the terms of the Co-operation Agreement, if the Offer Document (as defined in
the Co-operation Agreement) has not been despatched within 28 calendar days of the date ofissue of the press announcement announcing the change in structure (or such later date as the
Panel may agree);(c)on the earlier of: (i) the Long Stop Date; and (ii) the date on which the Scheme (or Takeover Offer,
as applicable) lapses or is withdrawn in accordance with its terms (other than where such lapse
or withdrawal: (a) is as a result of the exercise of Takeda’s right to effect a Switch (as defined in
the Co-operation Agreement) in accordance with the terms of the Co-operation Agreement; or (b)is otherwise to be followed by an announcement under Rule 2.7 of the Takeover Code made by
Takeda or a person acting in concert with Takeda to implement the Acquisition by a different offer
or scheme on substantially the same or improved terms and which is recommended by the Shire
Directors); or(d)any competing offer for the entire issued and to be issued ordinary share capital of Shire is madewhich is declared wholly unconditional (if implemented by way of a takeover offer) or otherwise
becomes effective (if implemented by way of a scheme of arrangement).

Shire has received irrevocable undertakings from those of the Takeda Directors who hold Takeda
Shares to vote in favour of the Takeda Resolutions in respect of their own beneficial holdings totalling
185,896 Takeda Shares as at the Takeda Voting Record Date (representing approximately 0.02 per
cent. of the ordinary issued share capital of Takeda on the Takeda Voting Record Date), comprised asfollows:
Takeda Director

Number of Takeda Shares–––––––––––––––
Christophe Weber
Masato Iwasaki
Yoshiaki Fujimori
Masahiro Sakane
Toshiyuki Shiga
Yasuhiko Yamanaka
Shiro Kuniya
Koji Hatsukawa
Total–––––––––––––––––––––––
148,200
13,096
1,800
900
1,300
17,9001,800
900185,896

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The other Takeda Directors do not hold Takeda Shares. The obligations of the Takeda Directors under
the irrevocable undertakings shall lapse and cease to have effect on and from the earlier of the following
occurrences:(a)

Takeda announces that it does not intend to proceed with the Acquisition and no new, revised or
replacement Scheme is announced by Takeda in accordance with Rule 2.7 of the Takeover Codeat the same time;(b)

the Scheme Document is not despatched on or before December 31, 2018 (or such later date asShire and Takeda, with the consent of the Panel, may agree);(c)on the earlier of: (i) the Long Stop Date; and (ii) the date on which the Scheme (or Takeover Offer,as the case may be) lapses or is withdrawn in accordance with its terms (other than where suchlapse or withdrawal: (a) is as a result of the exercise of Takeda’s right to effect a Switch (asdefined in the Co-operation Agreement) in accordance with the terms of the Co-operation
Agreement; or (b) is otherwise to be followed by an announcement under Rule 2.7 of the
Takeover Code made by Takeda or a person acting in concert with Takeda to implement theAcquisition by a different offer or scheme on substantially the same or improved terms and whichis recommended by the Shire Directors); or(d)any competing offer for the issued and to be issued ordinary share capital of Shire is made which
is declared wholly unconditional (if implemented by way of a takeover offer) or otherwise
becomes effective (if implemented by way of a scheme of arrangement).

7.

Service contracts and letters of appointment of the Shire Directors

7.1

Shire Executive Directors
The Shire Executive Directors have entered into service agreements with the Shire Group assummarised below:(a)Flemming Ornskov is engaged under a service agreement with Shire dated October 24,
2012, under which he receives an annual base salary of $1,688,000. He was appointed as
Chief Executive Officer Designate of Shire on January 2, 2013 before his appointment as
Chief Executive Officer on April 30, 2013. Thomas Dittrich is engaged under a service
agreement with Shire dated November 19, 2017, under which he receives an annual basesalary of CHF 750,000. He became Chief Financial Officer of Shire on March 19, 2018.

(b)

Shire makes contributions of 30 per cent., in the aggregate, of annual base salary for
Flemming Ornskov into a combination of Shire’s 401K plan and the Shire Groupsupplemental executive retirement plan and 14 per cent. of annual base salary for Thomas
Dittrich into Shire’s Swiss pension plan.

(c)

The benefits provided to Flemming Ornskov and Thomas Dittrich include a monthly car
allowance, long-term disability and life insurance, healthcare insurance and financial andtax advisory support. Shire also reimburses each Shire Executive Director for reasonable
expenses incurred by them while performing their duties.

(d)Flemming Ornskov and Thomas Dittrich are each eligible to earn an annual bonus under
Shire’s Deferred Bonus Plan 2015, with current target bonus levels of 90 per cent. and 80
per cent. of annual base salary respectively and maximum bonus levels of 180 per cent.
and 160 per cent. of annual base salary respectively. 75 per cent. of any bonus earned ispayable in cash and 25 per cent. of any bonus earned is deferred into shares granted
under Shire’s Deferred Bonus Plan 2015, which normally vest after a period of three years(see paragraph 12 of Part II (Explanatory Statement) of this document for further details).
Bonuses under the Shire Deferred Bonus Plan 2015 are based solely on corporate
performance (judged by reference to a combination of financial, operational and strategic
objectives).

187

7.2

(e)

Flemming Ornskov and Thomas Dittrich are also eligible to participate in the Shire Long
Term Incentive Plan 2015. Awards granted under the Shire Long Term Incentive Plan 2015
normally vest after three years subject to any performance conditions being satisfied andhave an additional two-year holding period post-vesting. For 2018, an annual equity grant
was made to Flemming Ornskov under Shire’s Long Term Incentive Plan 2015 with amaximum face value of 425 per cent. of his annual base salary. An annual equity grant wasalso made to Thomas Dittrich under Shire’s Long Term Incentive Plan 2015 following his
appointment with a maximum face value of 357 per cent. of his annual base salary. Eachequity grant is subject to customary terms applicable to members of the executive
committee. See paragraph 12 of Part II (Explanatory Statement) of this document for
further details of the Shire Long Term Incentive Plan 2015.

(f)

In addition, Thomas Dittrich was granted a replacement equity award to compensate himfor partial forfeiture of his 2016 long term incentive award from his previous employment
with Sulzer AG. The replacement equity award was granted on March 29, 2018, subject tothe terms of the Shire Long Term Incentive Plan 2015 with a maximum face value of CHF
333,333. The award, comprised of 100 per cent. performance share units, will vest after
three years, subject to Shire’s 2018 performance conditions being satisfied, with noconsideration payable if the performance conditions are not satisfied. No otherreplacement awards or payments were made to Thomas Dittrich.

(g)Each Shire Executive Director’s service agreement is terminable without cause by either
party on 12 months’ notice. Following the giving of such notice, Shire may accelerate thedate of termination but, if it does so, it must pay the Shire Executive Director’s base salary
for the remainder of the notice period, and must provide the other benefits due to him forthe notice period. If the Shire Executive Director obtains an alternative remunerated
position, these payments from Shire will be reduced by the monthly base remunerationfrom such alternative position. As an alternative to giving notice, Shire may in its discretion
terminate the employment of a Shire Executive Director immediately by making him apayment in lieu of notice equal to his salary and other benefits in respect of any unexpired
period of notice.

The Chairman and the other Shire Non-Executive Directors
The Shire Non-Executive Directors have entered into letters of appointment with the Shire Group
as summarised below:(a)Details of the appointment of the Shire Non-Executive Directors are shown in the tablebelow:
Shire Non-Executive Director

Date of appointment———————————
Susan Kilsby
Olivier Bohuon
Ian Clark
Gail Fosler
Steven Gillis
David Ginsburg
Sara Mathew
Albert Stroucken—————————
September 1, 2011
July 1, 2015
January 3, 2017
June 3, 2016
October 1, 2012
June 16, 2010
September 1, 2015
June 3, 2016(b)

The Chairman is appointed under a letter of appointment with Shire with an effective dateof September 1, 2014. The Chairman receives an annual basic fee of £450,000.

(c)

The Senior Independent Director and the other Shire Non-Executive Directors are eachengaged under a letter of appointment with Shire, under which they receive an annual
basic fee of £98,000 and £93,000 respectively.

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(d)

7.3

Shire also pays additional fees as set out below:(i)Sara Mathew and Albert Stroucken are entitled to an additional annual fee of£25,000 in relation to their positions as chair of the Audit, Compliance & Risk
Committee and the Remuneration Committee respectively;(ii)David Ginsburg is entitled to an additional annual fee of £20,000 in relation to his
position as chair of the Science & Technology Committee;(iii)

members of the Audit, Compliance & Risk Committee and the Remuneration
Committee (excluding the Committee Chairmen) are entitled to an additional annual
fee of £12,500;(iv)

members of the Science & Technology Committee (excluding the Committee
Chairman) are entitled to an additional annual fee of £10,000;(v)

members of the Nomination & Governance Committee (excluding the Committee
Chairman) are entitled to an additional annual fee of £8,750;(vi)

each Shire Non-Executive Director (excluding the Chairman) is entitled to an
additional fee of £2,000 per meeting for attending board meetings in addition to
those scheduled as part of the normal course of business;(vii)

each Shire Non-Executive Director (excluding the Chairman) is entitled to an
additional fee of £1,000 per meeting for attending board committee meetings inaddition to those scheduled as part of the normal course of business; and(viii)

the Chairman and each Shire Non-Executive Director is entitled to an additional feeof £5,000 per board meeting where transatlantic travel is required in order to attend.

(e)

The Chairman and the other Shire Non-Executive Directors receive 25 per cent. of their
total fees in the form of shares. Shire also reimburses the Chairman and each Shire NonExecutive Director for reasonable expenses incurred by them while performing their duties.

(f)David Ginsburg’s letter of appointment also contains specific provisions acknowledging his
principal employer’s rights in respect of its property and proprietary information, and its
policies as applicable to him.

(g)

The Shire Non-Executive Directors are initially appointed for a two-year term. Their initial
appointment, and any subsequent reappointments, are subject to election, and thereafter
annual re-election, in accordance with the UK Corporate Governance Code. Both parties
may terminate the relevant Shire Non-Executive Director’s appointment on three months’
written notice, in which case Shire will pay their fees and any expenses due up to the dateon which their appointment terminates. None of the appointment letters for the Shire NonExecutive Directors contains provisions for any other specific payment or compensation in
the event of termination of the appointment.

(h)Under the terms of a letter of re-appointment dated July 31, 2018, Steven Gillis willcontinue to serve as a Shire Non-Executive Director for a term of two years from
October 1, 2018, subject to annual re-election, the provisions of the Shire Articles and notless than three months’ notice of termination in writing given by either party. The terms of
the letter of re-appointment are identical to the terms of Steven Gillis’s previous letter of
re-appointment dated September 9, 2016, as summarised above.

Other service contracts
Except as disclosed above, there are no service contracts or letters of appointment between any
Shire Director, or proposed director of Shire, and any member of the Shire Group and no suchcontract or letter of appointment has been entered into or amended within the six months
preceding the date of this document.
189

8.

Retention arrangements

Takeda wishes to ensure strong business momentum through retention and to ensure that employees
are fairly treated. Accordingly, Takeda has agreed (and the Panel has confirmed) that Shire may
implement employee retention arrangements (including the Executive Director Retention
Arrangements) for a number of key Shire employees throughout the organisation who have been
identified by Shire after consultation with Takeda. See paragraph 6.7 at Part II (Explanatory Statement)of this document for further details of the Executive Director Retention Arrangements.
9.

Material contracts

9.1

Shire material contracts(a)Co-operation Agreement
Takeda and Shire have entered into a Co-operation Agreement dated May 8, 2018
pursuant to which Takeda has agreed to use all reasonable endeavours to implement theAcquisition and to secure the regulatory clearances and authorisations necessary tosatisfy the Regulatory Conditions.
Takeda and Shire have agreed to certain undertakings to co-operate and provide eachother with reasonable information, assistance and access in relation to the filings,
submissions and notifications to be made in relation to such regulatory clearances andauthorisations. Takeda has also given certain undertakings in relation to the Takeda
Extraordinary General Meeting and the obtaining of the necessary approvals from Takeda
Shareholders.
Takeda has the right to terminate the Co-operation Agreement where:(i)the Scheme Document is not posted by December 31, 2018 (or such later date as
may, with the consent of the Panel, be agreed between Takeda and Shire);(ii)

the Court Meeting or Shire General Meeting is not held by December 27, 2018 (orsuch later date as may, with the consent of the Panel, be agreed between Takeda
and Shire and the Court may allow), subject to certain permitted adjournments as
specified in the Co-operation Agreement;(iii)

the Scheme is not approved at the Court Meeting, the Special Resolution is notpassed at the Shire General Meeting or the Court refuses to sanction the Schemeor grant the Court Order;(iv)

the Shire Directors have withdrawn, or adversely modified, adversely qualified or
failed to provide, or they have failed to reaffirm (when reasonably requested by
Takeda to do so) their unanimous and unconditional recommendation that the Shire
Shareholders vote in favour of the Scheme and the Special Resolution (including
before publication of the Scheme Document, their intention to do so);(v)

a competing transaction is recommended by the Shire Directors or becomes
effective; or(vi)

any Condition has become incapable of satisfaction by the Long Stop Date or waiverby the Long Stop Date (in circumstances where invocation of the relevant Conditionis permitted by the Panel) or has not been waived by Takeda (where it has the rightto do so).

Either Takeda or Shire may terminate the Co-operation Agreement on the occurrence of
any of the break fee triggers described below. Takeda and Shire may also terminate the
Co-operation Agreement by mutual consent.

190

The Co-operation Agreement will also terminate if:(i)the Acquisition is withdrawn or lapses before the Long Stop Date, other than where
Takeda has exercised its right to implement the Acquisition by way of a Takeover
Offer with Shire’s consent or where such Takeover Offer otherwise continues to berecommended by the Shire Directors; or(ii)

the Scheme (or Takeover Offer, as the case may be) has not become effective by
the Long Stop Date.

Takeda has agreed to pay a break fee to Shire in certain circumstances. Further
information concerning the circumstances in which such a break fee would be payable,
and the amount that would be payable, is set out in paragraphs 11.4, 16 and 17.3 of Part II(Explanatory Statement) of this document.
(b)Agreement for the sale of Shire’s Oncology franchiseOn April 16, 2018, Shire Pharmaceutical Holdings Ireland Limited (“Shire Holdings”)
entered into an Asset and Stock Purchase Agreement (the “Servier ASPA”), pursuant towhich Shire Holdings agreed to sell its Oncology business to Servier S.A.S. (“Servier”) fora total consideration of $2.4 billion in cash. The sale of the Oncology business pursuant to
the Servier ASPA was completed on August 31, 2018. In connection with the Servier ASPA,
Servier obtained a representations and warranty insurance policy, which is Servier’s sole
recourse in respect of the non-fundamental representations and warranties of Shire
Holdings contained in the Servier ASPA. Shire Holdings agreed to certain limited
indemnification obligations (subject to agreed limitations on liabilities), including in respectof: (i) fundamental representations and warranties of Shire Holdings; (ii) certain tax
matters; (iii) covenants of Shire Holdings; (iv) liabilities expressly not assumed by Servier;and (v) certain other specified liabilities.

(c)Sponsors’ Agreement
On April 18, 2016, Shire, Evercore and Morgan Stanley entered into an agreement
pursuant to which Shire appointed Evercore and Morgan Stanley as joint sponsors inconnection with: (i) the Baxalta Merger; (ii) the approval and publication of the Shirecircular and prospectus in connection with the Baxalta Merger; and (iii) the application for
new Shire Shares to be admitted to listing on the premium listing segment of the Official
List and to trading on the London Stock Exchange’s main market for listed securities.

(d)

RCF and Term Facility Amendments
On December 12, 2014, Shire entered into a $2.1 billion revolving credit facilities
agreement with a number of financial institutions (the “RCF”), as amended on
November 25, 2015.
On November 2, 2015, Shire entered into a $5.6 billion term facilities agreement
comprising three credit facilities with a number of financial institutions (the “Term Facility”).
The facilities agreement includes customary representations and warranties, covenants
and events of default and restricts, subject to certain exceptions, Shire’s ability to incur
additional financial indebtedness, grant security over its assets or provide loans/grant
credit.
On January 15, 2016, pursuant to the terms and conditions contained therein, Shire
Acquisitions Investments Ireland DAC (“SAIIDAC”), a wholly owned subsidiary of Shire,
acceded as an additional borrower and additional guarantor to the Term Facility and as
additional guarantor to the RCF.

191

(i)

Extension of the RCF
On December 1, 2016, the termination date of the RCF was extended, in
accordance with its terms, by one year from December 12, 2020 to December 12,2021 with respect to all drawn and undrawn commitments under the RCF.

(ii)

Amendment to the RCF and Term Facility
On December 1, 2016, the terms of each of the RCF and Term Facility wereamended to update certain of the schedules contained therein relating to existing
security, existing loans and existing financial indebtedness of certain Shiresubsidiaries, primarily to permit certain inherited subsidiary-level security, loans andother financial indebtedness to subsist.

(iii)

Accession of Baxalta to the RCF and Term Facility
On December 1, 2016, Baxalta, a wholly owned subsidiary of Shire, acceded asadditional guarantor to each of the RCF and Term Facility pursuant to the terms andconditions contained therein.

(e)

SAIIDAC Notes(i)

Indenture
On September 23, 2016, Shire announced the completion of the previously
announced offering of: (i) $3,300,000,000 aggregate principal amount of 1.900 per
cent. Senior Notes due 2019 (the “2019 Notes”); (ii) $3,300,000,000 aggregate
principal amount of 2.400 per cent. Senior Notes due 2021 (the “2021 Notes”); (iii)$2,500,000,000 aggregate principal amount of 2.875 per cent. Senior Notes due
2023 (the “2023 Notes”); and (iv) $3,000,000,000 aggregate principal amount of
3.200 per cent. Senior Notes due 2026 (the “2026 Notes” and, together with the2019 Notes, the 2021 Notes and the 2023 Notes, the “Notes”) in each case issued
by SAIIDAC and guaranteed by Shire. In connection with the issue of the Notes,
SAIIDAC and Shire entered into an indenture, dated September 23, 2016 (the“Base Indenture”), among SAIIDAC, Shire and Deutsche Bank Trust Company
Americas (the “Trustee”), as supplemented by a First Supplemental Indenture,among SAIIDAC, Shire and the Trustee, dated September 23, 2016 (the “First
Supplemental Indenture”) and a Second Supplemental Indenture, among
SAIIDAC, Shire, Baxalta and the Trustee, dated December 1, 2016 (the “Second
Supplemental Indenture” and, together with the First Supplemental Indenture andthe Base Indenture, the “SAIIDAC Indenture”).
The Notes constitute senior unsecured indebtedness of SAIIDAC and are fully andunconditionally guaranteed on a senior unsecured basis by Shire and on a direct,
unsecured basis by Baxalta. The 2019 Notes bear interest at a rate of 1.900 per
cent. per annum, accruing from September 23, 2016. The 2019 Notes will mature
on September 23, 2019. The 2021 Notes bear interest at a rate of 2.400 per cent.
per annum, accruing from September 23, 2016. The 2021 Notes will mature on
September 23, 2021. The 2023 Notes bear interest at a rate of 2.875 per cent. perannum, accruing from September 23, 2016. The 2023 Notes will mature on
September 23, 2023. The 2026 Notes bear interest at a rate of 3.200 per cent. perannum, accruing from September 23, 2016. The 2026 Notes will mature on
September 23, 2026. Interest on the Notes is payable semi-annually in arrear on
March 23 and September 23 of each year, beginning on March 23, 2017. The
scheduled maturity of the Notes is subject to earlier repurchase or redemption inaccordance with the terms of the SAIIDAC Indenture.
The Notes may be redeemed at SAIIDAC’s option at the greater of: (i) 100 per cent.
of the principal amount plus accrued and unpaid interest; and (ii) the sum of the192present values of the remaining scheduled payments of interest and principal
discounted to the date of redemption on a semi-annual basis at the applicabletreasury rate (as defined in the relevant Notes) plus an incremental margin, plus, ineither case, accrued and unpaid interest.
If SAIIDAC experiences certain change of control events with respect to a series ofNotes, it must offer to purchase all or any part (equal to $2,000 or an integral
multiple of $1,000 in excess thereof) of that holder’s Notes at a purchase price equal
to 101 per cent. of the principal amount of Notes repurchased, plus accrued andunpaid interest, if any, to, but excluding, the date of purchase.
The SAIIDAC Indenture contains covenants that, among other things, restrict
Shire’s ability and the ability of certain of its subsidiaries to create secured capital
markets indebtedness and Shire’s and SAIIDAC’s ability to consolidate, merge orsell all or substantially all of its and its subsidiaries’ assets, taken as a whole. The
SAIIDAC Indenture also provides for customary events of default (subject in certain
cases to customary grace and cure periods), which include payment defaults,
breach of covenants or agreements, certain events of bankruptcy and insolvency
and Shire’s guarantee of the Notes being held in any judicial proceeding to be
unenforceable or invalid or ceasing to be in full force and effect. These covenants
and events of default are subject to a number of important qualifications, limitations
and exceptions that are described in the Indenture. If an event of default withrespect to the Notes of a series occurs under the SAIIDAC Indenture, the principal
amount of all of the Notes of such series then outstanding, plus accrued and unpaid
interest, if any, to the date of acceleration, may become immediately due andpayable.
(ii)

Underwriting Agreement
On September 19, 2016, Shire and SAIIDAC entered into an underwriting
agreement (the “Underwriting Agreement”) with Barclays Capital Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC, as
representatives of the several underwriters for the Underwriting Agreement(collectively, the “Underwriters”), in connection with the offering and sale of theNotes. The Underwriting Agreement includes the terms and conditions for theoffering and sale of the Notes, indemnification and contribution obligations, andother terms and conditions customary in agreements of this type.

(f)

Baxalta Notes
On June 3, 2016, Shire entered into a Second Supplemental Indenture (the “Second
Baxalta Indenture”) to the SAIIDAC Indenture, dated June 23, 2015, between Baxalta
Incorporated and The Bank of New York Mellon Trust Company, N.A., as trustee (the“Baxalta Indenture Trustee”) (as supplemented by the First Supplemental Indenture,
dated June 23, 2015 (the “Baxalta Indenture”)), relating to the guarantee by Shire of theoutstanding notes issued by Baxalta under the Baxalta Indenture, consisting of:(i) $375,000,000 aggregate principal amount of its floating rate senior notes due 2018;(ii) $375,000,000 aggregate principal amount of its 2.000 per cent. senior notes due 2018;(iii) $1,000,000,000 aggregate principal amount of its 2.875 per cent. senior notes due
2020; (iv) $500,000,000 aggregate principal amount of its 3.600 per cent. senior notes due
2022; (v) $1,750,000,000 aggregate principal amount of its 4.000 per cent. senior notesdue 2025; and (vi) $1,000,000,000 aggregate principal amount of its 5.250 per cent. seniornotes due 2045 (each a “series” and together, the “Baxalta Notes”). Under the terms of
the Second Baxalta Indenture, Shire fully and unconditionally guarantees to the holders ofeach series of the Baxalta Notes and to the Baxalta Indenture Trustee the full and punctual
payment when due, whether at stated maturity, by acceleration or otherwise, of theprincipal of, premium (if any) on, and interest on, each series of Baxalta Notes and any193other amounts due and payable under the Baxalta Indenture, subject to any applicablegrace period or notice requirement or both.
(g)Tender offers
On August 24, 2018, Shire, Baxalta and SAIIDAC announced that they had commenced
cash tender offers (the “Tender Offers”) to purchase up to $2,250,000,000 aggregate
principal amount of Baxalta’s outstanding 2.875 per cent. senior notes due 2020, 3.600 per
cent. senior notes due 2022, 4.000 per cent. senior notes due 2025 and 5.250 per cent.
senior notes due 2045 and SAIIDAC’s outstanding 3.200 per cent. senior notes due 2026.
Baxalta is the offeror for the notes issued by it, and SAIIDAC is the offeror for the notes
issued by it (SAIIDAC and Baxalta being the “Offerors”). On September 10, 2018, Shireannounced that the Offerors had increased the aggregate principal amount of notes that
may be purchased from $2,250,000,000 to $2,325,254,000 (as amended, the “Aggregate
Maximum Purchase Amount”). The terms and conditions of the Tender Offer aredescribed in the offer to purchase dated August 24, 2018 (the “Offer to Purchase”) andrelated letter of transmittal, as amended by the announcement on September 10, 2018.
The total consideration for each series of notes was based on the applicable reference
yield plus a fixed spread over the yield to maturity of the reference US Treasury security
specified in the Offer to Purchase, payable to holders of the notes who validly tendered
and did not validly withdraw their notes on or before 5.00 p.m. (New York time), on
September 7, 2018 (the “Early Tender Date”) and whose notes were accepted forpurchase by the Offerors. The total consideration for each series of notes included an earlytender premium of $30.00 per $1,000 principal amount of notes validly tendered and not
validly withdrawn by such holders and accepted for purchase by the Offerors. In addition,holders whose notes were accepted for purchase pursuant to the Tender Offers received
accrued and unpaid interest from the last interest payment date for the applicable seriesof notes up to, but not including, the early settlement date, which occurred on
September 11, 2018.
Pursuant to the terms of the Tender Offers, the amount of notes accepted for purchase wassubject to the Aggregate Maximum Purchase Amount. The amounts of each series ofnotes accepted for purchase by the Offerors were determined in accordance with certain
acceptance priority levels specified in the Offer to Purchase, with priority 1 notes having ahigher acceptance priority level than the priority 2 notes, and the proration procedures
described in the Offer to Purchase so as not to exceed the Aggregate Maximum PurchaseAmount.
The Offerors’ obligation to accept for purchase, and pay for, any notes validly tendered andnot validly withdrawn and accepted for purchase pursuant to the Tender Offers wasconditioned on the satisfaction or waiver by the Offerors of the conditions described in theOffer to Purchase, including the closing of, and receipt by Shire of the cash proceeds from,the sale of Shire’s Oncology business. As described in paragraph 9.1(b) of this Part VIII,
on August 31, 2018, Shire announced the completion of, and receipt by Shire of the cash
proceeds from, the sale of its Oncology business to Servier S.A.S., satisfying the Oncology
proceeds condition.
Following the early settlement on September 11, 2018, the Tender Offers expired at
11:59 p.m., New York City time, on September 21, 2018. However, because holders of thenotes subject to the Tender Offers validly tendered and did not validly withdraw notes onor prior to the Early Tender Date for which the aggregate principal amount exceeded theAggregate Maximum Purchase Amount, the Offerors did not accept for purchase any notes
tendered after the Early Tender Date.

194

(h)

Appointment of Thomas Dittrich
See paragraph 7.1 of this Part VIII for details of Thomas Dittrich’s service contract.

9.2

Takeda material contracts
(a)

ARIAD
In connection with Takeda’s acquisition of ARIAD, on January 8, 2017, Takeda entered into
an Agreement and Plan of Merger (the “Agreement and Plan of Merger”) with ARIAD and
Kiku Merger Co., Inc., a Delaware corporation and an indirect wholly owned subsidiary of
Takeda (“Merger Sub”). Pursuant to the agreement, Takeda agreed to cause Merger Sub
to commence a tender offer to purchase any and all of the shares of common stock, parvalue $0.001 per share, of ARIAD issued and outstanding, at a price per share of $24.00,
to the seller in cash, net of applicable withholding taxes and without interest, on the terms
and subject to the conditions in the Agreement and Plan of Merger. Following
consummation of the tender offer, Merger Sub was merged with and into ARIAD, with
ARIAD surviving as an indirect wholly owned subsidiary of Takeda. The tender offer for allof the outstanding shares of ARIAD common stock expired as scheduled on February 15,2017 and Takeda completed its acquisition of ARIAD without a vote of ARIAD’sshareholders pursuant to Section 251(h) of the Delaware General Corporation Law on
February 16, 2017.

(b)

TiGenix NV
In connection with Takeda’s acquisition of TiGenix NV, on January 5, 2018, Takeda enteredinto an Offer and Support Agreement (the “Offer and Support Agreement”) with TiGenix
NV, whereby Takeda commenced an all cash voluntary and conditional public takeover bid
for 100 per cent. of the securities with voting rights or giving access to voting rights of
TiGenix NV that were not already owned by Takeda or its affiliates, at a price of €1.78 pershare in cash and an equivalent price for the ADSs, warrants to acquire shares and 9 per
cent. senior unsecured convertible bonds due March 6, 2018 of TiGenix NV. On July 31,
2018, Takeda acquired all outstanding ordinary shares as well as the ADSs and warrantsof TiGenix NV following the expiration of the squeeze-out period and TiGenix NV became
a wholly owned subsidiary of Takeda.

(c)

Co-operation Agreement
See paragraph 11.4 of Part II (Explanatory Statement) of this document for details of the
Co-operation Agreement between Shire and Takeda.

(d)Bridge Credit Agreement
In connection with the Acquisition, on May 8, 2018, Takeda entered into the Bridge Credit
Agreement, with aggregate commitments of $30.85 billion with, among others, JPMorgan
Chase Bank N.A., Tokyo Branch, Sumitomo Mitsui Banking Corporation and MUFG Bank,
Ltd. The commitments under the Bridge Credit Agreement were reduced by the amount ofcommitments under the Term Loan Credit Agreement described below of $7.5 billion andfurther reduced by the amount of commitments under the Senior Short-Term Loan Facility
Agreement described below of $4.5 billion. The commitments under the Bridge Credit
Agreement will also be reduced by reference to the amount of the proceeds of the Bond
Offering. Takeda expects to refinance the remaining commitments under the Bridge Credit
Agreement through the pursuit of a range of financing options, including additionalborrowings, the incurrence of hybrid indebtedness, the issue of additional bonds and/or
available cash resources. The Bridge Credit Agreement includes mandatory prepayment
and cancellation provisions, which would be triggered by such financing options, as well
as by asset sales and equity issues (in each case subject to customary exceptions). The
proceeds of the Bridge Credit Agreement, if drawn upon, will be used primarily to fund the
cash portion of the Consideration payable to Shire Shareholders in connection with the195Acquisition, as well as to pay a portion of related expenses and to refinance a portion of
the existing indebtedness of the Shire Group. The Bridge Credit Agreement is unsecured
and is made available by a syndicate of lenders. Three of the four tranches under the
Bridge Credit Agreement have a maturity of 364 calendar days from the date when allconditions precedent to drawing under the Bridge Credit Agreement are satisfied or waivedin accordance with the terms of the Bridge Credit Agreement (the “Bridge Closing Date”).
The fourth tranche (in an amount of $3.5 billion) has a maturity of 90 calendar days
following the Bridge Closing Date.
As long as any loans are drawn or commitments are outstanding under the Bridge Credit
Agreement, Takeda will be subject to certain covenants, including customary covenants
regarding compliance with laws, payment of taxes, bookkeeping and reporting, as well as
covenants to complete the Acquisition in the manner planned. Takeda will also be subject
to the following covenants:•

a “negative pledge”, under which Takeda and its consolidated subsidiaries(including, after the completion of the Acquisition, Shire) will not incur or suffer to be
incurred liens over their properties to secure any indebtedness, subject to certain
exceptions, where the total amount of indebtedness secured by such liens exceeds$2.5 billion at the time of incurrence;•a restriction on Takeda’s subsidiaries incurring indebtedness, subject to certain
exceptions, including an aggregate general basket amount of $2.5 billion; and•as of March 31 and September 30 of each year (or June 30 and December 31 ofeach year, if Takeda changes its fiscal year end to December 31), beginning on
September 30, 2019 at the earliest (or June 30, 2019 at the earliest, in the case ofa December 31 fiscal year end), to not allow its ratio of Consolidated Net Debt (asdefined in the Bridge Credit Agreement) to Consolidated EBITDA (as defined in the
Bridge Credit Agreement) for the previous 12-month period to surpass the following
levels:–

September 30, 2019 (or June 30, 2019 and December 31, 2019, in the caseof a December 31 fiscal year end): 5.95 to 1.00; and–March 31, 2020 (or June 30, 2020, in the case of a December 31 fiscal yearend) and thereafter: 5.35 to 1.00.

Under the Bridge Credit Agreement, interest is payable at the end of each interest period(being a period of one, two, three or six months) or, where such period is longer than threemonths, every three months, and at a rate per annum equal to the sum of:•the published London interbank offered rate for US Dollars for a period equal inlength to such interest period (or, if such rate cannot be ascertained, certain
customary fallback rates), plus•

a percentage per annum determined by reference to Takeda’s public debt rating as
set out below:
Public Debt Rating———————————————————————
Level 1 (A+/A1 or above)
Level 2 (less than Level 1 but at least A/A2)
Level 3 (less than Level 2 but at least A-/A3)
Level 4 (less than Level 3 but at least BBB+/Baa1)
Level 5 (less than Level 4 but at least BBB/Baa2)
Level 6 (less than level 5)

196

Applicable Margin———————
0.750%
0.875%
1.00%
1.125%
1.25%
1.50%

provided that the applicable margin above shall increase by 0.25 per cent. perannum on the date that is three months after the Bridge Closing Date and by anadditional 0.25 per cent. per annum at the end of each three-month period
thereafter.
The Bridge Credit Agreement was amended on June 8, 2018 upon the signing of the Term
Loan Credit Agreement described below (“Amendment No. 1 to the Bridge Credit
Agreement”) and on October 26, 2018 upon the signing of the Senior Short-Term Loan
Facility Agreement described below (“Amendment No. 2 to the Bridge Credit
Agreement”) to make certain technical and confirming changes thereto.
(e)Term Loan Credit Agreement
On June 8, 2018, Takeda entered into the Term Loan Credit Agreement for an aggregate
principal amount of $7.5 billion with, among others, JPMorgan Chase Bank N.A., Tokyo
Branch, Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd. and Mizuho Bank, Ltd.
The commitments under the Bridge Credit Agreement were reduced by the $7.5 billion
amount of commitments under the Term Loan Credit Agreement. The facility under theTerm Loan Credit Agreement is made available by a syndicate of lenders. Although theTerm Loan Credit Agreement is denominated in US Dollars, Takeda may draw advances
under the Term Loan Credit Agreement in Euros up to an amount equal to the Euroequivalent of $3.5 billion. The proceeds of the Term Loan Credit Agreement will be used tofund part of the cash portion of the Consideration payable to Shire Shareholders inconnection with the Acquisition. The Term Loan Credit Agreement is unsecured and will
have a maturity of five years from the date when all conditions precedent to drawing under
the Term Loan Credit Agreement are satisfied or waived in accordance with its terms (the“Term Closing Date”). In addition, Takeda must repay advances under the Term Loan
Credit Agreement in three-monthly instalments (starting on the date falling 15 months after
the Term Closing Date) in an amount equal to: (i) for the first eight such instalments,
1.25 per cent. of the aggregate principal amount funded; and (ii) for each other instalment,
2.5 per cent. of the aggregate principal amount funded. Upon the signing of the Term Loan
Credit Agreement, Takeda also entered into Amendment No. 1 to the Bridge Credit
Agreement, described above, to make certain technical and conforming changes thereto.
As long as any loans are drawn or commitments are outstanding under the Term Loan
Credit Agreement, Takeda will be subject to certain covenants, including customarycovenants regarding compliance with laws, payment of taxes, bookkeeping and reporting,as well as covenants to complete the Acquisition in the manner planned. Takeda will also
be subject to the following covenants:•

a “negative pledge”, substantially similar to that under the Bridge Credit Agreement;•a restriction on Takeda’s subsidiaries incurring indebtedness, subject to certain
exceptions, including an aggregate general basket amount equal to the greater of$2.5 billion and 15 per cent. of Consolidated Tangible Assets (as defined in the Term
Loan Credit Agreement); and•as of March 31 and September 30 of each year (or June 30 and December 31 ofeach year, if Takeda changes its fiscal year end to December 31), beginning on
September 30, 2019 at the earliest (or June 30, 2019 at the earliest, in the case ofa December 31 fiscal year end), to not allow its ratio of Consolidated Net Debt (asdefined in the Term Loan Credit Agreement) to Consolidated EBITDA (as defined in
the Term Loan Credit Agreement) for the previous 12-month period to surpass thefollowing levels:–

September 30, 2019 (or June 30, 2019 and December 31, 2019, in the caseof a December 31 fiscal year end): 5.95 to 1.00;

197

–

March 31, 2020 and September 30, 2020 (or June 30, 2020 and
December 31, 2020, in the case of a December 31 fiscal year end): 5.35 to
1.00;

–

March 31, 2021 and September 30, 2021 (or June 30, 2021 andDecember 31, 2021, in the case of a December 31 fiscal year end): 4.30 to
1.00; and–March 31, 2022 (or June 30, 2022 and thereafter, in the case of a
December 31 fiscal year end) and thereafter: 4.00 to 1.00.

Under the Term Loan Credit Agreement, interest is payable at the end of each interest
period (being a period of one, two, three or six months) or, where such period is longer
than three months, every three months, and at a rate per annum equal to the sum of:•the published London interbank offered rate for the applicable currency of theadvance for a period equal in length to such interest period (or, if such rate cannot
be ascertained, certain customary fallback rates); plus•

a percentage per annum determined by reference to Takeda’s public debt rating as
set out below:
Public Debt Rating———————————————————————
Level 1 (A+/A1 or above)
Level 2 (less than Level 1 but at least A/A2)
Level 3 (less than Level 2 but at least A-/A3)
Level 4 (less than Level 3 but at least BBB+/Baa1)
Level 5 (less than Level 4 but at least BBB/Baa2)
Level 6 (less than level 5)(f)Applicable Margin———————
0.750%
0.875%
1.00%
1.125%
1.25%
1.50%

Senior Short-Term Loan Facility Agreement
On October 26, 2018, Takeda entered into the Senior Short-Term Loan Facility Agreement
for an aggregate principal amount of ¥500 billion with, among others, Sumitomo Mitsui
Banking Corporation, MUFG Bank, Ltd., Mizuho Bank, Ltd., The Norinchukin Bank andSumitomo Mitsui Trust Bank, Ltd. The commitments under the Bridge Credit Agreement
were further reduced by $4.5 billion of commitments under the Senior Short-Term Loan
Facility Agreement. The facility under the Senior Short-Term Loan Facility Agreement ismade available by a syndicate of lenders. The Senior Short-Term Loan Facility Agreement
is denominated in Japanese Yen and will be advanced to Takeda via a single advance not
to exceed an aggregate amount of ¥500 billion. The proceeds of the Senior Short-Term
Loan Facility Agreement will be used to fund a portion of the cash consideration payable
to Shire Shareholders in connection with the Acquisition. The Senior Short-Term Loan
Facility Agreement is unsecured and will have a maturity of either one month, two months,
three months or six months after the date of the advance, as determined by Takeda at thetime of the advance. Takeda must repay on the maturity date an amount equal to: (i) the
aggregate principal amount; and (ii) accrued and unpaid interest. The Senior Short-Term
Loan Facility Agreement includes a mandatory prepayment and cancellation provision
which is triggered by the incurrence of hybrid instruments (other than the SubordinatedLoan). Upon the signing of the Senior Short-Term Loan Facility Agreement, Takeda also
entered into Amendment No. 2 to the Bridge Credit Agreement, described above, to makecertain technical and conforming changes thereto.
As long as any loans are drawn or commitments are outstanding under the Senior ShortTerm Loan Facility Agreement, Takeda will be subject to certain covenants, including
customary covenants regarding compliance with laws, payment of taxes, bookkeeping andreporting, as well as covenants to complete the Acquisition in the manner planned. Takeda
will also be subject to the following covenants:198•a “negative pledge”, substantially similar to that under the Bridge Credit Agreement
and Term Loan Credit Agreement;•a restriction on Takeda’s subsidiaries incurring indebtedness, subject to certain
exceptions, including an aggregate general basket amount equal to the greater of$2.5 billion and 15 per cent. of Consolidated Tangible Assets (as defined in the
Senior Short-Term Loan Facility Agreement); and•as of March 31 and September 30 of each year (or June 30 and December 31 ofeach year, if Takeda changes its fiscal year end to December 31), beginning on
September 30, 2019 at the earliest (or June 30, 2019 at the earliest, in the case ofa December 31 fiscal year end), to not allow its ratio of Consolidated Net Debt (asdefined in the Senior Short-Term Loan Facility Agreement) to Consolidated EBITDA(as defined in the Senior Short-Term Loan Facility Agreement) for the previous
12-month period to surpass the following levels:–

September 30, 2019 (or June 30, 2019 and December 31, 2019, in the caseof a December 31 fiscal year end): 5.95 to 1.00; and–March 31, 2020 and September 30, 2020 (or June 30, 2020, in the case of a
December 31 fiscal year end): 5.35 to 1.00.

Under the Senior Short-Term Loan Facility Agreement, interest is payable at the end ofeach interest period of one month, at a rate per annum equal to the sum of:(g)•

the published Japanese Yen TIBOR rate for a period equal in length to the interest
period (or, if such rate cannot be ascertained, certain customary fallback rates); plus•

a margin of 0.10 per cent.

Subordinated Loan Agreement
On October 26, 2018, Takeda entered into the Subordinated Loan Agreement, withaggregate commitments of ¥500 billion, with Sumitomo Mitsui Banking Corporation, MUFG
Bank, Ltd., Mizuho Bank, Ltd., The Norinchukin Bank and Sumitomo Mitsui Trust Bank,
Limited. The proceeds of the Subordinated Loan, if drawn upon, will be used to refinancethe debt borrowed pursuant to the Senior Short-Term Loan Facility Agreement. The
drawdown of all or a part of the Subordinated Loan may not be implemented if Takeda
obtains alternative financing.
The Subordinated Loan will have a maturity of 60 years from the drawdown date of theSubordinated Loan (the “Subordinated Closing Date”). Under the Subordinated Loan
Agreement, Takeda may make an early repayment of all or part of the principal of theSubordinated Loan on any interest payment date on or after the sixth anniversary of theSubordinated Closing Date.
Under the Subordinated Loan Agreement, interest is payable at the end of each six-monthinterest period at a rate per annum equal to the sum of:•the published Japanese Yen TIBOR rate for a period equal in length to such interest
period (or, if such rate cannot be ascertained, certain customary fallback rates); plus•

a percentage per annum determined by reference to periods from the SubordinatedClosing Date as set out below:
Periods————
From the Subordinated Closing Date to the 10th anniversaryof the Subordinated Closing Date
From the 10th anniversary of the Subordinated Closing Dateto the 26th anniversary of the Subordinated Closing Date
After the 26th anniversary of the Subordinated Closing Date
199

Applicable Margin———————
2.00%
2.25%
3.00%

Under the Subordinated Loan Agreement, Takeda may, at its discretion, defer all or a partof the payment of interest on the Subordinated Loan, subject to certain mandatory
payment clauses.
As long as the Subordinated Loan or commitments under the Subordinated Loan
Agreement are outstanding, Takeda will be subject to certain covenants, including
customary covenants regarding compliance with laws, procurement of necessary licenses,
bookkeeping and reporting.
The Subordinated Loan is unsecured and Takeda must not provide any liens over its
properties (including providing options to set any liens over its properties) to secure any
indebtedness under the Subordinated Loan Agreement.
Claims under the Subordinated Loan are subordinated to any claims against Takeda, otherthan claims which are subject to subordination clauses equivalent to those under the
Subordinated Loan Agreement, or in liquidation proceedings, bankruptcy proceedings,
reorganisation proceedings, rehabilitation proceedings and similar proceedings inaccordance with laws other than the laws of Japan. Any amendment to any of theprovisions of the Subordinated Loan Agreement to the disadvantage of the creditors of
Takeda other than the creditors of the subordinated claims is prohibited by any means, andany agreement on such amendment takes no effect by any means and with respect to any
person.
(h)Bond Offering
On November 8, 2018 Takeda launched the Bond Offering. Takeda is offering fixed andfloating rate EUR-denominated senior notes due 2020, 2022, 2026 and 2030 (the “EUR
Senior Notes”). The final tenors of and interest rates and interest payment dates
applicable to each series of the EUR Senior Notes will be decided upon the pricing of theBond Offering. Depending on market conditions, Takeda may offer additional US
Dollar-denominated senior notes (the “Potential Future USD Notes”) in a potential futureoffering. Takeda expects that the aggregate total amount of the EUR Senior Notes and thePotential Future USD Notes will be approximately $14.05 billion.
The EUR Senior Notes are expected to price on November 15, 2018. Closing of the Bond
Offering is expected to occur on November 22, 2018.
The proceeds of the Bond Offering will be used to fund part of the cash portion of theConsideration payable to Shire Shareholders in connection with the Acquisition. The
commitments under the Bridge Credit Agreement will be reduced by reference to theamount of the proceeds of the Bond Offering.
The EUR Senior Notes, if and when issued, will be subject to special mandatory
redemption at a redemption price equal to 101 per cent. of the aggregate principal amountof the notes plus accrued and unpaid interest, if any, to, but excluding, the special
mandatory redemption date if: (i) the Acquisition has not been consummated on or prior to
the Long Stop Date; or (ii) if Takeda otherwise publicly announces that the Acquisition will
not be consummated.
Certain series of the EUR Senior Notes may include the option of Takeda to redeem them,in whole or in part, by a make-whole call at the treasury rate plus a spread, up to a
specified par call date, after which such EUR Senior Notes may be called at par. EUR
Senior Notes which do not include such optional redemption feature will not be callable
prior to the specified par call date.
No security is being offered in favour of the EUR Senior Notes. The EUR Senior Notes arebeing offered subject to a “negative pledge” under which Takeda may not offer security
over certain capital markets indebtedness of it or its principal subsidiaries, as defined in
the terms of the EUR Senior Notes.

200

10.

Material litigation of the Takeda Group

Takeda is involved in various legal and administrative proceedings. The most significant matters aredescribed below.
Takeda may become involved in significant legal proceedings for which it is not possible to make areliable estimate of the expected financial effect, if any, which may result from ultimate resolution of theproceedings. In these cases, appropriate disclosures about such cases would be included in thisparagraph 10 of this Part VIII, but no provision would be made for the cases.
With respect to each of the legal proceedings described below, other than those for which a provision
has been made, Takeda is unable to make a reliable estimate of the expected financial effect at thisstage. Takeda does not believe that information about the amount sought by the plaintiffs, if that is
known, would be meaningful with respect to those legal proceedings. This is due to a number of factors,
including, but not limited to, the stage of proceedings, the entitlement of parties to appeal a decisionand clarity as to theories of liability, damages and governing law.
Legal expenses incurred and charges related to legal claims are recorded in selling, general andadministrative expenses line of Takeda’s annual audited accounts. Provisions are recorded, after taking
appropriate legal and other specialist advice, where an outflow of resources is considered probable anda reliable estimate can be made of the likely outcome of the dispute. For certain product liability claims,
Takeda will record a provision where there is sufficient history of claims made and settlements to enable
management to make a reliable estimate of the provision required to cover unasserted claims. As of
March 31, 2018, Takeda’s aggregate provision for legal and other disputes was ¥23.2 billion(approximately $0.205 billion). The ultimate liability for legal claims may vary from the amounts provided
and is dependent upon the outcome of litigation proceedings, investigations and possible settlement
negotiations.
Takeda’s position could change over time, and, therefore, there can be no assurance that any losses
that result from the outcome of any legal proceedings will not exceed the amount of the provisions
reported by a material amount.
10.1 Product liability and related claims
Pre-clinical and clinical trials are conducted during the development of potential products todetermine the safety and efficacy of products for use by humans following approval by regulatory
bodies. Notwithstanding these efforts, when drugs and vaccines are introduced into themarketplace, unanticipated safety issues may become, or be claimed by some to be, evident.
Takeda is currently a defendant in a number of product liability lawsuits related to its products.
For the product liability lawsuits and related claims, other than those for which provision has been
made, Takeda is unable to make a reliable estimate of the expected financial effect at this stage.
The most significant product liability and related claims are described below.
(a)

Actos
Takeda has been named as a defendant in lawsuits in US federal and state courts in whichplaintiffs allege to have developed bladder cancer or other injuries as a result of taking products
containing type 2 diabetes treatment pioglitazone (US brand name: Actos). Eli Lilly and Company(“Lilly”), which co-promoted Actos in the United States for a period of time, also has been named
as a defendant in many of these lawsuits. Under the parties’ co-promotion agreement, Takeda
has agreed to defend and indemnify Lilly in the US matters. Outside the US, lawsuits and claims
have also been brought by persons claiming similar injuries.
In April 2015, Takeda reached an agreement with the lead plaintiffs’ lawyers that resolved the vast
majority of Actos product liability lawsuits pending against Takeda and Lilly in the US. The
settlement covered all bladder cancer claims pending in any US court as of the date ofsettlement. Also claimants with unfiled claims in the US represented by counsel as of the date ofsettlement and within three calendar days thereafter were eligible to participate. The settlement
became effective when 95 per cent. of litigants and claimants opted-in. In connection with this201

broad settlement, Takeda has paid $2.4 billion (¥272 billion) into a qualified settlement fund.
Takeda received insurance proceeds totalling ¥58 billion ($0.51 billion) under various policies
covering product liability claims against Takeda. Takeda also established reserves for remaining
Actos claims and lawsuits.
In addition to remaining product liability claims, the following lawsuits have been filed against
Takeda by public and private third-party payors, as well as consumers, seeking damages foralleged economic losses:(b)•

A purported nation-wide class action lawsuit has been filed in federal court in California –the Painters’ Fund case – on behalf of third-party payors and consumers seeking, among
other things, reimbursement of monies spent on Actos. In April 2018, the court dismissed
the Painters’ Fund case. The plaintiffs have appealed.

•

The States of Mississippi and Louisiana have filed lawsuits against Takeda and Lilly alleging
that defendants did not warn about bladder cancer and other risks of Actos. The lawsuits
seek reimbursement of the cost of Actos, paid by the states on behalf of patients throughprogrammes such as Medicaid, and for medical treatment of patients allegedly injured by
Actos, attorneys’ fees and expenses, punitive damages and/or penalties. The court granted
Takeda’s motion to dismiss the Louisiana case. The decision has been appealed.

Prevacid and Dexilant
As of March 31, 2018, more than 1,100 product liability lawsuits involving Prevacid and/or
Dexilant have been filed against Takeda in US federal and state courts. The federal lawsuits areconsolidated for pre-trial proceedings in a Multi-District Litigation in the federal court in New
Jersey. The plaintiffs allege they developed kidney injuries as a result of taking Prevacid or
Dexilant, and that Takeda failed to adequately warn them of this potential danger. However, itremains unclear how many of these claimants took Takeda protein pump inhibitors (including
Prevacid and Dexilant). Similar claims are pending against other manufacturers of drugs in thesame proton pump inhibitor class as Prevacid and Dexilant, including AstraZeneca, Proctor &Gamble and Pfizer.
In Canada, three proposed class actions have been filed in three provinces (Quebec, Ontario andSaskatchewan) in respect of Prevacid and/or Dexilant. The defendants include Takeda,
AstraZeneca and several generic manufacturers. It is unclear how many new lawsuits will be filed
against Takeda. At this time, a reserve is not probable or estimable.

10.2 Intellectual property claims
Intellectual property claims include challenges to the validity and enforceability of Takeda’s
patents on various products or processes as well as assertions of non-infringement of thosepatents. A loss in any of these cases could result in loss of patent protection for the product atissue. The consequences of any such loss could be a significant decrease in sales of that productand could materially affect future results of operations for Takeda.
(a)Prevacid
In January 2018, Takeda received notice from Zydus that it has amended its application for ageneric version of SoluTab. In response, Takeda filed a patent infringement lawsuit against
Zydus, and in response, Zydus filed a counterclaim asserting that Takeda’s challenge of Zydus’abbreviated new drug application product violates antitrust laws. Takeda believes thecounterclaim is without merit.
Other generic companies have filed abbreviated new drug applications for generic versions of
SoluTab and may launch their products upon approval by the US Food and Drug Administration.
In June 2009, Apotex filed a lawsuit in Toronto, Canada, against Takeda and Abbott Laboratories
seeking alleged damages for delayed market entry of its generic lansoprazole capsules due to aprior patent infringement lawsuit against Apotex. Previously, Abbott and Takeda filed a patent202

infringement lawsuit against Apotex in response to Apotex’s regulatory submission to the
Canadian Minister of Health seeking permission to market generic lansoprazole capsules before
the expiration of various Canadian patents relating to this drug. In September 2008, Abbott and
Takeda settled that patent infringement lawsuit against Apotex and Apotex was allowed to begin
selling generic lansoprazole capsules in Canada on May 1, 2009. Under the terms of thesettlement, Apotex retained its right to seek damages for delayed market entry caused by thelawsuit.
(b)

Pantoprazole
On January 15, 2016, Mylan filed a suit in the federal court against Takeda claiming damages asa result of the dismissal of Takeda’s previous Patented Medicines (Notice of Compliance)
proceeding against Mylan. Mylan claimed damages due to being held-off the market with its
generic pantoprazole magnesium product during the time period of June 27, 2013 until June 15,
2015. The parties settled the lawsuit in May 2018.

(c)

Amitiza
In March 2017, Sucampo (Takeda’s licensor, which became a wholly-owned subsidiary of
Mallinckrodt plc in February 2018) received a paragraph IV certification directed to Amitiza from
Amneal Pharmaceuticals, and in August 2017 received a paragraph IV certification directed toAmitiza from Teva. These parties contend that the patents listed in the US Food and Drug
Administration’s Orange Book for Amitiza are invalid and/or not infringed by their abbreviated new
drug product. In response, Sucampo and Takeda filed patent infringement lawsuits against theparties. In June 2018, the parties settled the lawsuits. Patent litigation against other abbreviatednew drug filers for Amitiza was previously settled.

(d)Trintellix
Takeda has received notices from 16 generic pharmaceutical companies that they havesubmitted ANDAs with paragraph IV certifications seeking to sell generic versions of Trintellix. To
date, at least five generic companies are challenging the patents covering the compound,vortioxetine, which expire in 2026. Takeda filed patent infringement lawsuits against theabbreviated new drug filers in federal court in Delaware.

(e)

Entyvio
Roche has filed patent infringement lawsuits against Takeda in Germany, Italy and the UK
alleging that Entyvio infringes Roche’s patent. Takeda is vigorously defending the lawsuits.
Additionally, Takeda has filed lawsuits seeking nullification of Roche’s patent in the UK and
Germany. Takeda also filed a lawsuit against Genentech in the state court in Delaware seeking
a declaration that Takeda has a licence to the Roche patent under the terms of a prior agreement
between Takeda and Genentech.

(f)

Other
In addition to the individual patent litigation cases described above, Takeda is party to a numberof cases where Takeda has received notices that companies have submitted abbreviated new
drug applications with paragraph IV certifications to sell generic versions of other Takeda
products. These include Uloric and Alogliptin products. Takeda has filed patent infringement
lawsuits against parties involved in these situations.

10.3 Sales, marketing, and regulation
Takeda is party to other litigation related to its products and its activities, the most significant of
which are described below.

203

(a)

Antitrust
There have been purported class action lawsuits filed in the federal court in New York by several
end payors and wholesalers against Takeda alleging anticompetitive conduct to delay genericcompetition for Actos. In September 2015, the court granted the defendants’ motions to dismiss
the antitrust claims asserted by the end payors. The end payors appealed this decision to the US
Federal 2nd Circuit Court of Appeals. The wholesalers’ lawsuit had been stayed pending theappellate court’s decision in the end payors’ lawsuit. In February 2017, the appellate court
reversed in part the dismissal of the end payors’ case and allowed one of the plaintiffs’ antitrust
theories to proceed in the trial court. Specifically, the court ruled that the plaintiffs sufficiently
alleged that Takeda’s characterisations of two patents in the US Food and Drug Administration
Orange Book were false, and that this resulted in delaying Teva’s launch of a generic version of
Actos. Takeda disagrees with these allegations and believes the US Food and Drug
Administration Orange Book listings were correct. The court, however, affirmed the trial court’s
dismissal of other antitrust theories. The end payors’ case, along with the wholesalers’ case, isproceeding in the trial court, where Takeda has filed a motion to dismiss the remaining legal
theory.

(b)

Investigation of Patient Assistance Programs
In November 2016, the US Department of Justice (through the US Attorneys’ Office in Boston)issued a subpoena to ARIAD Pharmaceuticals, which was acquired by Takeda during the year
ended March 31, 2017, seeking information from January 2010 to the present relating to ARIAD
Pharmaceuticals’ donations to 501(c) (3) co-payment foundations, financial assistanceprogrammes, and free drug programmes available to Medicare beneficiaries and the relationshipbetween these co-payment foundations and specialty pharmacies, hubs or case management
programmes. ARIAD Pharmaceuticals is co-operating in the investigation.

11.

Cash confirmation

The cash consideration payable pursuant to the Acquisition is being financed as set out in paragraph 7of Part II (Explanatory Statement) of this document. Each of Evercore, J.P. Morgan Cazenove andNomura, as financial advisers to Takeda, is satisfied that sufficient cash resources are available toTakeda to enable it to satisfy in full the cash consideration payable pursuant to the Scheme.
12.

Significant change

12.1 There has been no significant change in the financial or trading position of the Shire Group since
September 30, 2018, being the date to which Shire’s last published unaudited financial
statements were prepared.
12.2 There has been no significant change in the financial or trading position of the Takeda Groupsince September 30, 2018, being the date to which Takeda’s last published interim accounts wereprepared.
13.

Sources and bases of selected financial information

13.1 Historical Shire and Takeda share prices are derived from Bloomberg on the relevant date(s).
13.2 As at the Latest Practicable Date, there were 915,589,336 Shire Shares (excluding 7,357,283
ordinary shares held in treasury) and the Subscriber Ordinary Shares in issue. In addition, as atthe Latest Practicable Date, there were up to 14,927,934 Shire Shares (including Shire Shares
underlying Shire ADSs) which could be issued pursuant to the exercise/vesting of outstanding
options/awards prior to the Long Stop Date.23 The International Securities Identification Number
for the Shire Shares is JE00B2QKY057.
23 Includes Shire Shares (including Shire Shares underlying Shire ADSs) that could be issued upon the exercise ofoutstanding stock appreciation rights, assuming illustrative Shire ADS and Shire Share prices of $200.00 and £50.00
respectively.

20413.3 As at the Latest Practicable Date, there were 794,538,998 Takeda Shares in issue (excluding
162,897 ordinary shares held in treasury), consisting of 784,275,098 shares of common stockwith no par value in the capital of Takeda with voting rights attached.
13.4 The number of New Takeda Shares to be issued pursuant to the terms of the Acquisition will be
0.839 New Takeda Shares to be issued per Scheme Share multiplied by the sum of issued andto be issued ordinary share capital of Shire as set out in paragraph 13.2 above.
13.5 The value placed by the Acquisition on the entire issued and to be issued ordinary share capitalof Shire is calculated by reference to an equivalent value of £49.01 per Shire Share (based on
the closing price of ¥4,923 per Takeda Share and the exchange rates of £:¥ of 1:151.51 and £:$of 1:1.3945 on April 23, 2018 (being the day before the announcement that the Shire Board
would, in principle, be willing to recommend the Consideration)) multiplied by the sum of theissued and to be issued ordinary share capital of Shire (as set out in paragraph 13.2 above).
13.6 The value placed by the Acquisition on the entire issued and to be issued ordinary share capitalof Shire is calculated by reference to an equivalent value of £49.22 per Shire Share (based on
the closing price of ¥4,647 per Takeda Share and the exchange rates of £:¥ of 1:149.05 and £:$of 1:1.3152 on the Latest Practicable Date) multiplied by the sum of the issued and to be issued
ordinary share capital of Shire (as set out in paragraph 13.2 above).
13.7 The share capital of the Combined Group has been calculated as the sum of the number ofTakeda Shares in issue as at the Latest Practicable Date as set out in paragraph 13.3 above andthe New Takeda Shares to be issued pursuant to the terms of the Acquisition (as set out inparagraph 13.4 above).
13.8 The percentage of the share capital of the Combined Group that will be owned by Shire
Shareholders is calculated by dividing the number of New Takeda Shares to be issued pursuant
to the terms of the Acquisition referred to in paragraph 13.4 above by the issued share capital of
the Combined Group (as set out in paragraph 13.7 above) and multiplying the resulting sum by
100 to produce a percentage.
13.9 The market capitalisation of Takeda has been calculated by reference to the closing price per
Takeda Share as at the Latest Practicable Date and the total issued share capital of Takeda (asset out in paragraph 13.3 above).
13.10 The pro forma market capitalisation of the Combined Group has been calculated by reference tothe closing price per Takeda Share as at the Latest Practicable Date and the issued share capitalof the Combined Group (as set out in paragraph 13.7 above).
13.11 All pro forma financial information relating to the Combined Group has been calculated on thebasis set out in Appendix IV (Notes to the unaudited pro forma condensed combined financial
data).
13.12 The volume weighted average prices for Shire Shares is derived from Bloomberg by reference
to the volume weighted average price over either (a) the 30 Shire trading days up to March 23,
2018 (being the last Business Day before rumours of Takeda’s possible interest in an offer for
Shire); (b) the 30 Shire trading days up to March 27, 2018 (being the last Business Day before
the commencement of the Offer Period); or (c) the 30 Shire trading days up to the Latest
Practicable Date, as applicable.
13.13 Unless otherwise stated, the financial information relating to Shire is extracted from the audited
consolidated financial statements of Shire for the financial year to December 31, 2017 and fromthe unaudited consolidated financial statements of Shire for the nine months ended
September 30, 2018, prepared in accordance with US GAAP.
13.14 Unless stated otherwise, the financial information relating to Takeda is extracted from the audited
consolidated financial statements of Takeda for the financial year ended March 31, 2018 and205

from the unaudited consolidated financial statements of Takeda for the six months ended
September 30, 2018, prepared in accordance with IFRS.
13.15 Unless otherwise stated, where amounts are shown in both Japanese Yen and US Dollars, orconverted between the aforementioned currencies, in this document, an exchange rate of$1.00:¥ 113.33 as at the Latest Practicable Date has been used, which has been derived fromdata provided by Bloomberg.
13.16 Unless otherwise stated, where amounts are shown in both Japanese Yen and pounds Sterling,or converted between the aforementioned currencies, in this document, an exchange rate of£1.00:¥ 149.05 as at the Latest Practicable Date has been used, which has been derived fromdata provided by Bloomberg.
13.17 Unless otherwise stated, where amounts are shown in both US Dollars and pounds Sterling, orconverted between the aforementioned currencies, in this document, an exchange rate of£1.00:$ 1.3152 as at the Latest Practicable Date has been used, which has been derived fromdata provided by Bloomberg.
13.18 The synergy numbers are unaudited and are based on analysis by Takeda’s management andon Takeda’s internal records. Further information underlying the quantified financial benefits
statements contained in this document is provided in Appendix III (Statement on quantified
financial benefits) of this document.
13.19 The statement that the Combined Group would have been within the top ten pharmaceuticalcompanies by prescription drug revenue worldwide in 2017 is based on a report produced by
EvaluatePharma®, Evaluate Ltd., www.evaluate.com dated November 1, 2018 and calculated by
combining Takeda’s total prescription drug sales in the fiscal year ended March 31, 2018 andShire’s total prescription drug sales in the fiscal year ended December 31, 2017 and using an
exchange rate of $1.00 to ¥112.359.
14.

Incorporation by reference

14.1 This document includes each and all of its appendices.
14.2 Parts of other documents are incorporated by reference in, and form part of, this document.
14.3 Part VI (Financial and ratings information) of this document sets out which sections of such
documents are incorporated into this document.
14.4 A person who has received this document may request a hard copy of such documents
incorporated by reference. A hard copy of any such documents or information incorporated byreference will not be sent to such persons unless requested by writing to Equiniti, Corporate
Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom or bycalling them on 0330 123 5506 (if calling from within the UK) or +44 (0)121 415 0856 (if callingfrom outside the UK). Calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate. The helplineis open between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday excluding public
holidays in England and Wales. Please note that Equiniti cannot provide any financial, legal or
tax advice and calls may be recorded and monitored for security and training purposes.
15.

Other information

15.1 Each of Citi, Goldman Sachs, Morgan Stanley, Evercore, J.P. Morgan and Nomura has given andnot withdrawn its written consent to the issue of this document with the inclusion of the references
to its name in the form and context in which they appear.
15.2 Except as disclosed in this document, there is no agreement, arrangement or understanding(including any compensation arrangement) between Takeda or any person acting in concert with
it and any of the directors, recent directors, shareholders or recent shareholders of Shire, or any

206person interested or recently interested in Shire Shares, having any connection with ordependence on or which is conditional upon the outcome of the Offer.
15.3 There is no agreement, arrangement or understanding whereby the beneficial ownership of anyof the Shire Shares to be acquired by Takeda will be transferred to any other person, save that
Takeda reserves the right to transfer any such shares to any other member of the Takeda Group.
15.4 The aggregate fees and expenses which are expected to be incurred by Takeda in connection
with the Acquisition are estimated to amount to approximately $733.4 million (exclusive of any
applicable VAT and other taxes)(1). This aggregate number consists of the following categories:
Category

Amount – $m——————————————————
Financing arrangements(2)Financial and corporate broking advice
Legal advice(3)Accounting advice(3)Public relations advice(3)Other professional services(3)(4)
Other costs and expenses

—————
386.6
111.7
44.2
24.3
6.3
3.6
156.7
————
733.4

Total

————

(1) Note that not all of these fees and expenses are expected to be incurred in Takeda’s financial year ending
March 31, 2019.

(2) Refer to paragraph 7 of Part II (Explanatory Statement) of this document for details of the Bridge Credit
Agreement, the Term Loan Credit Agreement, the Senior Short-Term Loan Facility Agreement, theSubordinated Loan Agreement and the Bond Offering.
(3) These services are charged by reference to hourly or daily rates. Amounts included here reflect the time
incurred up to the Latest Practicable Date and an estimate of the further time required.
(4) These services may vary based on the service volumes and types of services provided. Amounts included
here reflect an estimate of the expected services required.

15.5 The aggregate fees and expenses which are expected to be incurred by Shire in connection with
the Acquisition are estimated to amount to between approximately $216.5 million and$229.5 million (exclusive of any applicable VAT and other taxes). This aggregate number consistsof the following categories:
Category

Amount – $m——————————————————
Financial and corporate broking advice
Legal advice
Accounting advice
Public relations advice
Other professional services(1)(2)(3)
Other costs and expenses—————
145 – 150
65 – 70
2–3
2–3
2.1 – 3.1
0.4————
216.5 – 229.5

Total

————

(1) An element of these costs is uncapped and relates to the reasonable expenses of Citi and its legal advisors.
The figures included reflect an estimate of the expected service.
(2) These services are charged based on the service volumes provided. The figures included reflect an estimateof the expected service volumes required.
(3) The amount of aggregate fees and expenses for these services depends on whether a success fee is paid.

15.6 Except as disclosed in this document, the emoluments of the Shire Directors and the Takeda
Directors will not be affected by the Acquisition or any other associated transaction.
15.7 Except as disclosed in this document, there is no agreement or arrangement to which Takeda isa party which relates to the circumstances in which it may or may not invoke a condition to the
Scheme.

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15.8 As at the Latest Practicable Date, according to information disclosed under Rule 8 of the
Takeover Code, BlackRock, Inc. held an interest of 7.09 per cent. in the issued share capital of
Takeda and an interest of 7.31 per cent. in the issued share capital of Shire. By virtue of theseholdings, BlackRock, Inc. has a potential direct or indirect interest of greater than 5 per cent. ineach of Takeda and Shire and would be expected to hold a direct or indirect interest of greaterthan 5 per cent. in the Combined Group following completion of the Acquisition.
16.

Profit forecasts

16.1 Shire Profit Forecasts
Each of the following statements, as contained in paragraph 5.1 of Part I (Letter from the
Chairman of Shire PLC) (together, the “Shire Profit Forecasts”), constitutes a profit forecast forthe purposes of Rule 28.1(a) of the Takeover Code:“Our projected 2020 revenue target has been updated to $16.5 – $17.5 billion.”“We continue to expect to achieve mid-forties Non GAAP EBITDA margin by 2020.”“Full year 2018 U.S. GAAP outlook for total revenue is expected to be $15.3 – $15.8 billion anddiluted earnings per ADS is expected to be $7.17 – $7.77.”“Full year 2018 Non GAAP outlook for total revenue is expected to be $15.3 – $15.8 billion anddiluted earnings per ADS is expected to be $14.77 – $15.37.”
In accordance with Rule 28.1(c) of the Code, the directors of Shire confirm that: (i) the basis ofaccounting used to prepare the Shire Profit Forecasts is consistent with the accounting policies
of Shire (or in the case of the Non GAAP Shire Profit Forecasts, or in the case of the Non GAAP
guidance, as adjusted in accordance with Shire’s established Non GAAP policy, which excludes
the items set out on pages 27–28 of the Shire Q3 Trading Update), including their tax effect); and(ii) each of the Shire Profit Forecasts has been properly compiled on the basis of assumptions
set out on page 26 of the Shire Q3 Trading Update.
16.2 Takeda Profit Forecasts
The Takeda Profit Forecast (as contained in paragraph 5.2(a) to paragraph 5.2(c) of Part I (Letterfrom the Chairman of Shire PLC) constitutes a profit forecast for the purposes of Rule 28.1(a) of
the Takeover Code.
In accordance with Rule 28.1(c) of the Code, Takeda Directors confirm that: (i) the basis ofaccounting used to prepare the Takeda Profit Forecast is consistent with the accounting policies
of Takeda; and (ii) each of the Takeda Profit Forecast has been properly compiled on the basisof assumptions set out on pages 9 and 10 of Takeda’s Summary of Financial Statements for the
Six Months Period Ended September 30, 2018.
17.

Documents available for inspection

Until and including the Effective Date (or the date on which the Scheme lapses or is withdrawn, if
earlier), copies of the following documents will be available via the link on Shire’s website atwww.shire.com and at Takeda’s website at www.takeda.com:(a)the Shire Articles;(b)

the Takeda Articles and a reference translation of the same into English;(c)a draft copy of the Shire Articles as proposed to be amended by the Special Resolution at theShire General Meeting;(d)the audited consolidated financial statements of the Shire Group for the two years ended
December 31, 2016 and December 31, 2017;

208

(e)

the audited consolidated financial statements of the Takeda Group for the two years ended March
31, 2017 and March 31, 2018;(f)

the unaudited consolidated financial statements of the Takeda Group for the three-month periods
ended June 30, 2018 and September 30, 2018;(g)

the unaudited consolidated financial statements of the Shire Group for the three-month periods
ended March 31, 2018, June 30, 2018 and September 30, 2018;(h)a copy of the written consent from each of Citi, Goldman Sachs, Morgan Stanley, Evercore,
J.P. Morgan and Nomura, referred to in paragraph 15.1 of this Part VIII;(i)a copy of the report of Deloitte LLP and the report of Evercore, J.P. Morgan Cazenove andNomura, in each case on the Quantified Financial Benefits Statement (included in Parts B and C
of Appendix IV to the Rule 2.7 Announcement);(j)a copy of the written confirmation letters from each of Deloitte LLP, Evercore, J.P. Morgan
Cazenove and Nomura referred to in Appendix III to this document;(k)a copy of the letters of irrevocable undertaking referred to in paragraph 6 of this Part VIII;(l)a copy of the Co-operation Agreement referred to in paragraph 9.1 of this Part VIII;(m)a copy of the Bridge Credit Agreement referred to in paragraph 9.2 of this Part VIII;(n)a copy of the Term Loan Credit Agreement referred to in paragraph 9.2 of this Part VIII;(o)a copy of the Senior Short-Term Loan Facility Agreement referred to in paragraph 9.2 of thisPart VIII;(p)a copy of the Subordinated Loan Agreement referred to in paragraph 9.2 of this Part VIII;(q)a copy of the preliminary and (if and when the Bond Offering is priced) final offering circular inrespect of the Bond Offering referred to in paragraph 9.2 of this Part VIII;(r)a copy of the Confidentiality Agreement, the Confidentiality and Joint Defense Agreement and the
Clean Team Confidentiality Agreement referred to in paragraph 11 of Part II (Explanatory
Statement) of this document;(s)a copy of the Master Framework and Custody Agreement referred to in paragraph 11 of Part II(Explanatory Statement) of this document;(t)a copy of the Shire Depositary Instruction Letter referred to in paragraph 11 of Part II (Explanatory
Statement) of this document;(u)a copy of the Dealing Facility Terms and Conditions referred to in paragraph 19.3(d) of Part II(Explanatory Statement) of this document;(v)

a copy of the Corporate Nominee Facility Terms and Conditions contained at Appendix II(Corporate Nominee Facility Terms and Conditions) of this document;(w)

a copy of the Shire Deposit Agreement; and(x)this document (including any documents incorporated by reference herein), the Forms of Proxy,
the ADS Voting Cards and the Forms of Election.

209

PART IXNOTES FOR MAKING ELECTIONSThis section should be read in conjunction with the rest of this document, the accompanying Forms of
Proxy and Form of Election (including the accompanying notes on how to complete the relevant Formof Election) and any document incorporated by reference.
In particular, details of the Currency Conversion Facility, the Corporate Nominee Facility, the ADS
Election Facility and the Dealing Facility (including the terms and conditions governing each such
facility) are set out in paragraphs 19.3, 20.3 and 21 of Part II (Explanatory Statement) of this document.
FLOWCHARTS HAVE BEEN INCLUDED ON PAGES 16 TO 18 IN ORDER TO ASSISTYOU IN MAKING AN ELECTION IN RESPECT OF THE CONSIDERATION.

1.

Elections by Shire Shareholders holding Shire Shares in certificated form

1.1

Currency Election
Shire Shareholders who hold Shire Shares in certificated form and have a registeredaddress in the United Kingdom, Channel Islands or Isle of Man as at the Scheme Record
Time will be deemed to have elected for the Currency Conversion Facility and will receive
the entire cash portion of the Consideration payable to them under the Scheme in pounds
Sterling (net of any applicable customary transaction and dealing costs associated withthe conversion) at the applicable market exchange rate on the latest reasonably
practicable date for fixing such rate before the relevant payment date under the Currency
Conversion Facility. Such Shire Shareholders may opt out of the Currency Conversion Facility,
which would result in such Shire Shareholders receiving the cash portion of the Consideration in
US Dollars, by completing and returning an Opt-out Form (a copy of which may be obtained bycontacting the Shareholder Helpline).
Unless they elect otherwise, each Shire Shareholder who holds Shire Shares incertificated form and does not have a registered address in the United Kingdom, Channel
Islands or Isle of Man as at the Scheme Record Time will receive the cash portion of theConsideration which is payable to them under the Scheme in US Dollars. Such Shire
Shareholders may elect to have the US Dollar cash portion of the Consideration which is payable
to them under the Scheme instead paid in pounds Sterling (net of any applicable customarytransaction and dealing costs associated with the conversion) at the applicable market exchange
rate on the latest reasonably practicable date for fixing such rate before the relevant payment
date under the Currency Conversion Facility.
If you hold Shire Shares in certificated form and wish to make a Currency Election, you mustcomplete Part 3 of, and sign, the WHITE Certificated Form of Election in accordance with the
instructions printed thereon and return it to Equiniti, Corporate Actions, Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA, United Kingdom. A pre-paid envelope, for use in the
United Kingdom only, is enclosed for your convenience.
If you hold Shire Shares in both certificated and uncertificated form and you wish to make a
Currency Election in respect of both such holdings, you must make a separate election in respectof each holding.
The WHITE Certificated Form of Election assumes that a Shire Shareholder who holds Shire
Shares in certificated form will make a Currency Election in respect of their entire holding of Shire
Shares at the Scheme Record Time. If you hold Shire Shares in certificated form and wish to
make a Currency Election in respect of some (but not all) of your Shire Shares, please contact
the Shareholder Helpline.

210Each Shire Shareholder who has set up a standing electronic payment mandate with the Shire
Registrar for the purpose of receiving dividend payments from Shire in pounds Sterling will,
subject to such Shire Shareholder having made (or being deemed to have made) a valid
Currency Election to receive the cash portion of their Consideration in pounds Sterling, receive
the cash portion of the Consideration payable to them pursuant to the Scheme by way of anelectronic BACs transfer to the account indicated in such mandate. In the absence of a standing
electronic payment mandate held by the Shire Registrar for receiving dividend payments from
Shire in pounds Sterling, a cheque will be issued and despatched to each relevant Shire
Shareholder at their registered address.
1.2

Securities Election
Subject to the terms and conditions set out in this document, each Shire Shareholder (other thana Restricted Shire Shareholder) who holds Shire Shares in certificated form at the Scheme
Record Time may, in relation to their Shire Shares, make at least one of the following Elections(each a “Securities Election”):(a)elect to hold the New Takeda Shares which they are entitled to receive pursuant to the
Scheme in their own JASDEC Account (by completing Part 4A on the WHITE CertificatedForm of Election) (a “JASDEC Election”). Please refer to paragraphs 19.1 and 19.3(a) ofPart II (Explanatory Statement) of this document for a summary of the background to
holding New Takeda Shares through a JASDEC Account and for further information
concerning the making of a JASDEC Election;(b)in the case of a Shire Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to havethe New Takeda Shares which they are entitled to receive pursuant to the Scheme held on
their behalf through the Corporate Nominee Facility, subject to the Corporate Nominee
Facility Terms and Conditions (by completing Part 4B on the WHITE Certificated Form ofElection) (a “Corporate Nominee Election”). Please refer to paragraph 19.3(b) of Part II(Explanatory Statement) of this document for further information concerning the making ofa Corporate Nominee Election and to paragraph 21 Part II (Explanatory Statement) of thisdocument for summary details of the Corporate Nominee Facility;(c)elect to receive 1.678 New Takeda ADSs (each New Takeda ADS representing 0.5 New
Takeda Shares) for each Shire Share they hold instead of the 0.839 New Takeda Shares
per Shire Share they would otherwise have been entitled to receive pursuant to the
Scheme, subject to the terms and conditions applicable to the New Takeda ADSs (bycompleting Part 4C on the WHITE Certificated Form of Election) (an “ADS Election”).
Please refer to paragraph 19.3(c) of Part II (Explanatory Statement) of this document for
further information concerning the making of an ADS Election and to paragraph 5 of Part
V (Takeda Securities) of this document for summary details of the New Takeda ADSs; or(d)in the case of a Shire Shareholder who holds 200 or fewer Shire Shares in certificated form
as at the Scheme Record Time and has a registered address in the EEA, Channel Islands,
Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to have all (butnot some only) of the New Takeda Shares which they are entitled to receive pursuant to
the Scheme sold on their behalf under the Dealing Facility and to have the net proceedsof such sale (after deduction of all expenses and commissions incurred in connection withsuch sale) remitted to them in pounds Sterling (by completing Part 4D on the WHITE
Certificated Form of Election) (a “Dealing Facility Election”). Please refer to paragraph19.3(d) of Part II (Explanatory Statement) of this document for further information
concerning the making of a Dealing Facility Election.

Flowcharts explaining the availability of the above Elections are included on pages 16 to 18 anddetails of how to complete the Certificated Form of Election are included in the notes whichaccompany the Certificated Form of Election.

211

If you hold Shire Shares in certificated form and wish to make a Securities Election, you
should complete at least one of Part 4A, Part 4B, Part 4C or Part 4D (as applicable) of, andsign, the WHITE Certificated Form of Election in accordance with the instructions printed
thereon and return it to Equiniti, Corporate Actions, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, United Kingdom. A pre-paid envelope, for use in the
United Kingdom only, is enclosed for your convenience.
Shire Shareholders who hold their Shire Shares in certificated form are not eligible to elect toreceive CDIs representing New Takeda ADSs.
In certain cases, Shire Shareholders are permitted to split their holding of Shire Shares such thatthey may make multiple Securities Elections in relation to their holding. Further details are set out
in paragraph 5 in this Part IX.
2.

Elections by Shire Shareholders holding Shire Shares in uncertificated form (that is, in
CREST)

If you are a CREST personal member, you should refer to your CREST sponsor before taking any
action. Your CREST sponsor will be able to confirm details of your participant ID and the member
account ID under which your Shire Shares are held. In addition, only your CREST sponsor will be able
to send any TTE Instruction to Euroclear in relation to your Shire Shares.
2.1

Currency Elections and ADS Elections to receive CDIs representing New Takeda ADSs(a)Currency Elections
Unless they elect otherwise, each Shire Shareholder who holds Shire Shares in
uncertificated form (that is, in CREST) at the Scheme Record Time and does notmake a valid Currency Election will receive the cash portion of the Consideration
which is payable to them under the Scheme in US Dollars. Such Shire Shareholders
may elect to have the US Dollar cash portion of the Consideration which is payable to themunder the Scheme instead paid in pounds Sterling (net of any applicable customarytransaction and dealing costs associated with the conversion) at the applicable market
exchange rate on the latest reasonably practicable date for fixing such rate before therelevant payment date under the Currency Conversion Facility.
If you hold Shire Shares in uncertificated form and wish to make a Currency
Election, you must issue a TTE Instruction through CREST using the proceduredescribed in paragraph 2.1(c) of this Part IX.
Each Shire Shareholder who holds Shire Shares in uncertificated form and does notmake a valid Currency Election must ensure that an active US Dollar CashMemorandum Account is in place in CREST by no later than the Scheme Record
Time. In the absence of a US Dollar Cash Memorandum Account, the payment of the cash
portion of the Consideration will not settle, resulting in a delay and the settlement of the
cash portion of the Consideration outside of CREST.

(b)

ADS Elections to receive CDIs representing New Takeda ADSs
Shire Shareholders who hold Shire Shares in uncertificated form (that is, in CREST) at the
Scheme Record Time may elect to receive CDIs representing New Takeda ADSs bymaking the relevant TTE Instruction through CREST using the procedure described inparagraph 2.1(c) of this Part IX.
The CDIs representing New Takeda ADSs will not carry any voting rights in Takeda(unless and to the extent such CDIs are cancelled such that the Takeda ADSs areheld through DTC by settling a cross-border delivery transaction in respect of theunderlying New Takeda ADSs through CREST to a DTC participant).

212

Furthermore, the holders of CDIs representing New Takeda ADSs may not be able
to claim either: (i) a reduction, pursuant to a double taxation convention, of the rateof 15.315 per cent. at which it is expected that tax will be withheld under Japanese
law from dividends (or other distributions deemed to be dividends for Japanese tax
purposes) made or paid by Takeda in respect of New Takeda Shares underlying New
Takeda ADSs represented by CDIs; or (ii) a refund of such tax withheld in excess of
the rate provided for in a double taxation convention. If holders of CDIs representing
New Takeda ADSs intend to claim the benefit of any applicable double taxation convention,
they may wish to cancel their CDIs as soon as practicable after the Effective Date so as toreceive the underlying New Takeda ADSs. Your attention is drawn to paragraph 3.2(a) ofPart VII (Taxation) of this document, which contains certain general comments on theJapanese tax treatment of dividends (or other distributions deemed to be dividends forJapanese tax purposes) made or paid by Takeda.
(c)Form of TTE Instruction
In order to make a Currency Election and/or ADS Election to receive CDIs representing
New Takeda ADSs, CREST sponsors should send a TTE Instruction to Euroclear whichmust be properly authenticated in accordance with Euroclear’s specifications and whichmust contain, in addition to the other information that is required for a TTE Instruction tosettle in CREST, the following:(i)the number of Shire Shares in respect of which: (i) the Currency Election; (ii) the
ADS Election to receive CDIs representing New Takeda ADSs; or (iii) the combined
Currency Election and ADS Election to receive CDIs representing New Takeda
ADSs, is being made (such Shire Shares to be transferred to an escrow balance);(ii)

their member account ID;(iii)

their participant ID;(iv)

the participant ID of the escrow agent, Equiniti, in its capacity as a CREST
Receiving Agent; this is “2RA51”;(v)

the relevant member account ID(s) of the escrow agent, Equiniti, in its capacity asa CREST Receiving Agent:(A)

to make a Currency Election only, this is “RA288202”;(B)

to make an ADS Election to receive CDIs representing New Takeda ADSs
only, this is “RA288203”; and(C)

to make a combined Currency Election and an ADS Election to receive CDIs
representing New Takeda ADSs, this is “RA288204”;(vi)

the ISIN of the relevant Shire Shares (this is “JE00B2QKY057”);(vii)

the intended settlement date (this should be as soon as possible and in any eventby the TTE Instruction Return Time);(viii)

the corporate action number for the transaction; this is allocated by Euroclear andcan be found by viewing the relevant corporate action details on-screen in CREST;(ix)

CREST standard delivery instructions priority of 80; and(x)a contact name and telephone number (inserted in the shared note field of the TTE
Instruction).

After making the TTE Instruction, the CREST sponsor will not be able to access the Shire
Shares concerned in CREST for any transaction or for charging purposes. If the Scheme213

is implemented in accordance with its terms, the escrow agent will arrange for thecancellation of the Shire Shares. Shire Shareholders who hold Shire Shares in
uncertificated form are recommended to refer to the CREST Manual published by
Euroclear for further information on the CREST procedure outlined above.
Shire Shareholders should note that Euroclear does not make available special
procedures in CREST for any particular corporate action. Normal system timings andlimitations will therefore apply in connection with a TTE Instruction and its settlement. Shire
Shareholders should therefore ensure that all necessary action is taken by them (or by
their CREST sponsor) to enable a TTE Instruction relating to their Shire Shares to settle
before the TTE Instruction Return Time. In doing so, Shire Shareholders are referred inparticular to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
A Shire Shareholder may make a Currency Election and/or an ADS Election to receive
CDIs representing New Takeda ADSs in respect of all or part of their holding of Shire
Shares at the Scheme Record Time.
If you hold Shire Shares in both certificated and uncertificated form and you wish to makea Currency Election and/or an ADS Election to receive CDIs representing New Takeda
ADSs in respect of both such holdings, you must make a separate election in respect ofeach holding.
2.2

Securities Election (other than an ADS Election to receive CDIs representing New Takeda
ADSs)
Securities Elections are required to be made outside of CREST by the completion of the CREST
Form of Election (other than an ADS Election to receive CDIs representing New Takeda ADSs –in respect of which please see paragraphs 2.1(b) and 2.1(c) of this Part IX).
Shire Shareholders who make a valid JASDEC Election, Corporate Nominee Election
and/or ADS Election (other than an ADS Election to receive CDIs representing New Takeda
ADSs) will not receive their entitlement to New Takeda Shares or New Takeda ADSs (asapplicable) settled through the CREST system. CREST participants will need to resolve
their settlement obligations bilaterally with their counterparty.
Subject to the terms and conditions set out in this document, each Shire Shareholder (other thana Restricted Shire Shareholder) who holds Shire Shares in uncertificated form (that is, in CREST)at the Scheme Record Time may, in relation to their holding of Shire Shares, make at least oneof the following Elections (each a “Securities Election”):(a)elect to hold the New Takeda Shares which they are entitled to receive pursuant to the
Scheme in their own JASDEC Account (by completing Part 4A on the GREEN CREST
Form of Election) (a “JASDEC Election”). Please refer to paragraphs 19.1 and 19.3(a) ofPart II (Explanatory Statement) of this document for a summary of the background to
holding New Takeda Shares through a JASDEC Account and for further information
concerning the making of a JASDEC Election;(b)in the case of a Shire Shareholder who has a registered address in the EEA, Channel
Islands, Isle of Man, Switzerland or Gibraltar as at the Scheme Record Time, elect to havethe New Takeda Shares which they are entitled to receive pursuant to the Scheme held on
their behalf through the Corporate Nominee Facility, subject to the Corporate Nominee
Facility Terms and Conditions (by completing Part 4B on the GREEN CREST Form ofElection) (a “Corporate Nominee Election”). Please refer to paragraph 19.3(b) of Part II(Explanatory Statement) of this document for further information concerning the making ofa Corporate Nominee Election and to paragraph 21 Part II (Explanatory Statement) of thisdocument for summary details of the Corporate Nominee Facility; or

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(c)

elect to receive 1.678 New Takeda ADSs (each New Takeda ADS representing 0.5 New
Takeda Shares) for each Shire Share they hold instead of the 0.839 New Takeda Shares
per Shire Share which they would otherwise have been entitled to receive pursuant to the
Scheme, subject to the terms and conditions applicable to the New Takeda ADSs (an “ADSElection”). Shire Shareholders may make an ADS Election: (i) by completing Part 4C on
the GREEN CREST Form of Election, so as to receive New Takeda ADSs through DTC or
directly through the direct registration system; or (ii) by making the relevant TTE Instruction
through CREST, so as to receive CDIs representing New Takeda ADSs (in respect ofwhich please see paragraphs 2.1(b) and 2.1(c) of this Part IX) Please refer to paragraph19.3(c) of Part II (Explanatory Statement) of this document for further information
concerning the making of an ADS Election and to paragraphs 5 and 6 of Part V (Takeda
Securities) of this document for summary details of the New Takeda ADSs and CDIs
representing New Takeda ADSs.

Shire Shareholders who hold their Shire Shares in uncertificated form are not eligible to make an
Election for the Dealing Facility.
If you hold Shire Shares in uncertificated form (that is, in CREST) and wish to make a
Securities Election (other than an ADS Election to receive CDIs representing New Takeda
ADSs), you should complete at least one of Part 4A, Part 4B or Part 4C (as applicable) of,and sign, the GREEN CREST Form of Election in accordance with the instructions printed
thereon and return it to Equiniti, Corporate Actions, Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, United Kingdom. A pre-paid envelope, for use in the
United Kingdom only, is enclosed for your convenience.
If you hold Shire Shares in uncertificated form (that is, in CREST) and wish to make an
ADS Election to receive CDIs representing New Takeda ADSs, you must make the relevant
TTE Instruction through CREST (see paragraphs 2.1(b) and 2.1(c) of this Part IX).
In certain cases, Shire Shareholders are permitted to split their holding of Shire Shares such thatthey may make multiple Securities Elections in relation to their holding. Further details are set out
in paragraph 5 in this Part IX.
Flowcharts explaining the availability of the above Elections are included on pages 16 to 18 anddetails of how to complete the CREST Form of Election are included in the notes whichaccompany the CREST Form of Election.
3.

Notes on making a Corporate Nominee Election

Shire Shareholders must provide applicable Customer Identification and Verification documents (as set
out in the notes which accompany the Forms of Election) when returning their Form of Election to makea valid Corporate Nominee Election.
4.

Notes on making ADS Elections to receive New Takeda ADSs

Shire Shareholders requesting delivery of New Takeda ADSs to their broker or other securities
intermediary in DTC must include information about a DTC participant account, including a valid DTC
participant name, DTC participant account number and the other information requested in Part 4C of
the Form of Election, to allow the Takeda Depositary to complete delivery of the New Takeda ADSs.
Such Shire Shareholders should contact their broker or other securities intermediary to request that it,or the DTC participant through which it clears, inputs valid instructions to receive delivery of the New
Takeda ADSs free of payment from the Takeda Depositary’s DTC participant account (account number
2504). The Takeda Depositary expects to commence delivery of the New Takeda ADSs to DTC
accounts on or after the second Business Day following the Effective Date, subject to receipt of the New
Takeda Shares at its custodian bank and valid delivery instructions. The Takeda Depositary may contact
the DTC participant using the contact information supplied in the Form of Election in order to completedelivery of the New Takeda ADSs.
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If the Takeda Depositary is unable to complete delivery of the New Takeda ADSs within 30 days of thedate on which the Takeda Depositary first attempted to commence delivery, the Takeda Depositary willregister the New Takeda ADSs and mail a Direct Registration Statement to the relevant Shire
Shareholder in accordance with the information supplied in Part 1 of the Form of Election.
5.

Split Securities Elections

Shire Shareholders are permitted to split their holding of Shire Shares such that they may make asingle, separate JASDEC Election, Corporate Nominee Election and/or an ADS Election in respect ofsome of or all of their Shire Shares at the Scheme Record Time on the same Form of Election.
Shire Shareholders are not permitted to make multiple JASDEC Elections, Corporate Nominee
Elections and/or ADS Elections in relation to any part of their holding of Shire Shares (i.e., a Shire
Shareholder may not make more than one JASDEC Election in respect of their holding, nor may a Shire
Shareholder make more than one Corporate Nominee Election in respect of their holding, nor may a
Shire Shareholder make more than one ADS Election in respect of their holding).
Shire Shareholders may only make a Dealing Facility Election in respect of their entire holding of Shire
Shares. A Dealing Facility Election made by a Shire Shareholder in respect of a specified number orpart of their holding of Shire Shares shall be treated as having been made in respect of their entire
holding of Shire Shares and any other Securities Election(s) which is purported to have been made bysuch Shire Shareholder shall be invalid.
6.

Failure to make a valid Securities Election

Each Shire Shareholder who does not make a valid Securities Election in respect of all of their
Shire Shares will receive 0.839 New Takeda Shares for each Shire Share they hold at the Scheme
Record Time in respect of which no such Securities Election has been made. Such New Takeda
Shares will be held in the name of the Representative as bare trustee for such Shire Shareholder until
the earlier of: (i) the delivery of a valid Securities Election by such Shire Shareholder to Equiniti inrelation to the action which should be taken in respect of the New Takeda Shares (in which case theRepresentative will procure that such action is taken as is required in order to give effect to such
Securities Election); and (ii) the date which falls three months from the Effective Date (in which case
the Representative will procure that such New Takeda Shares are sold in the market in accordance with
the Sales Policy and that the net proceeds of sale (after the deductions specified in the Sales Policy)
are paid to such Shire Shareholder).
Shire Shareholders who hold their Shire Shares in uncertificated form (that is, in CREST) at the
Scheme Record Time may only make an ADS Election to receive CDIs representing New Takeda ADSs
by making a TTE Instruction before the TTE Instruction Return Time. As the CREST system will bedisabled from the Scheme Record Time, it will not be possible to make a TTE Instruction to receive
CDIs representing New Takeda ADSs after the TTE Instruction Return Time.
New Takeda Shares held in the name of the Representative as bare trustee for Shire Shareholders who
have not made a valid Securities Election in respect of all of their Shire Shares will carry the right toreceive any dividends, distributions or other returns of capital announced, declared, made or paid by
Takeda by reference to a record date falling after the Effective Date but before the date on which such
New Takeda Shares are either: (i) transferred out of the No Action Sub-Account or sold through the
Dealing Facility pursuant to a valid Securities Election; or (ii) sold in the market pursuant to the Sales
Policy. Once any such dividends, distributions or other returns of capital are received by the Fiduciaryon behalf of the Representative acting as bare trustee for the relevant Shire Shareholders (including, if
applicable, any dividends, distributions or other returns of capital received after the relevant New
Takeda Shares have been sold where the relevant dividend, distribution or other return of capital was
declared, made or paid by reference to a record date falling after the Effective Date, but before the dateof sale), Takeda will procure that they will be paid to relevant Shire Shareholders in: (i) pounds Sterlingto Shire Shareholders who held their Shire Shares in certificated form and have a registered addressin the United Kingdom, Channel Islands or Isle of Man as at the Scheme Record Time; and (ii) US

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Dollars to all other Shire Shareholders, in each case converted at the applicable market exchange rateon the latest reasonably practicable date for fixing such rate prior to the rate of payment and net of any
applicable customary transaction and dealing costs associated with the conversion. Shire Shareholders
should note that Japanese withholding tax at a standard rate of 15.315 per cent. will be applied to any
dividends (or other distributions deemed to be dividends for Japanese tax purposes) prior to their
payment to the Fiduciary. Shire Shareholders should note that, to the extent that Shire Shareholders
hold their New Takeda Shares through the No Action Sub-Account, it is expected that Shire
Shareholders who are entitled to the benefit of a double taxation convention would face significant
practical difficulties if they were to try and apply for a refund of any tax withheld in excess of theapplicable treaty rate. Takeda’s usual practice is to determine a dividend record date of March 31, withpayment of the dividend taking place in June.
7.

Deadline for return of Forms of Election and TTE Instructions

The last time for Equiniti to receive your Form of Election will be 6.00 p.m. (London time) on
January 2, 2019. You should allow sufficient time for posting for your Form of Election to be received
on time.
The last time for receiving a TTE Instruction through CREST (applicable only for Shire
Shareholders who hold their Shire Shares in uncertificated form and who wish to make anelection: (i) under the Currency Conversion Facility; and/or (ii) to receive CDIs representing New
Takeda ADSs), will be 6.00 p.m. (London time) on January 4, 2019.
Any changes to the Election Return Time (the last time for Equiniti to receive your Form of Election or
for a TTE Instruction to be received) will be announced by Shire through a Regulatory Information
Service, with such announcement being made available on Shire’s and Takeda’s websites at
www.shire.com and www.takeda.com, respectively, and communicated to Shire Shareholders at aroundthe same date as such announcement.
8.

Changes to the number of Shire Shares held by a Shire Shareholder

If a Shire Shareholder has made a valid Election in respect of all of their Shire Shares (i.e., by marking“ALL” in the relevant part of a Form of Election or by making a Dealing Facility Election in respect of allof their Shire Shares), then the validity of such Election will not be affected by any increase or decreasein the number of Shire Shares held by the Shire Shareholder at any time before the Scheme Record
Time. Accordingly, such Election will apply in respect of all of the Shire Shares which the Shire
Shareholder holds at the Scheme Record Time.
If a Shire Shareholder has made one or more valid Elections in respect of a number of Shire Shares(i.e., by writing a number of shares on the Form of Election and/or TTE Instruction (as applicable)), then,in the event that the number of Shire Shares held by the relevant Shire Shareholder at the Scheme
Record Time:(a)is less than the aggregate number of Shire Shares to which the Election(s) relate, then each such
Election will apply pro rata in respect of the number of Shire Shares which the Shire Shareholder
holds at the Scheme Record Time; and(b)

is greater than the aggregate number of Shire Shares to which the Election(s) relate, each such
Election will apply only in respect of the number of Shire Shares specified in the relevant Formof Election and/or TTE Instruction (as applicable) and any Shire Shares which are not the subjectof a valid Securities Election shall be treated in accordance with paragraph 6 of this Part IX.

In the event that a pro rata reduction is applied in respect of an Election as described in (a) above, andsuch reduction would result in the apportionment of a fraction of a Shire Share between two or more
Election options, the number of Shire Shares apportioned to each such Election shall be rounded down
to the nearest whole number and the aggregate of any fractions resulting therefrom shall: (i) subject tothe relevant Shire Shareholder having made a valid ADS Election in respect of some of their holding of217

Shire Shares, be treated as having been the subject of a valid ADS Election; or (ii) otherwise be treatedas having been the subject of a valid JASDEC Election.
TTE Instructions in relation to Currency Elections and/or ADS Elections to receive CDIs representing
New Takeda ADSs may only be made in relation to a specified number of Shire Shares.
9.

Elections other than for a whole number of Shire Shares

Elections will only be accepted in respect of a whole number of Shire Shares. Any Election which ismade in respect of a number of Shire Shares which is not a whole number shall be deemed to be madein respect of the nearest whole number of Shire Shares when rounded down.
10.

Withdrawals

If you have returned a Form of Election and subsequently wish to withdraw or amend that Election,please contact Equiniti in writing by 1.00 p.m. (London time) on the Business Day immediately prior to
the date of the Election Return Time (which is expected to be January 2, 2019). Please clearly specify
whether you would like to withdraw or amend the Election that you have made and ensure that yourrequest contains an original signature. Any written requests of this nature should be sent to Equiniti. It
is at Equiniti’s absolute discretion to require the submission of a new Form of Election if an amendment
is requested.
If you made an Election for the Currency Conversion Facility or an ADS Election to receive CDIs
representing New Takeda ADSs through a TTE Instruction, you may withdraw your Election throughCREST by sending (or, if you are a CREST sponsored member, procuring that your CREST sponsor
sends) an ESA Instruction to settle in CREST by no later than 1.00 p.m. (London time) on the Business
Day immediately prior to the date of the Scheme Record Time (which is expected to be January 3,2019) in relation to the relevant Election. Each ESA Instruction must, in order for it to be valid and tosettle, include the following:(a)the number of Shire Shares to be withdrawn, together with their ISIN number, which is“JE00B2QKY057”;(b)

your member account ID;(c)your participant ID;(d)the participant ID of the escrow agent, Equiniti, in its capacity as a CREST Receiving Agent; thisis “2RA51”;(e)

the relevant member account ID of the escrow agent, Equiniti:(i)

to withdraw a Currency Election only, this is “RA288202”;(ii)

to withdraw an ADS Election to receive CDIs representing New Takeda ADSs only, this is“RA288203”; and(iii)

to withdraw a combined Currency Election and an ADS Election to receive CDIs
representing New Takeda ADSs, this is “RA288204”;(f)

the CREST transaction ID of the Election to be withdrawn;(g)

the intended settlement date for the withdrawal;(h)the corporate action number for the transaction; this is allocated by Euroclear and can be foundby viewing the relevant corporate action details on-screen in CREST; and(i)

CREST standard delivery instructions priority of 80.

Any such withdrawal will be conditional upon the Receiving Agent verifying that the withdrawal request
is validly made. Accordingly, the Receiving Agent will on behalf of Shire and Takeda reject or accept the218withdrawal or amendment by transmitting in CREST a receiving agent reject (AEAD) or receiving agent
accept (AEAN) message.
11.

Late or incomplete Elections

If any Form of Election is received after the Election Return Time, which is currently expected to be 6.00
p.m. (London time) on January 2, 2019 (or such later time (if any) to which the right to make an Election
may be extended) or any TTE Instruction is received after the TTE Instruction Return Time, which iscurrently expected to be 6.00 p.m. (London time) on January 4, 2019 (or such later time (if any) to which
the right to make a Currency Election or an ADS Election to receive CDIs representing New Takeda
ADSs by way of TTE Instruction may be extended), or such Form of Election or TTE Instruction isreceived before the relevant time and date but is not valid or complete in all respects at such time anddate, such Election or TTE Instruction (as applicable) shall, for all purposes, subject to the following
paragraph, be void (unless Shire and Takeda, in their absolute discretion, determine to treat as valid, inwhole or in part, any such Election or TTE Instruction (as applicable)).
If a Securities Election (other than an ADS Election to receive CDIs representing New Takeda ADSs) in
relation to the action which should be taken in respect of New Takeda Shares is submitted after theElection Return Time but before the date falling three months after the Effective Date, and, but for being
submitted after the Election Return Time, is otherwise valid, the relevant New Takeda Shares will, as
soon as reasonably practicable after receipt of the Securities Election, be transferred to the designated
JASDEC Account or the Takeda Depositary’s JASDEC Account, recorded to the relevant Personal SubAccount or sold through the Dealing Facility, as the case may be.
Shire Shareholders who hold their Shire Shares in uncertificated form (that is, in CREST) at the
Scheme Record Time may only make an ADS Election to receive CDIs representing New Takeda
ADSs by making a TTE Instruction before the TTE Instruction Return Time. As the CREST
system will be disabled from the Scheme Record Time, it will not be possible to make a TTE
Instruction to receive CDIs representing New Takeda ADSs after the TTE Instruction Return
Time.
12.

GeneralWithout prejudice to any other provision of this section or the Form of Election or otherwise, Shire andTakeda reserve the right (subject to the terms of the Acquisition and the provisions of the TakeoverCode) to treat as valid in whole or in part any Election which is not entirely in order.
No acknowledgements of receipt of any Form of Election, TTE Instruction or other documents will begiven. All communications, notices, other documents and remittances to be delivered by or to or sent
to or from Shire Shareholders (or their designated agent(s)) or as otherwise directed will be deliveredby or to or sent to or from such Shire Shareholders (or their designated agent(s)) at their own risk.
Shire, Takeda and their respective agents reserve the right to notify any matter to all or any Shire
Shareholders with registered addresses outside Jersey or the United Kingdom or to the nominees,trustees or custodians for such Shire Shareholders by announcement in Jersey or the United Kingdom
or paid advertisement in any daily newspaper published and circulated in Jersey or the United Kingdom
or any part thereof, in which case such notice shall be deemed to have been sufficiently given
notwithstanding any failure by any such Shire Shareholders to receive or see such notice. All referencesin this document to notice in writing, or the provision of information in writing, by or on behalf of Shire,
Takeda and their respective agents shall be construed accordingly. No such document shall be sent toan address outside Jersey or the United Kingdom where it would or might infringe the laws of thatjurisdiction or would or might require Shire or Takeda to obtain any governmental or other consent or toeffect any registration, filing or other formality with which, in the opinion of Shire or Takeda, it would beunable to comply or which it regards as unduly onerous.

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The Forms of Election, TTE Instructions and all Elections thereunder, and all action taken or made ordeemed to be taken or made pursuant to any of these terms, shall be governed by and interpreted inaccordance with Jersey law and shall be subject to the jurisdiction of the Court.
Execution of a Form of Election and/or the submission of a TTE Instruction (as applicable) by, or on
behalf, of a Shire Shareholder will constitute such Shire Shareholder’s agreement that the Court is(subject to the paragraph below) to have exclusive jurisdiction to settle any dispute or claim arising outof or in connection with the creation, validity, effect, interpretation or performance of the Form ofElection and/or TTE Instruction (as applicable), and for such purposes that such Shire Shareholder
irrevocably submits to the jurisdiction of the Court.
Execution of a Form of Election and/or the submission of a TTE Instruction (as applicable) by, or on
behalf of, a Shire Shareholder will constitute their agreement that the agreement in the paragraphabove is included for the benefit of Shire, Takeda and their respective agents and accordingly,
notwithstanding the agreement in the paragraph above, each of Shire, Takeda and their respective
agents shall retain the right to, and may in its absolute discretion, bring proceedings in the courts of any
other country which may have jurisdiction and that the electing Shire Shareholder irrevocably submits
to the jurisdiction of the courts of any such country.
If the Scheme is not implemented in accordance with its terms, any Election made or deemed to bemade shall cease to be valid.
Neither Shire, Takeda nor any of their respective advisers or any person acting on behalf of any one ofthem shall have any liability to any person for any loss or alleged loss arising from any decision as tothe treatment of Elections made or deemed to have been made under the Scheme on any of the bases
set out in this section or otherwise in connection therewith.
13.

Shire ADS Holders

The Shire Depositary will make an ADS Election in respect of its entire holding of Shire Shares
underlying the Shire ADSs as at the Scheme Record Time. Consequently, as each Shire ADS
represents three Shire Shares, Shire ADS Holders will receive $90.99 in cash and 5.034 New
Takeda ADSs (upon surrender of their certificated Shire ADSs (if applicable) to the Shire
Depositary after the Scheme Effective Time) for every Shire ADS which they hold at the ADS
Effective Date, subject to any deductions in respect of US backup withholding.
Shire ADS Holders are not entitled to make Elections in respect of their Shire ADSs. If a Shire ADS
Holder does not wish to receive the Consideration in US Dollars and New Takeda ADSs, and instead
wishes to make an Election, Shire ADS Holders must take delivery of Shire Shares directly. In order todo so, Shire ADS Holders must take steps to present their Shire ADSs to the Shire Depositary forcancellation before 5.00 p.m. (New York time) on December 26, 2018 (subject to the relevant Shire ADS
Holder’s compliance with the terms of the Shire Deposit Agreement and payment of the Shire
Depositary’s fees for Shire ADSs that are presented for cancellation prior to 5.00 p.m. on November 23,2018) and take delivery of Shire Shares so as to become Shire Shareholders before the Scheme
Record Time.
Shire ADS Holders should note that the last time for Equiniti to receive Forms of Election from Shire
Shareholders is 6.00 p.m. (London time) on January 2, 2019 and the last time for receipt of TTE
Instructions is 6.00 p.m. (London time) on January 4, 2019. Accordingly, Shire ADS Holders who wish
to present their Shire ADSs to the Shire Depositary for cancellation are advised to do so well in advanceof 5.00 p.m. (New York time) on December 26, 2018 in order to allow themselves sufficient time tosubmit a valid Election in respect of their Shire Shares.
Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m. (New Yorktime) on November 23, 2018 until 8.00 a.m. (New York time) on December 4, 2018. Shire ADS
Holders who present their Shire ADSs to the Shire Depositary for cancellation prior to 5.00 p.m. (NewYork time) on November 23, 2018 in order to take delivery of Shire Shares will be responsible for thepayment of the Shire Depositary’s fees associated with such cancellation. Shire ADS Holders who

220present their Shire ADSs to the Shire Depositary for cancellation between 8:00 a.m. (New York time) on
December 4, 2018 and 5.00 p.m. (New York time) on December 26, 2018 in order to take delivery of
Shire Shares will not be responsible for the payment of the Shire Depositary’s fees associated with suchcancellation.
Further information for Shire ADS holders is set out at Part X (Further information for Shire ADS
Holders) of this document.
14.

Overseas Shareholders

Further details about the availability of the Scheme and the Acquisition to Overseas Shareholders are
set out in paragraph 27 of Part II (Explanatory Statement) of this document.
If you are a Restricted Shire Shareholder, you will not be sent a WHITE Certificated Form of Election
or a GREEN CREST Form of Election and will not be entitled to make any Elections under such forms
or by TTE Instruction.

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PART XFURTHER INFORMATION FOR SHIRE ADS HOLDERS
1.

The Acquisition

As each Shire ADS represents three Shire Shares, under the terms of the Acquisition, the Scheme
becoming effective will result, in effect, in each Shire ADS Holder being entitled to 90.99 US Dollars incash and 5.034 New Takeda ADSs, in each case for each Shire ADS, which is to be settled inaccordance with, and subject to the deductions more particularly described in, paragraph 5 of thisPart X.
2.

The Scheme

On the Effective Date, all the Shire Shares as at the Scheme Record Time which are represented by
the outstanding Shire ADSs will be transferred to Takeda (or such of its nominee(s) as are agreed
between Takeda and Shire) in consideration for the Consideration payable by, or on behalf of, Takeda
to the Shire Depositary. Shire ADS Holders will receive their pro rata share of the Consideration, in
respect of each Shire ADS they hold at the ADS Effective Date, through the settlement proceduredescribed in paragraph 5 of this Part X.
3.

VotingShire ADS Holders have been sent an ADS Voting Card and a Notice of Court Meeting andExtraordinary General Meeting by the Shire Depositary. A Shire ADS Holder can vote, or direct thevoting of, the Shire Shares represented by its Shire ADSs in a number of ways.
Voting via the Shire Depositary: Shire ADS Holders as at the ADS Voting Record Time of 5.00 p.m.
(New York time) on November 7, 2018 should, if they wish to direct the voting of the Shire Shares
represented by their Shire ADSs that are held by the Shire Depositary (or its nominee), sign, complete
and return the ADS Voting Card in accordance with the instructions printed thereon and in the Noticeof Court Meeting and Extraordinary General Meeting received from the Shire Depositary in order to
instruct the Shire Depositary how to vote the Shire Shares represented by their Shire ADSs on theirbehalf at the Court Meeting and the Shire General Meeting. The ADS Voting Card should be returned
by mail to Shire plc, c/o Citibank Shareholder Services, PO Box 43099, Providence RI 02940-5000,
USA, as soon as possible and, in any event, so as to be received no later than 10.00 a.m. (New Yorktime) on November 29, 2018 or if either the Court Meeting or the Shire General Meeting is adjourned,
such later date as may be notified by the Shire Depositary, having consulted with Shire. Alternatively,
Shire ADS Holders as at the ADS Voting Record Time of 5.00 p.m. (New York time) on November 7,
2018 may instruct the Shire Depositary with voting instructions by internet or telephone, as set out inthe instructions printed on the ADS Voting Card and in the Notice of Court Meeting and Extraordinary
General Meeting received from the Shire Depositary.
Shire ADS Holders who hold their Shire ADSs indirectly must follow the instructions from theircustodian, broker or other agent through which they hold their Shire ADSs if they wish to give voting
instructions to the Shire Depositary. Providing voting instructions via a custodian, broker or other agent
may require the provision of information by a particular deadline, well in advance of the deadline to give
the Shire Depositary voting instructions, and therefore you are encouraged to reach out to suchcustodian, broker or other agent for any such deadline as quickly as possible.
Following timely receipt of a signed and completed ADS Voting Card (or instructions by internet or
telephone) from a Shire ADS Holder, the Shire Depositary shall endeavour, insofar as practicable andpermitted under the provisions of, or governing, the Shire Shares represented by Shire ADSs, to voteor cause its nominee to vote (by means of the appointment of a proxy or otherwise) such Shire Shares
represented by the Shire ADSs in respect of which instructions have been received in accordance withthose instructions.

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Cancellation of Shire ADSs so as to become a Shire Shareholder: Shire ADS Holders who wish toattend the Court Meeting and/or the Shire General Meeting must take steps to present their Shire ADSs
(and, to the extent that such Shire ADSs are certificated, the certificates evidencing such Shire ADSs)
to the Shire Depositary for cancellation before 5.00 p.m. (New York time) on November 23, 2018(subject to the relevant Shire ADS Holder’s compliance with the terms of the Shire Deposit Agreement
and payment of the Shire Depositary’s fees), together with: (i) delivery instructions for the Shire Shares
represented by such Shire ADSs (including, if applicable, the name and address of the person who willbe the registered holder of such Shire Shares); and (ii) if the cancellation is to take place before theShire Meetings, a certification that the Shire ADS Holder: (x) beneficially owned the relevant Shire ADSs
as at the ADS Voting Record Time and has not given, and will not give, voting instructions to the Shire
Depositary in respect of such Shire ADSs in relation to the Shire Meetings (or has cancelled all voting
instructions previously given); (y) beneficially owned the relevant Shire ADSs as at the ADS Voting
Record Time and has given voting instructions to the Shire Depositary in respect of such Shire ADSs
in relation to the Shire Meetings, but undertakes not to vote the Shire Shares represented by such Shire
ADSs at the Shire Meetings; or (z) did not beneficially own the relevant Shire ADSs as at the ADS Voting
Record Time, but undertakes not to vote the Shire Shares represented by such Shire ADSs at the Shire
Meetings. Shire ADS Holders who hold their Shire ADSs in a brokerage, bank, custodian or othernominee account should promptly contact their broker, bank or other nominee to find out what actions
are required to instruct the broker, bank or other nominee to cancel the Shire ADSs on their behalf.
Shire ADS Holders who present their Shire ADSs to the Shire Depositary for cancellation prior to
5.00 p.m. (New York time) on November 23, 2018 in order to take delivery of Shire Shares will be
responsible for the payment of the Shire Depositary’s fees associated with such cancellation.
Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m. (New Yorktime) on November 23, 2018 until 8.00 a.m. (New York time) on December 4, 2018. Shire ADS
Holders who take steps (as described in the paragraphs above) to cancel their Shire ADSs before
5.00 p.m. (New York time) on November 23, 2018 and become Shire Shareholders before the Voting
Record Time will also have the right to attend the Court Sanction Hearing in person and be represented
by counsel to support or oppose the sanctioning of the Scheme.
4.

Elections

The Shire Depositary will make an ADS Election in respect of its entire holding of Shire Shares
underlying the Shire ADSs as at the Scheme Record Time. Consequently, as each Shire ADS
represents three Shire Shares, Shire ADS Holders will receive $90.99 in cash and 5.034 New
Takeda ADSs (upon surrender of their certificated Shire ADSs (if applicable) to the Shire
Depositary after the Scheme Effective Time) for every Shire ADS which they hold at the ADS
Effective Date, subject to any deductions in respect of US backup withholding (see paragraph 5of this Part X).
Shire ADS Holders are not entitled to make Elections in respect of their Shire ADSs. If a Shire ADS
Holder does not wish to receive the Consideration in US Dollars and New Takeda ADSs, and instead
wishes to make an Election, Shire ADS Holders must take delivery of Shire Shares directly. In order todo so, Shire ADS Holders must take steps to present their Shire ADSs to the Shire Depositary forcancellation before 5.00 p.m. (New York time) on December 26, 2018 (subject to the relevant Shire ADS
Holder’s compliance with the terms of the Shire Deposit Agreement and payment of the Shire
Depositary’s fees for Shire ADSs that are presented for cancellation prior to 5.00 p.m. on November 23,2018) and take delivery of Shire Shares so as to become Shire Shareholders before the Scheme
Record Time.
Shire ADS Holders should note that the last time for Equiniti to receive Forms of Election from Shire
Shareholders is 6.00 p.m. (London time) on January 2, 2019 and the last time for receipt of TTE
Instructions is 6.00 p.m. (London time) on January 4, 2019. Accordingly, Shire ADS Holders who wish
to present their Shire ADSs to the Shire Depositary for cancellation are advised to do so well in advanceof 5.00 p.m. (New York time) on December 26, 2018 in order to allow themselves sufficient time tosubmit a valid Election in respect of their Shire Shares.
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Shire ADS Holders will not be permitted to cancel their Shire ADSs from 5.00 p.m. (New Yorktime) on November 23, 2018 until 8.00 a.m. (New York time) on December 4, 2018.
Shire ADS Holders who present their Shire ADSs to the Shire Depositary for cancellation prior to
5.00 p.m. (New York time) on November 23, 2018 in order to take delivery of Shire Shares will be
responsible for the payment of the Shire Depositary’s fees associated with such cancellation. Shire ADS
Holders who present their Shire ADSs to the Shire Depositary for cancellation between 8:00 a.m. (NewYork time) on December 4, 2018 and 5.00 p.m. (New York time) on December 26, 2018 in order to takedelivery of Shire Shares will not be responsible for the payment of the Shire Depositary’s fees
associated with such cancellation.
5.

Settlement

On the Effective Date, Shire Shares as at the Scheme Record Time represented by the Shire ADSs willbe transferred to Takeda (or such of its nominee(s) as are agreed between Takeda and Shire). Within
14 days of the Effective Date, the Shire Depositary will, in accordance with the terms of the Scheme,
receive: (i) a cash amount in US Dollars; and (ii) New Takeda ADSs, in each case equal to the total
amount due by way of Consideration under the terms of the Scheme in respect of all the Shire Shares
held by the Shire Depositary at the Scheme Record Time.
Once the Shire Depositary has received the New Takeda ADSs, each Shire ADS Holder will receive(upon surrender of their certificated Shire ADSs (if applicable) to the Shire Depositary) their pro rata
entitlement to New Takeda ADSs (in respect of each Shire ADS they hold at the ADS Effective Date)from the Shire Depositary in accordance with the terms and conditions of the Shire Deposit Agreement.
Once the Shire Depositary has received the relevant cash amount in US Dollars, each Shire ADS
Holder will receive (upon surrender of their certificated Shire ADSs (if applicable) to the Shire
Depositary) their pro rata portion of the cash in US Dollars (in respect of each Shire ADS they hold at
the ADS Effective Date). On the Effective Date, Shire will become wholly owned by Takeda and/or its
nominee(s), and Shire ADSs will cease to represent any interest in Shire Shares. Registered holders ofcertificated Shire ADSs will, on or after the ADS Effective Date, receive letters of transmittal from theShire Depositary. Those holders must sign and return the letter of transmittal, together with their ShireADS certificates, to receive their funds and New Takeda ADSs. Registered holders of uncertificated
Shire ADSs will automatically receive their funds and New Takeda ADSs, and do not need to take any
further action. Payments to registered holders of Shire ADSs will be made by cheques mailed by theShire Depositary to the address the Shire Depositary has in its records for such registered holder.
The date on which New Takeda ADSs will be delivered to Shire ADS Holders will depend on the way inwhich such Shire ADS Holders held their Shire ADSs. It is expected that Shire ADS Holders holding
through participants in DTC will receive delivery shortly after the receipt by the Shire Depositary of the
New Takeda ADSs and that registered Shire ADS Holders holding uncertificated Shire ADSs (that is,
Shire ADSs held outside of DTC for which no certificates have been issued) will be issued New Takeda
ADSs in uncertificated form beginning approximately one week thereafter (and will receive a statementby post reflecting the issuance of New Takeda ADSs in their name). Registered Shire ADS Holders
holding certificates for their Shire ADSs will only receive delivery of their New Takeda ADSs after they
return their signed letter of transmittal and Shire ADS certificate to the Shire Depositary.
Any Shire ADS Holders who hold their Shire ADSs indirectly through a bank, broker, or other securities
intermediary or share plan administrator within DTC, will receive credit of the funds and New Takeda
ADSs to their account from their bank, broker or other securities intermediary or share plan
administrator. The Shire Depositary will remit the funds to DTC, and DTC will, in turn, credit the ShireADS Holder’s bank, broker, securities intermediary or share plan administrator.
In order to avoid the application of US backup withholding on cash amounts paid to Shire ADS
Holders (including non-US persons) who have not previously provided a duly completed IRS
Form W-8 or Form W-9 to their brokers or the Shire Depositary that remains valid at the time of
payment such holders must provide the Shire Depositary with a properly completed IRS Form
W-8 or Form W-9, as applicable, that establishes an exemption from backup withholding. For

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further information, please see paragraph 2 in Part VII (Taxation) of this document. All Shire ADS
Holders should consult their appropriate independent tax adviser to determine whether or notthey are required to provide these forms. IRS Forms W-8 and W-9 are available on the IRS
website at http://www.irs.gov.
In addition, pursuant to the notice of termination (pursuant to the Shire Deposit Agreement throughwhich the Shire ADS programme is operated) which will be sent to Shire ADS Holders separately, theShire Deposit Agreement will be terminated. Such notice of termination will be conditional on the
Scheme becoming Effective in accordance with its terms.
6.

Fractional entitlements

No fractional New Takeda ADSs will be delivered to Shire ADS Holders. The Shire Depositary will
aggregate the New Takeda ADSs resulting from the entitlements of Shire ADS Holders to fractional New
Takeda ADSs and sell them in the open market as soon as practicable after receipt by the Shire
Depositary of the New Takeda ADSs. The net proceeds of sale (after deduction of all expenses andcommissions incurred in connection with such sale, and rounded down to the nearest whole cent) shallbe paid to Shire ADS Holders in due proportion to their entitlement.
7.

Shire ADS Holder Helpline

The helpline for Shire ADS Holders is provided by the Shire Depositary and is available between
8.30 a.m. and 6.00 p.m. (New York time) Monday to Friday (except public holidays in the US) on +1 866
395 6421 from within the US or +1 781 575 4555 if calling from outside the US. Calls are charged at
the standard geographic rate and will vary by provider. Calls outside the US will be charged at theapplicable international rate.
The Shire ADS Holder Helpline cannot provide advice on the merits of the Acquisition or give any
financial, legal or tax advice.

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PART XI
DEFINITIONS
The following definitions apply throughout this document, unless the context requires otherwise:“Acquisition”

the proposed acquisition of the issued and to be issued ordinary
share capital of Shire by Takeda to be implemented by means of
the Scheme (or if Takeda so elects, subject to the terms of the
Co-operation Agreement, a Takeover Offer) on the terms andsubject to the Conditions set out in this document and, where thecontext requires, any subsequent revision, variation, extension
or renewal thereof“Adjusted EBITDA”

means, in relation to the Takeda Group, EBITDA (net profit
before income tax expenses, depreciation and amortization andnet interest expense), further adjusted to exclude impairment
losses, other operating expenses and income (excluding
depreciation and amortisation), finance expenses and income(excluding net interest expense), share of gains and losses frominvestments accounted for under the equity method and otheritems that are unrelated to Takeda’s core operations such aspurchase accounting effects and transaction related costs“ADR” or “American Depositary
Receipt”

an American Depositary
Depositary Shares“ADS” or “American Depositary
Share”an American Depositary Share“ADS Effective Date”

the date which falls two Business Days after the Scheme Record
Time, or such other time as Shire and the Shire Depositary may
agree“ADS Election”

an election to receive New Takeda ADSs or CDIs representing
New Takeda ADSs (as applicable) under the ADS Election
Facility“ADS Election Facility”

the facility provided for under the terms of the Scheme underwhich a Shire Shareholder may elect to receive the non-cash
portion of the Consideration payable to them in the form of New
Takeda ADSs or (in the case of Shire Shareholders who make avalid ADS Election to receive CDIs representing New Takeda
ADSs before the TTE Instruction Return Time and who holdShire Shares in uncertificated form (that is, in CREST) only)
CDIs representing New Takeda ADSs

“ADS Voting Card”

the WHITE form for use by Shire ADS Holders indicating to theShire Depositary how their votes should be cast at the Shire
Meetings“ADS Voting Record Time”

5.00 p.m. (New York time) on November 7, 2018 or, if the Court
Meeting and/or the Shire General Meeting is or are adjourned,
such later date as may be notified by the Shire Depositary,
having consulted with Shire

226

Receipt

evidencing American

“Agent”

subject to the Special Resolution being approved, Shire, or suchother person as may be appointed by Shire, conditional upon
and with effect from the time and date at which the Scheme issanctioned by the Court, acting as the agent of all Shire
Shareholders at the Scheme Record Time“AMI”

a JASDEC account management institution that has been
admitted to JASDEC pursuant to the Book-Entry Act“Authorisations”

regulatory authorisations, orders, recognitions, grants, consents,
clearances, confirmations, certificates, licences, permissions orapprovals“Awards”

awards/options/stock appreciation rights under the Shire Share
Plans“BACs”

Bankers’ Automated Clearing System, as operated by Bacs
Payment Schemes Limited, a company which deals withpayments that are made between bank accounts within the
United Kingdom“Baxalta”

Baxalta Incorporated“Baxalta Merger”

the merger of BearTracks, Inc., a wholly owned subsidiary of
Shire, with and into Baxalta which completed on June 3, 2016

“Baxalta Scheme”

options and restricted stock units over ADSs and Shire Sharesthat were originally granted over shares in Baxalta Inc and aregoverned by the rules of the Baxalta Incorporated 2015 Incentive
Plan and the Governing Terms of the Substitute Awards“Book-Entry Act”

the Act on Book-Entry of Company Bonds, Shares, etc. of Japan,
as amended from time to time

“Bridge Credit Agreement”

the bridge facility agreement described in paragraph 7 of Part II(Explanatory Statement) of this document“Business Day”

a day (other than a Saturday, Sunday or public holiday in
London, Jersey, New York or Tokyo) on which banks are open forbusiness in London, Jersey, New York and Tokyo“CDI”

a CREST depository interest, as defined in the CREST Manual“certificated” or “in certificatedform”

a share or other security which is not in uncertificated form

“Certificated Form of Election”

the WHITE form of election under which a Shire Shareholder
who holds Shire Shares in certificated form may make: (i) aCurrency Election; and/or (ii) a JASDEC Election, Corporate
Nominee Election and/or an ADS Election (other than an ADS
Election to receive CDIs representing New Takeda ADSs);
and/or (iii) a Dealing Facility Election, subject to the terms andconditions set out in this document“Citi”

Citigroup Global Markets Limited“Clean Team Confidentiality
Agreement”

the clean team agreement described in paragraph 11 of Part II(Explanatory Statement) of this document

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“Closing Price”

the closing middle market quotations for Shire Shares on the
London Stock Exchange and/or Takeda Shares on the Tokyo
Stock Exchange (as applicable)“Combined Group”

the enlarged group comprising the Shire Group and the Takeda
Group following completion of the Acquisition“Competition and Markets
Authority” or “CMA”

the UK Competition and Markets Authority, which is a
department of the government of the United Kingdom
responsible for competition“Conditions”

the conditions to the implementation of the Acquisition set out inPart IV (Conditions to, and further terms of, the implementationof the Scheme and the Acquisition) of this document and a“Condition” shall mean any one of them

“Confidentiality Agreement”

the confidentiality agreement described in paragraph 11 of Part II(Explanatory Statement) of this document“Confidentiality and Joint
Defense Agreement”

the confidentiality and joint defense agreement described inparagraph 11 of Part II (Explanatory Statement) of this document“Consideration”

the consideration payable to Shire Shareholders at the Scheme
Record Time in accordance with the terms of the Scheme,
comprising $30.33 in cash and either 0.839 New Takeda Sharesor 1.678 New Takeda ADSs per Shire Share“Co-operation Agreement”

the agreement dated May 8, 2018 between Takeda and Shire
relating, among other things, to the implementation of theAcquisition“Corporate Nominee Election”

an election to receive New Takeda Shares through the Corporate
Nominee Facility“Corporate Nominee Facility”

the facility provided for under the terms of the Scheme underwhich a Shire Shareholder who has a registered address in the
EEA, Channel Islands, Isle of Man, Switzerland or Gibraltar as at
the Scheme Record Time may elect to have the Fiduciary holdon their behalf some or all of the New Takeda Shares which such
Shire Shareholder is entitled to receive as the non-cash portionof the Consideration for their Shire Shares pursuant to the
Scheme, subject to the Corporate Nominee Facility Terms andConditions“Corporate Nominee Facility
Terms and Conditions”

the terms and conditions governing the Corporate Nominee
Facility, as set out at Appendix II (Corporate Nominee Facility
Terms and Conditions) of this document“Court”

the Royal Court of Jersey“Court Meeting”

the meeting or meetings of the Shire Shareholders as at the
Voting Record Time convened by order of the Court pursuant to
Article 125 of the Jersey Companies Law, notice of which is set
out in Part XII (Notice of Court Meeting) of this document, for the
purpose of considering and, if thought fit, approving the Scheme(with or without amendment) and any adjournment,
postponement or reconvention thereof

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“Court Order”

the Act of the Court sanctioning the Scheme under Article 125 of
the Jersey Companies Law“Court Sanction Hearing”

the hearing at which the Court sanctions the Scheme“CREST”

the relevant system (as defined in the CREST Regulations) inrespect of which Euroclear is the Operator (as defined in the
CREST Regulations) in accordance with which securities may
be held and transferred in uncertificated form

“CREST Form of Election”

the GREEN form of election under which a Shire Shareholder
who holds Shire Shares in uncertificated form (that is, in CREST)at the Scheme Record Time may make a JASDEC Election,
Corporate Nominee Election and/or ADS Election (other than an
ADS Election to receive CDIs representing New Takeda ADSs),or such other form of instruction as may be agreed between a
Shire Shareholder and the Receiving Agent for the purposes ofmaking an election on substantively the same terms as an
Election, in each case subject to the terms and conditions set out
in this document“CREST International Manual”

the CREST International Manual published by Euroclear, as
amended from time to time

“CREST Manual”

the CREST Manual published by Euroclear, as amended fromtime to time

“CREST Regulations”

in relation to Shire Shares held in uncertificated form, theCompanies (Uncertificated Securities) (Jersey) Order 1999, as
amended from time to time and in relation to CDIs representing
New Takeda ADSs, the Uncertificated Securities Regulations
2001 (SI 2001 No.3755), as amended from time to time“Currency Conversion Facility”

the facility provided for under the terms of the Scheme underwhich a Shire Shareholder may elect to receive the US Dollar
cash portion of the Consideration which such Shire Shareholder
is entitled to receive pursuant to the Scheme in pounds Sterling(net of any applicable customary transaction and dealing costs
associated with the conversion) at the applicable market
exchange rate on the latest reasonably practicable date for fixing
such rate before the relevant payment date

“Currency Election”

an election for the Currency Conversion Facility“Dealing Facility”

the facility provided for under the terms of the Scheme underwhich a Shire Shareholder who holds 200 or fewer Shire Sharesin certificated form as at the Scheme Record Time and has aregistered address in the EEA, Channel Islands, Isle of Man,
Switzerland or Gibraltar as at the Scheme Record Time may
make an election to have all of the New Takeda Shares which
they are entitled to receive pursuant to the Scheme sold on theirbehalf, subject to the Dealing Facility Terms and Conditions“Dealing Facility Election”

an election to sell New Takeda Shares through the Dealing
Facility“Dealing Facility Terms andConditions”

the terms and conditions governing the operation of the Dealing
Facility, a copy of which is available on the Takeda and Shire229

websites, at www.takeda.com and www.shire.com respectively
or by contacting the Shareholder Helpline“Disclosed”

the information fairly disclosed by or on behalf of Shire: (i) in theannual report and accounts of the Shire Group for the financial
year ended December 31, 2017; (ii) in this document; (iii) in theRule 2.7 Announcement; (iv) in any other announcement to a
Regulatory Information Service by, or on behalf of, Shire before
the publication of this document; (v) in writing before the date ofthis document to Takeda or Takeda’s financial, accounting, tax orlegal advisers (in their capacity as such); or (vi) as otherwise
fairly disclosed to Takeda (or its respective officers, employees,
agents or advisers) before the date of this document“Disclosure Guidance andTransparency Rules”

the rules and regulations made by the Financial Conduct
Authority in its capacity as the UKLA under the Financial
Services and Markets Act 2000, and contained in the UKLA’s
publication of the same name“DRS”

the direct registration system administered by the DTC“DTC”

the Depository Trust Company“EEA”

the European Economic Area as at the date of this document“Effective”

means the Scheme having become effective in accordance with
its terms“Effective Date”

the date on which the Scheme becomes Effective“Election”

a Currency Election or a Securities Election, as the context
requires“Election Return Time”

6.00 p.m. (London time) on January 2, 2019 or (if later) 6.00 p.m.
(London time) on the date falling two calendar days before thedate on which the Scheme Record Time falls, being the latest
time for lodging a Form of Election“Equiniti”

Equiniti Limited, a limited liability company incorporated inEngland with registered number 06226088“ESA Instruction”

has the meaning given to it in the CREST Manual“EU”

the European Union“EUCAN”

Europe and Canada“EU Merger Regulation”

Council Regulation (EC) 139/2004 of January 20, 2004 on thecontrol of concentrations between undertakings“Euroclear”

Euroclear UK & Ireland Limited, incorporated in England withcompany number 02878738“Evercore”

Evercore Partners International LLP“Excluded Shares”

any Shire Shares:(i)registered in the name of, or beneficially owned by,
Takeda or any member of the Takeda Group or theirrespective nominees;

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(ii)

represented by Shire ADSs which are registered in thename of, or beneficially owned by, Takeda or any memberof the Takeda Group or their respective nominees; or(iii)held in treasury by Shire“Executive Director Retention
Arrangements”

the retention arrangements which apply to the Shire Executive
Directors, as described in paragraph 6.7 of Part II (Explanatory
Statement) of this document“FCA” or “Financial Conduct
Authority”

the Financial Conduct Authority acting in its capacity as thecompetent authority for the purposes of Part VI of the UK
Financial Services and Markets Act 2000

“Fiduciary”

Equiniti Financial Services Limited, a limited liability company
incorporated in England with registered number 06208699“Forms of Election”

the WHITE Certificated Form of Election sent to Shire
Shareholders (other than Restricted Shire Shareholders) who
hold their Shire Shares in certificated form and the GREEN
CREST Form of Election sent to Shire Shareholders (other than
Restricted Shire Shareholders) who hold their Shire Shares in
uncertificated form (that is, in CREST), and a “Form ofElection” shall mean either such form of election as the context
requires“Forms of Proxy”

the BLUE Form of Proxy for use at the Court Meeting and the
YELLOW Form of Proxy for use at the Shire General Meeting,which are being sent to Shire Shareholders, and accompany thisdocument and a “Form of Proxy” shall mean either such form ofproxy as the context requires“Fractional Shares”

the maximum whole number of New Takeda Shares resulting
from the aggregation of fractional entitlements to New Takeda
Shares to which Shire Shareholders at the Scheme Record Timeare entitled pursuant to the Scheme and the maximum whole
number of New Takeda Shares which represent the aggregate of
fractional entitlements to New Takeda ADSs to which Shire
Shareholders at the Scheme Record Time are entitled pursuant
to the Scheme“Global Custodian”

Nomura Bank (Luxembourg) S.A.

“Goldman Sachs”

Goldman Sachs International“HMRC”HM Revenue and Customs in the United Kingdom“IFRS”

International Financial Reporting Standards“IRS”

Internal Revenue Service in the United States“Japan”

Japan (Nippon-koku), its cities, prefectures, territories andpossessions and all areas subject to its jurisdiction and any
political sub-division thereof“Japanese Companies Act”

the Japanese Companies Act (Act No. 86 2005) (kaisha hou)“Japanese Listing Rules”

the Tokyo Stock Exchange Securities Listing Regulations“JASDEC”

Japan Securities Depository Center, Inc.

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“JASDEC Account”

a direct account with JASDEC or a securities account with oneof the AMIs

“JASDEC Election”

an election by a Shire Shareholder to receive some or all of the
New Takeda Shares which such Shire Shareholder is entitled toreceive pursuant to the Scheme into a designated JASDEC
Account“Jersey Companies Law”

the Companies (Jersey) Law 1991, as amended from time totime“J.P. Morgan”

JPMorgan Securities Japan Co., Ltd., together with its affiliate
J.P. Morgan Cazenove“J.P. Morgan Cazenove”

J.P. Morgan Securities plc (which conducts its UK investmentbanking business as J.P. Morgan Cazenove)“Latest Practicable Date”

with respect to the issued share capital of Takeda, the close ofbusiness on October 31, 2018, and otherwise, the close ofbusiness on November 7, 2018, being the latest practicable date
before the publication of this document“Listing Rules”

the rules and regulations made by the Financial Conduct
Authority in its capacity as the UKLA under the Financial
Services and Markets Act 2000, and contained in the UKLA’s
publication of the same name

“Local Japanese Stock Exchanges” the Nagoya Stock Exchange, Fukuoka Stock Exchange andSapporo Stock Exchange“London Stock Exchange”

London Stock Exchange plc or its successor“Long Stop Date”

May 8, 2019 or such later date as may be agreed in writing by
Takeda and Shire (with the Panel’s consent and as the Court
may approve (if such approval(s) is or are required))“Market Abuse Regulation”

Regulation (EU) No. 596/2014 of the European Parliament andthe Council of April 16, 2014 on market abuse“Master Framework and Custody
Agreement”

the master framework and custody agreement described inparagraph 11 of Part II (Explanatory Statement) of this document“Member State”

each of the 28 states of the EU as at the date of this document,
as the context requires“Morgan Stanley”

Morgan Stanley & Co. International plc“NASDAQ”

the registered national securities exchange operated by the
NASDAQ Stock Market LLC“New Takeda ADSs”

the new Takeda ADSs to be delivered pursuant to the Scheme to
Shire Shareholders at the Scheme Record Time who make avalid ADS Election to receive New Takeda ADSs (including any
New Takeda ADSs underlying CDIs representing New Takeda
ADSs)“New Takeda Securities”

the New Takeda Shares, the New Takeda ADSs and/or the CDIs
representing New Takeda ADSs (as the case may be) to bedelivered to Shire Shareholders at the Scheme Record Timepursuant to the Scheme232

“New Takeda Share Resolution”

the resolution to be tabled at the Takeda Extraordinary General
Meeting in order to approve the issue of the New Takeda Shares“New Takeda Shares”

the new Takeda Shares to be delivered to Shire Shareholders at
the Scheme Record Time pursuant to the Scheme“New York Stock Exchange” or“NYSE”

the New York Stock Exchange“No Action Sub-Account”

a sub-account opened with the Fiduciary in the name of theRepresentative acting as bare trustee for Shire Shareholders (ifany) who have made (or are deemed to have made) an invalid
Securities Election or have failed to make a valid Securities
Election in respect of some or all of their Shire Shares“Nomura”

Nomura International plc“Offer Period”

the Offer Period (as defined by the Takeover Code) relating toShire, which commenced on March 28, 2018

“Official List”

the Official List maintained by the UKLA

“Opt-out Form”

the form which Shire Shareholders who hold Shire Shares incertificated form and have a registered address in the UK,
Channel Islands or Isle of Man can request from Equiniti bycalling the Shareholder Helpline in order to opt out of theCurrency Conversion Facility“Overseas Shareholders”

Shire Shareholders who are resident in, or nationals or citizensof, jurisdictions outside of Jersey and the United Kingdom or who
are nominees of, or custodians or trustees for, citizens or
nationals of countries other than Jersey or the United Kingdom“Panel”

the Panel on Takeovers and Mergers“Permitted Dividend”

has the meaning given to it in paragraph 10.1 of Part II(Explanatory Statement) of this document“PRC Anti-Monopoly Law”

the Anti-Monopoly Law of the People’s Republic of China“Prudential Regulation Authority”
or “PRA”

the Prudential Regulation Authority of the United Kingdom or its
successor“Receiving Agent”

Equiniti“Registrar of Companies”

the registrar of companies in Jersey“Regulatory Conditions”

means the Conditions set out in paragraphs 4(c) to 4(i)(inclusive) and 4(l) of Part A of Part IV (Conditions to, and further
terms of, the implementation of the Scheme and the Acquisition)of this document (if and to the extent that, in the case ofparagraphs 4(h), 4(i) and 4(l), the relevant “Third Party” under
the Conditions is a Relevant Authority)“Regulatory Information Service”

any of the services authorised by the FCA from time to time forthe purpose of disseminating regulatory announcements“Relevant Authority”

means any central bank, ministry, governmental, quasigovernmental (including the EU), supranational, statutory,
regulatory or investigative body or authority (including any
national or supranational anti-trust or merger control authority,233

any sectoral ministry or regulator and any foreign investment
review body), national, state, municipal or local government(including any subdivision, court, administrative agency orcommission or other authority thereof), any entity owned orcontrolled by them, any private body exercising any regulatory,
taxing, importing or other authority, trade agency, association,
institution or professional or environmental body in any
jurisdiction“Representative”

Shire or such other person as may be appointed by Shire in
writing from time to time

“Restricted Jurisdiction”

any country or territory outside Jersey or the United Kingdom inrespect of which Takeda is advised that the law of such country
or territory: (i) precludes the allotment, issue and/or delivery of
New Takeda Shares and/or New Takeda ADSs; (ii) precludes theallotment, issue and/or delivery of New Takeda Shares and/or
New Takeda ADSs except after compliance by Shire or Takeda(as the case may be) with any governmental or other consent or
any registration, filing or other formality with which Shire and/or
Takeda (as the case may be) is unable to comply or compliancewith which Shire and/or Takeda (as the case may be) regards as
unduly onerous; and/or (iii) may result in a significant risk of civil,
regulatory or criminal exposure if information concerning theAcquisition is sent or made available to Shire Shareholders inthat jurisdiction“Restricted Shire Shareholder”

a Shire Shareholder who is resident, located or has a registeredaddress in a jurisdiction outside Jersey or the United Kingdom inrespect of whom Takeda is advised that the law of a country or
territory outside Jersey or the United Kingdom precludes: (i) the
allotment, issue and/or delivery to that Shire Shareholder of New
Takeda Shares and/or New Takeda ADSs in accordance with the
Scheme; (ii) the provision to that Shire Shareholder of the rightto make an Election; and/or (iii) either or both of the mattersreferred to in points (i) and/or (ii), except after compliance by
Shire or Takeda (as the case may be) with any governmental orother consent or any registration, filing or other formality withwhich Shire and/or Takeda (as the case may be) is unable tocomply or compliance with which Shire and/or Takeda (as thecase may be) regards as unduly onerous“Rule 2.7 Announcement”

the joint announcement made by Shire and Takeda in relation to
the Acquisition on May 8, 2018

“Sales Policy”

the sales policy set out in paragraph 22 of Part II (Explanatory
Statement)“Scheme”

the scheme of arrangement proposed to be made under Article
125 of the Jersey Companies Law between Shire and the Shire
Shareholders to implement the acquisition of Shire by Takeda as
set out in Part III (The Scheme of Arrangement) of thisdocument, with or subject to any modification, addition orcondition approved or imposed by the Court and agreed to by
Shire and Takeda“Scheme Document”

this document

234

“Scheme Effective Time”

the time and date at which the Scheme becomes Effective“Scheme Record Time”

6.00 p.m. (London time) on the calendar day following the dateof the Court Sanction Hearing“Scheme Shareholder”

a holder of Scheme Shares“Scheme Shares”

the Shire Shares:(i)in issue at the date of this document;(ii)(if any) issued after the date of this document but before
the Voting Record Time; and(iii)(if any) issued at, or after, the Voting Record Time andbefore the Scheme Record Time on terms that the original
holder or any subsequent holder thereof shall be bound by
the Scheme or in respect of which the original or any
subsequent holder thereof shall have agreed in writing to
be bound by the Scheme,

and in each case remaining in issue at the Scheme Record
Time, but excluding any Excluded Shares“SEC”

the US Securities and Exchange Commission“Securities Election”

a JASDEC Election, Corporate Nominee Election, ADS Election
or Dealing Facility Election, as the context requires“Settlement Account”

the JASDEC Account to be opened by the Global Custodian, on
the instruction of the Fiduciary, for the purpose of entering into
the record maintained by JASDEC the New Takeda Shares to beissued in connection with the Acquisition and, as relevant, thecontinued holding of New Takeda Shares in accordance with theBook-Entry Act“Shareholder Helpline”

the Shareholder Helpline, details of which are included on page
4 of this document“Shire”

Shire plc, a company incorporated in Jersey with registerednumber 99854“Shire ADS”

an American Depositary Share issued under the Shire Deposit
Agreement, such American Depositary Share representing three
Shire Shares“Shire ADS Holder”

a holder of Shire ADSs from time to time

“Shire Articles”

the articles of association of Shire, as amended from time to time

“Shire Board”

the Shire Directors collectively“Shire Deposit Agreement”

the amended and restated deposit agreement, including theform of American Depositary Receipt for American Depositary
Shares representing Shire Shares attached thereto, setting forth
the terms of the Shire ADSs from time to time

“Shire Depositary”

Citibank, N.A., or the depositary from time to time for the Shire
ADSs pursuant to the Shire Deposit Agreement“Shire Directors”

the directors of Shire as at the date of this document or, where
the context so requires, the directors of Shire from time to time235

“Shire Executive Directors”

each of Dr Flemming Ornskov and Mr Thomas Dittrich“Shire General Meeting”

the general meeting of Shire to be convened in connection with
the Scheme, notice of which is set out in Part XIII (Notice ofShire General Meeting) of this document, for the purpose of
considering and, if thought fit, approving the Special Resolution(with or without amendment) and any adjournment,
postponement or reconvention thereof“Shire Group”

Shire and its subsidiaries and subsidiary undertakings from time
to time and, where the context permits, each of them“Shire Meeting(s)”the Court Meeting and/or the Shire General Meeting, as the casemay be“Shire Non-Executive Directors”

each of Susan Kilsby, Olivier Bohuon, Ian Clark, Gail Fosler,
Steven Gillis, David Ginsburg, Sara Mathew and Albert
Stroucken“Shire Profit Forecasts”

the statements set out in paragraph 5.1 of Part I (Letter from the
Chairman of Shire PLC) and paragraph 16.1 of Part VIII
(Additional Information) which constitute profit forecasts for the
purposes of Rule 28.1(a) of the Takeover Code“Shire Registrar”

Shire’s registrar, Equiniti (Jersey) Limited, a limited liability
company incorporated in Jersey with registered number 99609“Shire Remuneration Committee”

the remuneration committee of Shire from time to time

“Shire Share Plans”

the Shire Long Term Incentive Plan 2015, the Shire Global
Employee Stock Purchase Plan, the Shire Sharesave Scheme
2008, the Shire UK Sharesave Plan 2015, the Shire Irish
Employee Stock Purchase Plan 2008, the Shire Irish Sharesave
Plan 2015, the Shire Deferred Bonus Plan 2015, the Shire
Portfolio Share Plan, the Baxalta Scheme and the deferred
equity award in respect of 85,179 notional Shire Shares granted
to A. Busch on March 1, 2018

“Shire Shareholder”

a holder of Shire Shares from time to time

“Shire Shares”

the existing unconditionally allotted or issued and fully paid
ordinary shares of 5 pence each in the capital of Shire and any
further such ordinary shares which are unconditionally allotted or
issued before the Scheme becomes Effective (and excluding, forthe avoidance of doubt, the Subscriber Ordinary Shares)“Significant Interest”

in relation to an undertaking, a direct or indirect interest of 20 per
cent. or more of the total voting rights conferred by the equity
share capital of such undertaking“Special Resolution”

the special resolution to be proposed by Shire at the Shire
General Meeting in connection with, among other things, theapproval of the Scheme and the alteration of the Shire Articles
and such other matters as may be necessary to implement the
Scheme and the delisting of the Shire Shares“Subscriber Ordinary Shares”

two fully paid subscriber ordinary shares of £1 each in the capitalof Shire236

“Takeda”

Takeda Pharmaceutical Company Limited, a company
incorporated in Japan and whose registered office is at
1-1 Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan“Takeda ADR”

an American Depositary Receipt issued under the Takeda
Deposit Agreement that evidences one or more Takeda ADSs

“Takeda ADS”

an American Depositary Share issued under the Takeda Deposit
Agreement, such American Depositary Share representing 0.5
Takeda Shares“Takeda Articles”

the articles of incorporation of Takeda, as amended from time totime“Takeda Board”

the Takeda Directors collectively“Takeda Deposit Agreement”

the deposit agreement, including the form of American
Depositary Receipt for American Depositary Shares
representing Takeda Shares attached thereto, setting forth theterms of the Takeda ADSs from time to time

“Takeda Depositary”

The Bank of New York Mellon, or the depositary from time to time
for the Takeda ADSs pursuant to the Takeda Deposit Agreement“Takeda Director Appointment
Resolutions”

the resolutions to be tabled at the Takeda Extraordinary General
Meeting in order to appoint three current Shire Directors (Olivier
Bohuon, Ian Clark and Steven Gillis) as new Takeda Directors
with effect from the Effective Date

“Takeda Directors”

the directors of Takeda as at the date of this document or, where
the context so requires, the directors of Takeda from time to time

“Takeda Extraordinary General
Meeting”

the extraordinary general meeting of Takeda to be convened inconnection with the Acquisition, notice of which has been sentout in the Takeda Shareholder Documents, for the purpose of
considering and, if thought fit, approving the Takeda Resolutions(with or without amendment) and any adjournment,
postponement or reconvention thereof“Takeda Group”

Takeda and its subsidiaries and subsidiary undertakings fromtime to time and, where the context permits, each of them“Takeda Profit Forecast”

the statements set out in paragraph 5.2(a) to paragraph 5.2(c) ofPart I (Letter from the Chairman of Shire PLC) and paragraph16.2 of Part VIII (Additional Information) which constitute a profit
forecast for the purposes of Rule 28.1(a) of the Takeover Code“Takeda Resolutions”

the New Takeda Share Resolution and the Takeda Director
Appointment Resolutions“Takeda Shareholder”

a holder of Takeda Shares from time to time

“Takeda Shareholder Documents”

the convocation of meeting relating to the issue of New Takeda
Shares and appointment of three current Shire Directors as new
Takeda Directors to be sent to the Takeda Shareholders andmade available to Shire Shareholders and containing, among
other things, the notice convening the Takeda Extraordinary
General Meeting and information on Takeda, the CombinedGroup and the New Takeda Securities

237

“Takeda Shares”

the shares of common stock with no par value in the capital of
Takeda“Takeda Voting Record Date”

October 19, 2018 or such other date as may be notified by
Takeda to Takeda Shareholders in respect of the Takeda
Extraordinary Shareholder Meeting from time to time

“Takeover Code”

the City Code on Takeovers and Mergers issued by the Panel,as amended from time to time

“Takeover Offer”

if, subject to the consent of the Panel and the terms of the Cooperation Agreement, the Acquisition is implemented by way of
a takeover offer as defined in Article 116 of the Jersey
Companies Law, the offer to be made by or on behalf of Takeda
to acquire the entire issued and to be issued ordinary sharecapital of Shire and, where the context admits, any subsequent
revision, variation, extension or renewal of such offer“Third Party”

each of a central bank, government or governmental, quasigovernmental,
supranational,
statutory,
regulatory,
environmental, administrative, fiscal or investigative body, court,
trade agency, association, institution, environmental body,
employee representative body or any other body or person
whatsoever in any jurisdiction“Tokyo Stock Exchange”

Tokyo Stock Exchange, Inc.

“TTE Instruction”

a transfer to escrow instruction as defined in the CREST Manual“TTE Instruction Return Time”

6.00 p.m. (London time) on January 4, 2019 or (if later) the
Scheme Record Time, being the latest time for making a TTE
Instruction“UK” or “United Kingdom”

the United Kingdom of Great Britain and Northern Ireland“UKLA”

the UK Listing Authority, being the Financial Conduct Authority
acting in its capacity as the competent authority for the purposesof Part VI of the Financial Services and Markets Act 2000

“uncertificated” or “inuncertificated form”

recorded on the relevant register of members as being held in
uncertificated form and title to which may, by virtue of the
CREST Regulations, be transferred by means of CREST“US” or “United States”

the United States of America, its territories and possessions, any
state of the United States of America, the District of Columbia
and all other areas subject to its jurisdiction and any political subdivision thereof“US ADS Holders”

Shire ADS Holders ordinarily resident in the United States or witha registered address in the United States“US Exchange Act”

the United States Securities Exchange Act of 1934, as amended,and the rules and regulations promulgated thereunder“US GAAP”

Generally Accepted Accounting Principles (United States)“US Securities Act”

the United States Securities Act of 1933, and the rules andregulations promulgated thereunder238

“US Shareholders”

Shire Shareholders ordinarily resident in the United States orwith a registered address in the United States, and any
custodian, nominee or trustee holding Shire Shares for persons
in the United States or with an address in the United States“Voting Record Time”

6.30 p.m. (London time) on the day which is two calendar days
before the date of the Shire Meetings or, if the Court Meeting
and/or the Shire General Meeting is or are adjourned, 6.30 p.m.
(London time) on the date falling two calendar days before thedate appointed for such adjourned Shire Meeting (as the casemay be)“Wider Shire Group”

Shire and its subsidiaries, subsidiary undertakings, associatedundertakings and any other body corporate, partnership, joint
venture or person in which Shire and/or such subsidiaries orundertakings (aggregating their interests) have a Significant
Interest“Wider Takeda Group”

Takeda and its subsidiaries, subsidiary undertakings, associatedundertakings and any other body corporate, partnership, joint
venture or person in which Takeda and/or such subsidiaries orundertakings (aggregating their interests) have a Significant
Interest

For the purposes of this document:•“subsidiary”, “subsidiary undertaking”, “undertaking” and “associated undertaking” havethe respective meanings given thereto by the UK Companies Act 2006 (as amended from time
to time);•all references to “pounds”, “pounds Sterling”, “Sterling”, “GBP”, “£”, “pence”, “penny” and “p”
are to the lawful currency of the United Kingdom;•

all references to “JPY”, “JP¥”, “¥” and “Japanese Yen” are to the lawful currency of Japan;•

all references to “US$”, “$”, “USD” and “US Dollars” are to the lawful currency of the UnitedStates;•all references to “EUR” are to the lawful currency of the lawful currency of the member states of
the EU that have adopted the single currency from time to time•

all references to “CHF” are to the lawful currency of Switzerland; and•all times are references to London times unless otherwise stated.

239

PART XIINOTICE OF COURT MEETING
IN THE ROYAL COURT OF JERSEYSAMEDI DIVISION

File No. 2018/276

IN THE MATTER OFSHIRE PLCandIN THE MATTER OF
ARTICLE 125 OF THE COMPANIES (JERSEY) LAW 1991
NOTICE IS HEREBY GIVEN that by an Act of Court dated November 5, 2018, made in the above
matters, the Court has directed a meeting (the “Court Meeting”) to be convened of the Scheme
Shareholders as at the Voting Record Time (each as defined in the scheme of arrangement referred to
below) for the purpose of considering and, if thought fit, approving (with or without modification) a
scheme of arrangement (the “Scheme of Arrangement”) proposed to be made pursuant to Article 125of the Companies (Jersey) Law 1991 (as amended) (the “Companies Law”) between Shire plc (the“Company”) and the Scheme Shareholders as at the Scheme Record Time, and that such Court
Meeting shall be held at Block 3, Miesian Plaza, 50-58 Baggot Street Lower, Dublin 2, Ireland on
December 5, 2018 at 11.15 a.m. (London time), at which place and time all Scheme Shareholders arerequested to attend either in person or by proxy.
A copy of the Scheme of Arrangement and of the explanatory statement required to be furnishedpursuant to Article 126 of the Companies Law is incorporated in the document of which this Noticeforms part (the “Circular”).
Voting on the resolution to approve the Scheme will be by poll, which shall be conducted as the
Chairman of the Court Meeting may determine.
Right to Appoint a Proxy; Procedure for Appointment
Scheme Shareholders entitled to attend, speak and vote at the Court Meeting may vote in personat the Court Meeting or they may appoint another person or persons, whether a member of theCompany or not, as their proxy or proxies to attend, speak and vote in their stead at the Court
Meeting.
A BLUE Form of Proxy for use in connection with the Court Meeting is enclosed with this Notice.
Instructions for its use are set out on the form. It is requested that the BLUE Form of Proxy(together with any power of attorney or other authority, if any, under which it is signed, or a duly
certified copy thereof) be returned to Equiniti (Jersey) Limited, c/o Equiniti Limited, Aspect
House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom, by post or (during
normal business hours only) by hand, to be received not later than 11.15 a.m. (London time) on
December 3, 2018 or, in the case of an adjournment of the Court Meeting, not later than 48 hours
before the time appointed for the adjourned meeting. A pre-paid envelope, for use in the United
Kingdom only, is enclosed for your convenience. However, if not so lodged, BLUE Forms of
Proxy (together with any such authority, if applicable) may be handed to Equiniti or the
Chairman of the Court Meeting before the start of the Court Meeting.
Scheme Shareholders are entitled to appoint a proxy in respect of some or all of their Scheme Shares(as defined in the Scheme of Arrangement) held. Scheme Shareholders are also entitled to appoint
more than one proxy, provided that each proxy is appointed to exercise rights attached to a different
Scheme Share held. A space has been included in the BLUE Form of Proxy to allow Scheme
Shareholders to specify the number of Scheme Shares in respect of which that proxy is appointed.

240

Scheme Shareholders who return the BLUE Form of Proxy duly executed but leave this space blankshall be deemed to have appointed the proxy in respect of all their Scheme Shares. A proxy need not
be a member of the Company, but they must attend the Court Meeting to represent you.
If you wish to appoint more than one proxy, photocopy the BLUE Form of Proxy or request additional
forms by calling Equiniti on 0330 123 5506 (if calling from within the UK) or on +44 (0)121 415 0856 (ifcalling from outside the UK) between 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday,
excluding public holidays in England and Wales. Calls are charged at the standard geographic rate andwill vary by provider. Calls outside the United Kingdom will be charged at the applicable international
rate.
Scheme Shareholders entitled to attend and vote at the Court Meeting may also appoint a proxyelectronically through the www.sharevote.co.uk service. Full details of the procedure to be followed toappoint a proxy electronically are given on the website. Scheme Shareholders should note that they
may not appoint more than one proxy in respect of their shareholding through the www.sharevote.co.uk
service, and if they wish to appoint more than one proxy, they should request additional BLUE Formsof Proxy from Equiniti through the relevant phone number above. For an electronic proxy appointment
to be valid, the appointment must be received by Equiniti no later than 11.15 a.m. (London time) on
December 3, 2018 (or, if the Court Meeting is adjourned, not later than 48 hours before the time
appointed for any adjourned meeting).
Members who hold their shares in uncertificated form through CREST who wish to appoint a proxy or
proxies through the CREST electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. Further details concerning these procedures are set out on pages 5
to 9 of the Circular. For an electronic proxy appointment to be valid, the appointment must be received
by Equiniti no later than 11.15 a.m. (London time) on December 3, 2018 (or, if the Court Meeting is
adjourned, not later than 48 hours before the time appointed for any adjourned meeting).
Completion and return of the BLUE Form of Proxy, or the appointment of a proxy throughCREST or electronically through the www.sharevote.co.uk service, shall not prevent an eligible
Scheme Shareholder from attending and voting in person at the Court Meeting or any
adjournment thereof.
In respect of proxies submitted using the CREST electronic proxy appointment service or the
www.sharevote.co.uk service, the time of receipt will be taken to be the time from which Equiniti is able
to receive the message by enquiry to CREST or the www.sharevote.co.uk service.
Voting Record Time
Entitlement to attend, speak and vote at the Court Meeting or any adjournment thereof and the numberof votes which may be cast thereat shall be determined by reference to the register of members of theCompany as at 6.30 p.m. (London time) on December 3, 2018 or, if the Court Meeting is adjourned, theregister of members of the Company as at 6.30 p.m. (London time) on the date falling two calendar days
before the date appointed for such adjourned meeting (as the case may be). In each case, changes tothe register of members of the Company after such time shall be disregarded in determining the rights
of any person to attend, speak and vote at the Court Meeting.
Joint holders
In the case of joint holders of Scheme Shares at the Voting Record Time, the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the vote(s) of theother joint holder(s). For this purpose, seniority shall be determined by the order in which the names
stand in the register of members of the Company in respect of the joint holding.
Corporate representatives
As an alternative to appointing a proxy, any Scheme Shareholder as at the Voting Record Time which
is a body corporate may appoint one or more corporate representatives who may exercise on its behalf

241all its powers as a member provided that no more than one corporate representative exercises powers
over the same Scheme Share.
Nominated persons
Any person to whom this Notice is sent who is a person nominated to enjoy information rights inaccordance with Article 59 of the Company’s Articles of Association (a “nominated person”) does not,in that capacity, have a right to appoint a proxy, such right only being exercisable by shareholders of
the Company. However, nominated persons may, under agreement with the shareholder who
nominated them, have a right to be appointed (or to have someone else appointed) as a proxy for the
Court Meeting.
American Depositary Shares
Holders of American Depositary Shares (“ADSs”), as issued under the amended and restated deposit
agreement dated as of May 23, 2011 by and among the Company, Citibank, N.A. (the “Shire
Depositary”), and all holders and beneficial owners of ADSs from time to time (the “Shire Deposit
Agreement”), as at 5.00 p.m. (New York time) on November 7, 2018 may provide their voting
instructions to the Shire Depositary via the internet, by telephone or by sending in a completed ADS
voting instruction card, in each case in accordance with the instructions included on such ADS voting
instruction card. In each case, voting instructions must be received by the Shire Depositary no later than
10.00 a.m. (New York time) on November 29, 2018 (or, if the Court Meeting is adjourned, such later
date as may be notified by the Shire Depositary, having consulted with the Company).
If the Shire Depositary does not receive voting instructions from a holder of ADSs by that time, suchholder of ADSs shall not be deemed to have instructed the Shire Depositary to give a person designatedby Shire a discretionary proxy to vote the ordinary shares of the Company represented by the ADSs in
respect of which the Shire Depositary has not received voting instructions. Accordingly, the ordinary
shares of the Company represented by the ADSs in respect of which the Shire Depositary has notreceived voting instructions will not be represented at the Court Meeting and will not be voted at the
Court Meeting.
By the said Act of Court, the Court has appointed Susan Kilsby or, failing her, any director of theCompany to act as Chairman of the Court Meeting and has directed the Chairman to report the result
thereof to the Court.
The Scheme of Arrangement shall be subject to the subsequent sanction of the Court.
Dated November 12, 2018
Mourant Ozannes
22 Grenville Street
St HelierJerseyJE4 8PX
Channel Islands
Advocates and Solicitors for the Company

242

PART XIIINOTICE OF SHIRE GENERAL MEETINGNOTICE OF GENERAL MEETING OFSHIRE PLC
(the “Company”)(Registered in Jersey with registered number 99854)
NOTICE IS HEREBY GIVEN that a GENERAL MEETING of the Company shall be held at Block 3,
Miesian Plaza, 50-58 Baggot Street Lower, Dublin 2, Ireland on December 5, 2018 at 11.30 a.m.
(London time) (or as soon thereafter as the Court Meeting (as defined in the document of which thisnotice forms part) shall have concluded or been adjourned) (the “General Meeting”) for the purpose of
considering and, if thought fit, passing the following resolution, which shall be proposed as a special
resolution:
SPECIAL RESOLUTION
THAT:
(a)

for the purpose of giving effect to the scheme of arrangement dated November 12, 2018 (the“Scheme”) between the Company and the Scheme Shareholders (as defined in the Scheme), a
print of which has been produced to this meeting and for the purposes of identification signed by
the chairman hereof, in its original form in the document sent to shareholders of the Company
dated November 12, 2018 or subject to any modification, addition or condition agreed between
the Company and Takeda Pharmaceutical Company Limited (“Takeda”) and approved or
imposed by the Royal Court of Jersey (the “Court”), the directors of the Company be authorised
to take all such action as they may consider necessary or appropriate for carrying the Scheme
into effect; and(b)with effect from the passing of this resolution, the Articles of Association of the Company beamended by the adoption and inclusion of the following new Article 154:

“154. Scheme of Arrangement(A)

In this Article, the “Scheme” means the scheme of arrangement dated November 12, 2018
between the Company and the Scheme Shareholders (as defined in the Scheme) under
Article 125 of the Companies Laws in its original form or with or subject to any modification,
addition or condition approved or imposed by the Royal Court of Jersey and agreed by theCompany and Takeda Pharmaceutical Company Limited (“Takeda”) and (save as defined inthis Article) expressions defined in the Scheme shall have the same meanings in this Article.

(B)

Notwithstanding any other provision of these Articles or the terms of any resolution,
whether ordinary or special, passed by the Company in any general meeting, if theCompany issues any shares (other than to Takeda, any member of the Takeda Group or
their respective nominee(s)) at any time on or after the adoption of this Article and at or
before the Scheme Record Time, such shares shall be issued subject to the terms of the
Scheme (and shall be Scheme Shares for the purposes thereof) and the original or any
subsequent holder or holders of such shares shall be bound by the Scheme accordingly.

(C)

Notwithstanding any other provision of these Articles and, subject to the Scheme
becoming effective, if any shares are issued to any person (a “New Member”) (other thanunder the Scheme or to Takeda, any member of the Takeda Group or their respective
nominee(s)) at any time after the Scheme Record Time (the “Post-Scheme Shares”), they243shall, on the Scheme Effective Date, or, if later, on issue, be immediately transferred to
Takeda (or as it may direct) in consideration for (subject as hereinafter provided) the
payment to the New Member of the Relevant Consideration (as defined in Article 154(E)below).
(D)On any reorganisation of, or material alteration to, the share capital of either the Company
or Takeda (including, without limitation, any subdivision or consolidation) carried out after
the Scheme Effective Date, the value of the Relevant Consideration shall be adjusted by
the directors in such manner as the auditors of the Company may determine to beappropriate to reflect such reorganisation or alternation. References in this Article toshares shall, following such adjustment, be construed accordingly.

(E)

In this Article, “Relevant Consideration” means a cash payment in pounds Sterling equal
to the value of 0.839 New Takeda Shares and 30.33 US Dollars (or such greater or lesser
number of New Takeda Shares and amount as may be due under the Scheme if modified
in accordance with its terms) for each Post-Scheme Share as the relevant New Member
would have been entitled to pursuant to the Scheme had each Post-Scheme Share beena Scheme Share (as defined in the Scheme). The cash value of the New Takeda Sharesfor the purposes of this Article shall be calculated based on the mid-market quotation at
the close of business of the Tokyo Stock Exchange on the date of the issue of the PostScheme Shares. Values shall, where required, be converted to pounds Sterling at theclosing rate for the relevant date of issue of the Post-Scheme Shares from Bloomberg.

(F)

To give effect to any transfer of Post-Scheme Shares, the Company may appoint any
person as attorney (under the Powers of Attorney (Jersey) Law 1995, and on the basis thatany such appointment shall be irrevocable for a period of one year from the date uponwhich such New Member is issued the Post-Scheme Shares for that New Member) or
agent for the New Member to transfer the Post-Scheme Shares to Takeda and/or its
nominee(s) and do all such other things and execute and deliver all such documents as
may in the opinion of the attorney or agent be necessary or desirable to vest the PostScheme Shares in Takeda or its nominee(s) and, pending such vesting, to exercise allsuch rights attaching to the Post-Scheme Shares as Takeda may direct. If an attorney oragent is so appointed, the New Member shall not thereafter (except to the extent that theattorney or agent fails to act in accordance with the directions of Takeda) be entitled toexercise any rights attaching to the Post-Scheme Shares unless so agreed by Takeda. The
attorney or agent shall be empowered to execute and deliver as transferor a form oftransfer or other instrument or instruction of transfer on behalf of the New Member infavour of Takeda and/or its nominee(s) and the Company may give a good receipt for theconsideration for the Post-Scheme Shares and may register Takeda and/or its nominee(s)as holder thereof and issue to it certificates for the same. The Company shall not be
obliged to issue a certificate to the New Member for the Post-Scheme Shares. Takeda
shall, subject to paragraph (C) of this Article, pay (or procure the payment of) the Relevant
Consideration per Post-Scheme Share as soon as practicable and in any event within 45
Business Days (as defined in the Scheme) of the issue of the Post-Scheme Shares to the
New Member.

(G)

This Article shall cease to be effective if the Scheme shall not have become effective onor before 8 May 2019 (or such later date, if any, as Takeda and the Company may agree
and the Court and the Panel may allow).

(H)

Notwithstanding any other provision of these Articles, both the Company and the directors
may refuse to register the transfer of any shares between the Scheme Record Time andthe Scheme Effective Date.

(I)

No amounts of cash less than one penny shall be paid to any New Member pursuant tothis Article and the aggregate amount of cash to which a New Member would otherwise
have become entitled shall be rounded down to the nearest whole penny.”; and
244

(c)

conditional upon and with effect from the sanctioning of the Scheme by the Court, the Company,or such other person as may be appointed by the Company, be appointed as agent of the
Scheme Shareholders (as defined in the Scheme) for the purposes of undertaking and carrying
into effect, and is hereby irrevocably authorised to undertake and carry into effect, any and allsuch steps, actions, matters and procedures as may, in the opinion of the agent, be considerednecessary, desirable or appropriate pursuant to Japanese law (including, in particular, under
Articles 203 and 204 of the Japanese Companies Act (Act No. 86 2005) (kaisha hou)) in
connection with the allotment, issue and settlement of the New Takeda Shares pursuant to the
Scheme.
By order of the Board
Susan Kilsby
Chairman
Registered office
22 Grenville Street
St HelierJerseyJE4 8PX
Channel Islands
November 12, 2018

Notes
Right to Appoint a Proxy; Procedure for Appointment
1. Members of the Company entitled to attend and vote at the General Meeting are entitled to appoint a proxy to
exercise all or any of their rights to attend, speak and vote on their behalf at the General Meeting. A proxy need not
be a member of the Company but must attend the meeting to represent that member.
2.

A YELLOW Form of Proxy for use at the General Meeting is enclosed with this notice. Instructions for its use are setout on the form. To be valid, the YELLOW Form of Proxy, and any power of attorney or other authority (if any) underwhich it is executed (or a duly certified copy of any such power or authority) must be returned to Equiniti (Jersey)
Limited, c/o Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom bypost or (during normal business hours only) by hand not later than 11.30 a.m. (London time) on December 3, 2018
or, in the case of an adjournment of the General Meeting, not later than 48 hours before the time appointed for the
adjourned meeting. A pre-paid envelope, for use in the United Kingdom only, is enclosed for your convenience.

3.

A member may appoint more than one proxy in relation to the General Meeting, provided that each proxy is appointed
to exercise the rights attached to a different share or shares held by that member. A space has been included in the
YELLOW Form of Proxy to allow members to specify the number of shares in respect of which that proxy is
appointed. Members of the Company who return the YELLOW Form of Proxy duly executed but leave this space
blank shall be deemed to have appointed the proxy in respect of all their shares. If you wish to appoint more than
one proxy, photocopy the YELLOW Form of Proxy or request additional forms by calling Equiniti on 0330 123 5506
(if calling from within the UK) or on +44 (0)121 415 0856 (if calling from outside the UK) between 8.30 a.m. and 5.30
p.m. (London time) Monday to Friday, excluding public holidays in England and Wales. Calls are charged at thestandard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicableinternational rate. Please note that Equiniti cannot provide any financial, legal or tax advice and calls may be recorded
and monitored for security and training purposes. If two or more valid but differing proxy appointments are received
in respect of the same share for use at the General Meeting or on the same poll, the one which is last received(regardless of its date or of the date of its execution) shall be treated as replacing and revoking the others as regards
that share and if the Company is unable to determine which was last deposited, none of them shall be treated asvalid in respect of that share.

4.

Members of the Company entitled to vote at the General Meeting may also appoint a proxy electronically through thewww.sharevote.co.uk service by not later than 11.30 a.m. (London time) on December 3, 2018 or, in the case of an
adjournment of the General Meeting, not later than 48 hours before the time appointed for the adjourned meeting.
Full details of the procedure to be followed to appoint a proxy electronically are given on the website. Members of
the Company should note that they may not appoint more than one proxy in respect of their shareholding through thewww.sharevote.co.uk service, and if they wish to appoint more than one proxy, they should photocopy the YELLOW
Form of Proxy or request additional YELLOW Forms of Proxy from Equiniti through the relevant phone number
above.

245

5.

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for the General Meeting (and any adjournment of the General Meeting) by following the procedures
described in the CREST Manual. CREST personal members or other CREST sponsored members (and those
CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting
service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or
instruction made by means of CREST to be valid, the appropriate CREST message (a “CREST Proxy Instruction”)
must be properly authenticated in accordance with Euroclear’s specifications and must contain the information
required for such instructions, as described in the CREST Manual (available via www.euroclear.com). The message,
regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to apreviously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID
7RA01) by 11.30 a.m. (London time) on December 3, 2018 or, in the case of an adjournment of the General Meeting,
not later than 48 hours before the time appointed for the adjourned meeting. For this purpose, the time of receipt will
be taken to be the time (as determined by the time stamp applied to the message by the CREST applications host)from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by
CREST. After this time, any change of instructions to a proxy appointed through CREST should be communicated tohim by other means. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Article 34 of the Companies (Uncertificated Securities) (Jersey) Order 1999 (as amended from time to time). CREST
members (and, where applicable, their CREST sponsors or voting service providers) should note that Euroclear does
not make available special procedures in CREST for any particular messages. Normal system timings and limitations
will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed
a voting service provider, to procure that his/her CREST sponsor or voting service provider takes) such action as shallbe necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In thisconnection, CREST members (and, where applicable, their CREST sponsors or voting service providers) arereferred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST systemand timings.

6.

Completion and return of the YELLOW Form of Proxy, or the appointment of a proxy through CREST orelectronically through the www.sharevote.co.uk service, shall not prevent an eligible member of theCompany from attending and voting in person at the General Meeting or any adjournment thereof.

Voting Record Time
7. Entitlement to attend, speak and vote at the General Meeting or any adjournment thereof, and the number of votes
which may be cast at the General Meeting, will be determined by reference to the Company’s register of members
at 6.30 p.m. (London time) on December 3, 2018 or, if the General Meeting is adjourned, 6.30 p.m. (London time) on
the date falling two calendar days before the date appointed for the adjourned meeting. In each case, changes to theregister of members after such time will be disregarded.
Joint holders
8. In the case of joint members, where more than one of the joint members purports to appoint a proxy or to vote inperson on the same poll, only the appointment or vote submitted by the most senior member will be accepted.
Seniority is determined by the order in which the names of the joint members appear in the Company’s register ofmembers in respect of the joint shareholding (the first named being the most senior).
Corporate representatives
9. Any body corporate which is a member may, by resolution of its directors or other body corporate, appoint any person
as it thinks fit to act as its representative who shall be entitled to exercise the same powers on behalf of thecorporation which he represents as that body corporate could exercise if it were an individual member present at theGeneral Meeting in person.
Nominated Persons
10. The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person andwho have been nominated to enjoy information rights in accordance with article 59 of the Company’s articles of
Association (a “nominated person”). A nominated person may have a right under an agreement between him/her
and the member by whom he/she was nominated to be appointed, or to have someone else appointed, as a proxy
for the General Meeting. If a nominated person does not have such a right or does not wish to exercise it, he/she
may have a right under such an agreement to give instructions to the member as to the exercise of voting rights.
11. The statement of the rights of members in relation to the appointment of proxies in Notes 1 to 5 above does not apply
to nominated persons. The rights described in these paragraphs can only be exercised by members of the Company.
Nominated persons are reminded that they should contact the registered shareholder (and not the Company) on
matters relating to the Company’s shares.
General
12. The total number of issued ordinary shares in the Company as at the close of business on November 7, 2018, being
the latest practicable date before the publication of this document is 922,946,619, carrying one vote each on a poll.

246

As at the close of business of November 7, 2018, the Company holds 7,357,283 shares in treasury. Therefore, thetotal number of voting rights in the Company as at close of business on November 7, 2018 is 915,589,336.
13. To facilitate entry to the General Meeting, members are requested to bring with them the admission card which is
attached to the proxy card.
14. Members should note that the doors to the General Meeting will be open at 10.30 a.m.
15. Mobile phones may not be used in the General Meeting hall, and cameras and recording equipment are not allowedin the General Meeting hall.
16. Any person permitted to speak at the General Meeting has the right to ask questions relevant to the business of theGeneral Meeting. The Company must cause to be answered any such question relating to the business being dealt
with at the General Meeting but no such answer need be given if: (a) to do so would interfere unduly with the
preparation for the General Meeting or involve the disclosure of confidential information; (b) the answer has alreadybeen given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company
or the good order of the General Meeting that the question be answered.
17. A copy of this notice and other information required by section 311A of the UK Companies Act 2006 can be found atwww.shire.com.
18. All resolutions to be put to the General Meeting will be voted on by a poll and not by a show of hands. Members andproxies will be asked to complete a poll card to indicate how they wish to cast their votes. These cards will becollected at the end of the General Meeting. The results of the poll will be published on the Company’s website andnotified to the UK Listing Authority once the votes have been counted and verified.
19. Copies of the Company’s existing Articles of Association and copies of the Articles of Association as proposed to beamended by the special resolution set out in this notice are available for inspection at Equiniti Limited at Aspect
House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom, and at the Company’s registered officeat 22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands until the opening of business on the day on which
the General Meeting is held and will also be available for inspection at the place of the General Meeting for at least
15 minutes before the General Meeting.
20. Except as provided above, shareholders who have general queries about the General Meeting should use thefollowing means of communication (no other methods of communication will be accepted); (i) contact Equiniti inwriting at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA, United Kingdom; or(ii) telephone the shareholder helpline on 0330 123 5506 (if calling from within the UK) or on +44 (0)121 415 0856 (ifcalling from outside the UK). Calls are charged at the standard geographic rate and will vary by provider. Calls outside
the United Kingdom will be charged at the applicable international rate. Different charges may apply to calls frommobile telephones. The helpline is open between 8.30 a.m. to 5.30 p.m. (London time), Monday to Friday, excluding
public holidays in England and Wales. Please note that Equiniti cannot provide any financial, legal or tax advice andcalls may be recorded and monitored for security and training purposes. Members may not use any electronic
address provided in either this notice of General Meeting or any related documents (including the enclosed Form of
Proxy) to communicate with the Company for any purposes other than those expressly stated.
American Depositary Shares
21. If: (i) as at 5.00 p.m. (New York time) on November 7, 2018, you hold American Depositary Shares (“ADSs”) issued
under the amended and restated deposit agreement dated as of May 23, 2011 by and among the Company, Citibank,
N.A. (the “Shire Depositary”), and all holders and beneficial owners of ADSs from time to time (the “Shire Deposit
Agreement”); and (ii) you want the Shire Depositary to vote the ordinary shares in the Company represented by your
ADSs at the General Meeting, you may provide your voting instructions to the Shire Depositary via the internet, by
telephone or by sending in a completed ADS voting instruction card, in each case in accordance with the instructions
included on such ADS voting instruction card. In each case, voting instructions must be received by the Shire
Depositary no later than 10.00 a.m. (New York time) on November 29, 2018 or, if the General Meeting is adjourned,
such later date as may be notified by the Shire Depositary, having consulted with the Company.
22. If the Shire Depositary does not receive voting instructions by this time, you will: (i) subject to the terms of the Deposit
Agreement, be deemed to have instructed the Shire Depositary to give a person designated by the Company adiscretionary proxy to vote the ordinary shares in the Company represented by your ADS; and (ii) be required, in
accordance with DTR 5 of the UK Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, tonotify the Company of your holdings in ADS if the percentage of your voting rights falls below a notifiable threshold
as a result of a person designated by the Company having been so appointed.
23. In the event that a person designated by the Company is given such discretionary proxy, it is the intention of the boardof directors of the Company to direct such person to exercise such votes in line with the voting recommendation of
the board for the resolution to be proposed at the General Meeting.

247

APPENDIX IRISK FACTORS
Any holding of New Takeda Securities is subject to a number of risks and uncertainties. This Appendix
I has been prepared by the Takeda Directors to inform Shire Shareholders and Shire ADS Holders of
the key risks and uncertainties associated with the New Takeda Securities and the Combined Group’sbusiness, strategy and the industry in which it will operate. Before making an Election to receive New
Takeda Securities, Shire Shareholders and Shire ADS Holders should carefully consider the factors,
risks and uncertainties associated with any such holding, the Combined Group’s business, strategy andthe industry in which it operates, together with all other information contained in this document
including, in particular, the risk factors described below.
The following is not an exhaustive list or explanation of all risks that prospective holders of New Takeda
Securities may face and should be used as guidance only. The order in which risks are presented is notnecessarily an indication of the likelihood of the risks actually materialising, of the potential significanceof the risks or of the scope of any potential harm to the Combined Group’s business, prospects,
financial condition and/or results of operations. Additional risks and uncertainties relating to the
Combined Group that are not currently known to Shire or Takeda, or that Shire and Takeda currently
deem immaterial, may individually or cumulatively also have a material adverse impact on the CombinedGroup’s business, prospects, financial condition and/or results of operations and, if any such risk
should materialise, the price of New Takeda Securities may decline and holders could lose all or partof their holding. Shire Shareholders and Shire ADS Holders should carefully consider whether a holdingin New Takeda Securities is suitable for them in the light of the information in this document and theirpersonal circumstances.
1.

Risks relating to the Combined Group

1.1

The Combined Group may fail to realise the anticipated benefits of the Acquisition.
The ultimate success of the Acquisition depends on the Combined Group’s ability to realise theanticipated growth opportunities and synergies leading to cost savings Takeda expects fromcombining the businesses. Even following the completion of the Acquisition, it will be necessary
for the Combined Group to devote significant time and resources to the reorganisation of its
personnel structure, enhancement of cost-efficiency and the strengthening of management andoperational functions in order to realise the anticipated synergies from the integration of Takeda’s
and Shire’s businesses. Takeda expects to incur non-recurring cash costs totalling approximately$2.4 billion in connection with the integration of Shire in the first three fiscal years following thecompletion of the Acquisition. The expected synergies and the projected cash costs necessary
to achieve them may be affected by changes in the overall economic, political and regulatoryenvironment, including applicable tax regimes and fluctuations in foreign exchange rates, and therealisation of the other risks relating to the Combined Group’s business described herein.
Furthermore, the integration process may divert management’s attention from other strategic
opportunities and the day-to-day operation of the Combined Group’s business. If the CombinedGroup is not able to successfully manage the integration process and create a unified businessculture, the anticipated benefits of the Acquisition and subsequent integration may not be realised
fully or at all or may take longer or prove more costly to realise than expected.
The Combined Group may face significant challenges in integrating the organisations, businesscultures, procedures and operations of Takeda and Shire, including:•integrating personnel, operations and systems, while maintaining focus on selling andpromoting existing and newly acquired or produced products;•

co-ordinating and integrating geographically dispersed organisations;•changes or conflicts in corporate culture;248

•

the need to manage, train and integrate Shire’s and Takeda’s personnel, who may
respectively have limited experience with Takeda’s and Shire’s business lines andproducts, and to retain existing Shire and Takeda employees, particularly highly-skilled orother key employees and senior members of the Takeda’s and Shire’s respective
management teams;•

maintaining and growing Shire’s and Takeda’s customer base;•incremental tax exposure based on the differences in Takeda’s corporate structure andShire’s;•

maintaining business relationships with suppliers, third-party alliance partners and otherkey counterparties; and•inefficiencies associated with the integration and management of the operations of the twocompanies.

Furthermore, in connection with the Acquisition, Takeda expects to record significant amounts ofgoodwill and intangible assets. If Takeda is unable to achieve the anticipated benefits of theAcquisition, the Combined Group could be required to recognise significant impairment losses
related to such goodwill and intangible assets, potentially up to their full value. Additionally,
because Takeda intends to issue a significant number of additional Takeda Shares as part of theConsideration for the Acquisition, a failure to achieve the anticipated benefits of the Acquisition
could negatively affect the Combined Group’s earnings per share.
1.2

Takeda has substantial debt, and expects to incur significant additional debt in connection
with the Acquisition, which may limit the Combined Group’s ability to execute its businessstrategy, refinance existing debt or incur new debt, and if Takeda is unable to meet its
goals for deleveraging after the Acquisition, the Combined Group could be at a greater riskof a downgrade of its credit ratings.
The principal value of Takeda’s consolidated bonds and loans was approximately ¥985.7 billion
as of March 31, 2018. In connection with the Acquisition, on May 8, 2018, Takeda entered into a
Bridge Credit Agreement, with aggregate commitments of $30.85 billion, to finance a portion of
the funds required for the Acquisition. Subsequently, on June 8, 2018, Takeda entered into a Term
Loan Credit Agreement (the “Term Loan Credit Agreement”) with aggregate commitments of$7.5 billion, and reduced commitments under the Bridge Credit Agreement by the same amount.
On October 26, 2018, Takeda entered into a senior short-term loan facility agreement (the“Senior Short-Term Loan Facility Agreement”), with aggregate commitments of ¥500 billion;
this further reduced the commitments under the Bridge Credit Agreement by $4.5 billion. On
November 8, 2018, Takeda launched the offering of its unsecured EUR denominated seniornotes (the “Bond Offering”), the proceeds of which will be used to fund part of the cash portionof the Consideration payable to Shire Shareholders in connection with the Acquisition. The
commitments under the Bridge Credit Agreement will be reduced by reference to the amount of
the proceeds of the Bond Offering. Takeda expects to draw down on the commitments to theTerm Loan Credit Agreement, the Senior Short-Term Loan Facility Agreement and (subject to any
additional refinancing) the Bridge Credit Agreement at the time of the completion of theAcquisition. Furthermore, following the completion of the Acquisition, Takeda may refinance all ora portion of the amounts borrowed under the Senior Short-Term Loan Facility Agreement
pursuant to the subordinated loan agreement entered into on October 26, 2018 (the“Subordinated Loan Agreement”), with aggregate commitments of ¥500 billion, subject toTakeda’s ability to obtain alternative financing. Moreover, subject to any potential refinancing (ifany), following the Acquisition, Shire’s consolidated borrowings and capital leases, which totalled$19.5 billion as of December 31, 2017, would be included in the Combined Group’s consolidatedbalance sheet. This significant amount of aggregate debt and the substantial amount of cash
required for payments of interest and principal could adversely affect the Combined Group’s
liquidity. Furthermore, Takeda is required to comply with certain covenants within various

249

financing arrangements and violations of such covenants may require the acceleration and
immediate repayment of the indebtedness, which may in turn have a material adverse effect on
Takeda’s financial condition.
Takeda may desire to or be required from time to time to incur additional borrowings, including
refinancing any of the Bridge Credit Agreement, the Term Loan Credit Agreement, the Senior
Short-Term Loan Facility Agreement or any other indebtedness to be incurred in connection with
the Acquisition and settlement of Shire’s existing indebtedness. In particular, any amounts
borrowed under the Bridge Credit Agreement will mature at the latest 364 calendar days following
the date of funding (in the case of tranche 4 thereto, which is currently the subject of anaggregate of $3.5 billion of lending commitments, 90 calendar days following such date),requiring Takeda to repay, whether by cash on hand or from other sources, such as disposals, orto refinance such borrowings soon after they are incurred. Takeda may also be unsuccessful inpursuing a refinancing alternative to the Senior Short-Term Loan Facility Agreement other thanthe Subordinated Loan Agreement. Takeda’s ability to arrange a refinancing will depend on the
Combined Group’s financial position and performance, prevailing market conditions and otherfactors beyond the Combined Group’s control.
Takeda aims to decrease its leverage following the Acquisition, with a target ratio of net debt toAdjusted EBITDA of 2.0x or less within three to five years following completion of the Acquisition,and is considering selected disposals of non-core assets to increase the pace of deleveraging.
However, Takeda may not be able to meet these goals if it is unable to sufficiently decrease its
overall indebtedness, or if it is unable to achieve sufficient increases in earnings to offset its
increased levels of debt. Takeda may also not be successful in selecting non-core assets for
disposal, and disposals may affect its business, financial condition or results of operations
adversely, leading to larger-than-expected decreases in earnings. Takeda may also not be able
to dispose of such assets successfully in a manner that allows Takeda to meet its goals or at all.
If Takeda is unable to decrease its leverage, Takeda may be subject to additional ratings actions
by third-party ratings agencies. For example, in May 2018, Moody’s (Japan) K.K. lowered
Takeda’s credit rating to A2 from A1, reflecting its expectations for Takeda’s overall levels ofleverage in the future, even in the absence of the Acquisition. In addition, in May 2018, Standard& Poor’s Global Ratings announced that it was reviewing Takeda’s credit ratings with a view to apotential downgrade due to Takeda’s decision to acquire Shire. Any future downgrades may
negatively influence the terms for the refinancing of Takeda’s existing debt or new borrowings onterms that Takeda would consider commercially reasonable.
1.3

The unaudited pro forma condensed combined financial data presented herein is notnecessarily representative of the Combined Group’s actual or future financial
performance.
The unaudited pro forma condensed combined balance sheet and statement of income as of andfor the fiscal year ended March 31, 2018 included in this document have been prepared forillustrative purposes only, and show the effect of:•

the Acquisition;•

the financing obtained by Takeda to fund the cash portion of the Consideration; and•the issue of New Takeda Shares to Shire Shareholders at the Scheme Record Time,
including shares represented by New Takeda ADSs.

The unaudited pro forma condensed combined balance sheet reflects these transactions as if
they had occurred on March 31, 2018, while the unaudited pro forma condensed combined
statement of income reflects these transactions as if they had occurred on April 1, 2017.
The unaudited pro forma condensed combined financial information has been derived from theaudited historical financial statements of Takeda and Shire, and certain adjustments andassumptions have been made regarding the Combined Group after giving effect to the250Acquisition. The amount of consideration to be recorded on Takeda’s financial statements willvary based on the exchange rate at the date of the completion of the Acquisition and the valueof Takeda and Shire’s respective shares. The terms and conditions of the financing that will be
used to fund the Acquisition, including the amount of debt Takeda actually incurs, have not been
finally determined and are subject to change. The unaudited pro forma condensed combined
financial information gives effect to borrowings under the Bridge Credit Agreement (as reduced
to date), the Term Loan Credit Agreement, the Senior Short-Term Loan Facility Agreement andan assumed amount of senior notes reflecting the total amount of the EUR Senior Notes
combined with the Potential Future USD Notes and does not give effect to any potentialrefinancing of the Senior Short-Term Loan Facility Agreement pursuant to the Subordinated Loan
Agreement following the completion of the Acquisition or any other potential future financing
transactions. The unaudited pro forma condensed combined financial information does notinclude, among other things, adjustments relating to costs expected to be incurred in relation to
restructuring or integration activities, estimated synergies, the effect of any further refinancing ofcommitments under the Bridge Credit Agreement, Term Loan Credit Agreement, the Senior
Short-Term Loan Facility Agreement or existing indebtedness of either of Takeda or Shire or otherpotential items that are currently not factually supportable and, in the case of the unaudited pro
forma condensed combined statement of income, expected to have a continued impact on
Takeda’s results following the completion of the Acquisition. Certain assets and liabilities of Shire
have been measured at fair value based on preliminary estimates using assumptions that Takeda
believes are reasonable, utilising information currently available. The process for estimating thefair value of acquired assets and assumed liabilities requires the use of judgment in determining
the appropriate assumptions and estimates. These estimates may be revised and may include
additional assets acquired or liabilities assumed as additional information becomes available andas additional analyses are performed. Differences between preliminary estimates in theunaudited pro forma condensed combined financial information and the final acquisition
accounting may occur and could be material.
In addition, the assumptions used in preparing the unaudited pro forma condensed combined
financial information may not prove to be accurate. Such assumptions can be adversely affectedby known or unknown facts, risks and uncertainties, many of which are beyond Takeda’s and/or
Shire’s control. Other factors may also affect the Combined Group’s financial condition or resultsof operations following the completion of the Acquisition. In addition, following the completion of
the Acquisition, the financial position and results of operations of Shire, which are reported under
US GAAP, will be converted to IFRS for inclusion in Takeda’s consolidated financial position andresults of operations, which are reported under IFRS. The unaudited pro forma condensed
combined financial information presents the effect of such conversion based on the information
available to Takeda as of the date hereof. Takeda expects further information to become available
to it after the completion of the Acquisition, and the adjustments actually made to convert Shire’s
financial information to IFRS may vary in material ways from the assumptions made in theunaudited pro forma condensed combined financial information contained in this document.
1.4

Takeda will be subject to additional risks arising from the acquired businesses of Shireand from the legal, regulatory and tax regimes that Shire operates under.
Following the completion of the Acquisition, Takeda will assume the risks related to Shire’s
businesses, which differ from, or will amplify, certain risks Takeda currently faces. For example,
markets outside Japan, particularly the United States, represent a larger portion of Shire’s
business than Takeda’s, and Takeda therefore expects its overall exposure to these markets toincrease following the completion of the Acquisition. As with Takeda’s products, Shire’s products
are subject to competition from generic or other competing products, and the successful
introduction of such competitors or the invalidation of patent protections over Shire’s products
could materially and adversely affect the products acquired. Additionally, Shire operates in certain
businesses that Takeda currently does not, including rare diseases and plasma-derived
therapies. These businesses will present new or unfamiliar challenges to Takeda. Shire’s plasmaderived therapies in particular present significant challenges relating to the sourcing, production251and transportation of plasma, all of which are complex and subject to extensive regulation, in
addition to being capital intensive. If Takeda is unable to manage this new business effectively, it
may lose market share or customer confidence, be required to pursue additional manufacturing
capability or sourcing (or, in the case of an oversupply, lower prices charged, record impairment
charges on facilities or inventory or close certain facilities) or take other actions that could
materially and adversely affect the plasma-derived therapies business.
Furthermore, Takeda will be subject to additional legal, regulatory and tax regimes that Shire
operates under, many of which are complex and could subject Takeda to additional risks or
liabilities. For example, Shire is subject to evolving and complex tax laws in various jurisdictions
and routinely obtains advice on tax matters, including the tax treatment of the break fee it
received in connection with the terminated offer to acquire Shire made by AbbVie, Inc. in 2014,
which has not been agreed with the tax authorities. In addition, in connection with Shire’s 2016acquisition of Baxalta, Shire has agreed to indemnify Baxter International Inc., its affiliates andeach of their respective officers, directors and employees against certain tax-related losses if themerger of Baxalta and Shire causes the prior spin-off of Baxalta by Baxter International Inc. andrelated transactions to fail to qualify as tax-free. Although Shire received an opinion of tax counsel
that the merger will not cause such prior transactions to fail to qualify as tax-free, such opinion is
not binding on the tax authorities and the potential tax indemnification obligations are not limited
in amount.
If Takeda is unable to manage these additional risks effectively, the Combined Group’s business,
results of operations or financial conditions following the completion of the Acquisition could bematerially and adversely affected.
1.5

Research and development of pharmaceutical products is expensive and subject tosignificant uncertainties, and the Combined Group may be unsuccessful in bringing
commercially successful products to market or recouping development costs.
The Combined Group’s ability to continue to grow its business depends significantly on the
success of its research and development activities in identifying, developing and successfullycommercialising new products in a timely and cost-effective manner. To accomplish this, Takeda
commits, and, if the Acquisition completes, the Combined Group will commit, substantial efforts,
funds and other resources to research and development, both through its in-house resources andthrough collaborations with third parties. However, research and development programmes for
new products by pharmaceutical companies are expensive and involve intensive preclinicalevaluation and clinical trials in connection with a highly complex and lengthy regulatory approval
process (see paragraph 1.6 of this Appendix I below). The research and development process
for a new pharmaceutical product also requires Takeda (and, if the Acquisition completes, will
require the Combined Group) to attract and retain sufficient numbers of highly-skilled employees
and can take 10 to 15 years or longer from discovery to commercial launch. Moreover, even if
Takeda (and, if the Acquisition completes, the Combined Group) successfully develops andbrings to market new products, there is only a limited available patent life in which to recoup
these development costs.
During each stage of the approval process and post-approval life cycle of Takeda’s (and, if theAcquisition completes, the Combined Group’s) products, there is a substantial risk that serious
obstacles will be encountered, including:•unfavourable results from preclinical testing of a new compound;•difficulty in enrolling patients in clinical trials, or delays or clinical trial holds at clinical trialsites;•

delays in completing formulation and other testing and work necessary to support anapplication for regulatory approval;•

adverse reactions to the product candidate or indications of other safety concerns;

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insufficient clinical trial data to support the safety or efficacy of the product candidate;•difficulty or delays in obtaining all necessary regulatory approvals in each jurisdiction
where Takeda (and, if the Acquisition completes, the Combined Group) proposes to market
such products;•

failure to bring a product to market before a competitor, or to develop a product sufficiently
differentiated from a competing product to achieve significant market share;•difficulty in obtaining reimbursement at satisfactory rates for Takeda’s (and, if theAcquisition completes, the Combined Group’s) approved products from governments andinsurers;•

difficulty in obtaining regulatory approval for additional indications;•failure to enter into or implement successful alliances for the development and/orcommercialisation of products;•

inability to manufacture sufficient quantities of a product candidate for development orcommercialisation activities in a timely or cost-efficient manner;•even after Takeda (and, if the Acquisition completes, the Combined Group) obtains
regulatory approval for and commercialises a product, such product and its manufacturer
are subject to continual regulatory review, and any discovery of previously unknown
problems with the product or the manufacturer may result in imposition of restrictions orrecalls, including withdrawal of the product from the market; and•the degree of market acceptance of any approved product candidate by the medical
community, including physicians, healthcare professionals and patients, will depend on anumber of factors, including relative convenience and ease of administration, theprevalence and severity of any adverse reactions, availability of alternative treatments,
pricing and Takeda’s sales and marketing strategy.

In addition, to the extent that new regulations raise the costs of obtaining and maintaining productauthorisations or limit the economic value of a new product to its originator, Takeda’s (and, if theAcquisition completes, the Combined Group’s) profitability and growth prospects could bediminished. Development of new and innovative products can also require the use of emerging
platforms and technologies for which regulations either do not yet exist or are under development
or modification. This may lead to greater uncertainty and risk in establishing the necessary data
for approvals to conduct clinical trials and/or receiving marketing approvals.
As a result of the foregoing or other factors, Takeda (and, if the Acquisition completes, theCombined Group) may decide to abandon the development of potential pipeline products inwhich it has invested significant resources, even where the product is in the late stages ofdevelopment. Moreover, there can also be no assurance that the Combined Group will be
successful in bringing new products to market, marketing them, achieving sufficient acceptancethereof and recouping its investments in their development. For example, Takeda’s pipeline
compounds may not receive regulatory approval, become commercially successful or achievesatisfactory rates of reimbursement. Additionally, products approved for use and successfully
marketed in one market may be unable to obtain regulatory approval, become commerciallysuccessful or achieve satisfactory rates of reimbursement in other markets. As a result, Takeda(and, if the Acquisition completes, the Combined Group) may be unable to earn returns on
investments that it originally anticipated or at all, or may be forced to revise its research anddevelopment strategy, and the Combined Group’s business, financial condition and results ofoperations could be materially and adversely affected.

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1.6

If the Combined Group fails to comply with government regulations, regulatory approvals
and reimbursement requirements, its business could be adversely affected.
Obtaining marketing approval for pharmaceutical products is a lengthy, complex and highly
regulated process that requires intensive preclinical and clinical data, and the approval process
can vary significantly depending on the regulatory authority. Relevant health authorities may, atthe time of the filing of the application for a marketing authorisation, or later during their review,
impose requirements that can evolve over time, including requiring additional clinical trials, andsuch authorities may delay or refuse to grant approval. Even where the Combined Group has
obtained marketing approval for a product in one or more major markets, it may need to invest
significant time and resources in applying for approval in other markets, and there is no
assurance that the Combined Group will be able to obtain such approval. In recent years, healthauthorities have become increasingly focused on product safety and on the risk/benefit profile ofpharmaceutical products, which could lead to more burdensome and costly approval processes
and negatively affect the Combined Group’s ability to obtain regulatory approval for products
under development. For example, the US Food and Drug Administration, the European
Medicines Agency, and the Pharmaceuticals and Medical Devices Agency, have been
implementing strict requirements for approval, particularly in terms of the volume of data needed
to demonstrate a product’s efficacy and safety.
Even after regulatory approval is obtained, marketed products are subject to various postapproval requirements, including continual review, risk evaluations, comparative effectivenessstudies and, in some cases, requirements to conduct post-approval clinical trials to gather
additional safety and other data. Regulatory authorities in many countries have worked toenhance post-approval monitoring in recent years, which has increased post-approval regulatoryburdens. Post-regulatory approval reviews and data analyses can lead to the issuance ofrecommendations by government agencies, health professional and patients or other specialisedorganisations regarding the use of products; for example, a recommendation to limit the patient
population of a drug’s indication, the imposition of marketing restrictions, including changes in
product labelling, or the suspension or withdrawal of the product. Any such action can result in
reductions in sales volume and/or new or increased concerns about the adverse reactions orefficacy of a product. These substantial regulatory requirements have, over time, increased thecosts associated with maintaining regulatory approvals and achieving reimbursement for
Takeda’s products.
If the regulatory approval process or post-approval reimbursement or other requirements become
significantly more burdensome in any of the Combined Group’s major markets, the CombinedGroup could become subject to increased costs and may be unable to obtain or maintainapproval to market the Combined Group’s products. Any such adverse changes could materiallyand adversely affect the Combined Group’s business, results of operations or financial condition.

1.7

The expiration or loss of patent or regulatory data protection over the Combined Group’s
products or patent infringement by generic manufacturers could lead to significant
competition from generic versions of the relevant product and lead to declines in market
share and price levels of the Combined Group’s products.
Takeda’s pharmaceutical products are (and, if the Acquisition completes, the Combined Group’s
pharmaceutical products will be) generally protected for a defined period by various patents(including those covering drug substance, drug product, approved indications, methods ofadministration, methods of manufacturing, formulations and dosages) and/or regulatory
exclusivity, which are intended to provide Takeda (or the Combined Group, as applicable) with
exclusive rights to market the products for the life of the patent or duration of the regulatory dataprotection period. The loss of market exclusivity for pharmaceutical products opens suchproducts to competition from generic substitutes that are typically priced significantly lower thanthe original products, which typically adversely affects the market share and prices of the original
products.

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Generic substitutes have high market shares in a number of key markets, including the UnitedStates, Europe and many emerging countries, and the adverse effects of the launch of genericproducts are particularly significant in such markets. The introduction of generic versions of apharmaceutical product typically leads to a swift and substantial decline in the sales of theoriginal product. Takeda’s active life cycle management efforts cannot (and, if the Acquisition
completes, the Combined Group’s active life cycle management regulations will not be able to)fully mitigate the impact of competition from generics. In the United States and the EU, forexample, political pressure to reduce spending on prescription drugs has led to legislation andother measures that encourage the use of generic products. In Japan, the government is
implementing various measures to control drug costs, including by encouraging medical
practitioners to use and prescribe generic drugs, and in June 2017 announced its intention toraise generic drug penetration with respect to products for which market exclusivity has expired
to 80 per cent. by volume by September 2020. Legislation has also been passed in the UnitedStates and Europe encouraging the use of biosimilar products. Similar to generics, biosimilars
aim to provide less expensive versions of innovative biologic products. New legislation has
provided abbreviated pathways for the approval and marketing of biosimilar products, which may
affect the profitability and commercial viability of the Combined Group’s biologic products.
Certain of Takeda’s products have begun to, or are expected over the next several years to, facedeclining sales due to the loss of market exclusivity. For example, following the expiration ofpatent protection over bortezomib, the active ingredient in VELCADE, one of Takeda’s largest
selling products in the United States, a competing bortezomib-containing product has been
introduced. This has led to a decrease in sales of VELCADE, and further entry of competingproducts could result in substantial additional declines. Such decreases may accelerate following
the scheduled expiration of patent protection over the formulation of VELCADE in 2022, or earlier
if a competitor is able to develop a way to formulate VELCADE in a manner that does not infringe
the relevant patent or succeed in getting the formulation patent invalidated. In addition, as patent
protection has expired for PANTOPRAZOLE in many major markets, including the United States
and the EU, sales of PANTOPRAZOLE have continued to decline in those markets.
The Combined Group may also be subject to competition from generic drug manufacturers
before the expiration of patents if a manufacturer successfully challenges the validity of the
Combined Group’s patents, or if the manufacturer believes that the benefits of launching thegeneric drug “at risk” (before the expiration of the Combined Group’s patent) outweigh the costsof defending infringement litigation. If such a competitor launches a generic product “at risk”
before the initiation or completion of court proceedings, a court may decline to grant the
Combined Group a preliminary injunction to halt further “at risk” sales and remove the infringing
product from the market. While the Combined Group may be entitled to obtain damages
subsequently, the amount the Combined Group may ultimately be awarded and able to collect
may be insufficient to compensate for the loss of sales and other harm caused to it. Furthermore,
if the Combined Group loses patent protection as a result of an adverse court decision or asettlement, in certain jurisdictions, it may face the risk that government and private third-party
payers and purchasers of pharmaceutical products may claim damages alleging they have overreimbursed or overpaid for a drug.
If the Combined Group’s patent and other intellectual property rights are infringed by generic drug
manufacturers or other third parties, the Combined Group may not be able to take full advantageof the potential or existing demand for its products. The protection that the Combined Group isable to obtain for its prescription drugs varies from product to product and country to country andmay not always be sufficient because of local variations in issued patents, or differences innational law or legal systems, including inconsistency in the enforcement or application of law
and limitations on the availability of meaningful legal remedies. In particular, patent protection in
emerging markets is often less certain than in developed markets. Certain countries may also
engage in compulsory licensing of pharmaceutical intellectual property to other manufacturers as
a result of local political pressure. Furthermore, the attention of the Combined Group’s
management and other personnel could be diverted from their normal business activities if the255Combined Group decides to litigate against such infringement. The realisation of any such risks
could adversely and materially affect the Combined Group’s business, financial condition andresults of operations.
1.8

The Combined Group is subject to the risk of intellectual property infringement claims by
third parties.
The Combined Group is also subject to the risk of infringement claims made against the
Combined Group by third parties. Although Takeda monitors (and, if the Acquisition completes,
the Combined Group will monitor) its operations to prevent infringement on the intellectual
property rights of third parties, if it is found to have infringed the intellectual property rights ofothers or if it agrees to settle infringement claims, it may be required to recall the relevant
products, terminate manufacturing and sales of such products, pay significant damages or pay
significant royalties.
Takeda evaluates (and, if the Acquisition completes, the Combined Group will continue toevaluate) any such infringement claims to assess the likelihood of unfavourable outcomes and to
estimate, if possible, the amount of potential losses. Based on these assessments and estimates,
and in keeping with applicable accounting and disclosure standards, Takeda establishes
reserves and/or discloses the relevant litigation claims or decides not to establish reserves ordisclose (and, if the Acquisition completes, the Combined Group will continue this practice). Suchassessments and estimates are based on the information available to Takeda’s (and, if theAcquisition completes, the Combined Group’s) management at such time and involve asignificant amount of management judgment. Actual outcomes or losses may differ materiallyfrom those envisioned by Takeda’s current assessments and estimates (or, if the Acquisition
completes, the Combined Group’s then current assessments and estimates). Although theparties to such patent and intellectual property disputes in the pharmaceutical industry have often
settled through licensing or similar arrangements, the costs associated with these arrangements
may be substantial and could include the payment of ongoing royalties. Furthermore, thenecessary licences may not be available on acceptable terms or at all. Therefore if the CombinedGroup is unable to successfully defend against infringement claims by third parties, theCombined Group’s financial results could be materially and adversely affected.

1.9

The Combined Group faces risks from the pursuit of acquisitions, and the anticipatedbenefits and synergies resulting from acquisitions may not be realised.
Takeda regularly pursues (and, if the Acquisition completes, the Combined Group will pursue)
acquisitions for a number of reasons, including strengthening its pipeline, complementing existinglines of business, adding research and development capabilities or pursuing other synergies. The
pursuit of these acquisitions requires the commitment of significant management and capital
resources in various stages, from the exploration of potential acquisition targets to the negotiationand execution of an acquisition to the integration of an acquired business into Takeda’s (or, if theAcquisition completes the Combined Group’s) own business. The required commitment of timeand resources may divert the attention of management or capital or other resources away fromthe Combined Group’s day-to-day business. Moreover, the Combined Group may not be able torecoup the investment of capital or other resources through the successful integration of acquired
businesses, including the realisation of any expected cost or other synergies. Specifically, theCombined Group may encounter the following difficulties:•

The Combined Group may face significant challenges in combining the infrastructure,
management and information systems of acquired companies with its own, including
integrating research and development, manufacturing, distribution, marketing andpromotional activities and information technology systems.

•

There may be difficulties in conforming standards, controls, procedures and accounting
and other policies, as well as business cultures and compensation structures.

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•

The Combined Group may not be able to retain key personnel at acquired companies, or
its own employees may be motivated to leave due to acquisitions.

•

The Combined Group may not be successful in identifying and eliminating redundancies
and achieving other cost savings as expected.

•

The Combined Group may not be able to successfully realise benefits from acquired
products, including pipeline products under development.

Integrating the operations of multiple new businesses with that of the Combined Group’s own is
a complex process that requires significant management attention and resources. The integration
process may disrupt the Combined Group’s existing and other newly acquired businesses and,if implemented ineffectively, could have an adverse impact not only on the Combined Group’s
ability to realise the benefits of a given acquisition but also on the results of its existing
operations. Integration-related risks may be heightened in cases where acquired businesses’
operations, employees or customers are located outside the Combined Group’s major markets
and the Combined Group incurs higher costs than anticipated due to regulatory changes,
environmental factors or foreign exchange fluctuations. Takeda continues to pursue (and, if theAcquisition completes, the Combined Group will continue to pursue) strategic businessacquisitions globally as a key part of its continuous growth strategy. If Takeda (or, if theAcquisition completes, the Combined Group) is not able to achieve the anticipated benefits of any
future acquisitions in full or in a timely manner, Takeda (or, if the Acquisition completes, theCombined Group) could be required to recognise impairment losses, Takeda may not be able torecoup its investment, and the Combined Group’s business, financial position and results ofoperations could be materially and adversely affected. Particularly, Takeda (or, if the Acquisition
completes, the Combined Group) may be unable to achieve the expected revenues pursuant tolicensing, co-promotion or co-development agreements or collaborations. Takeda (or, if theAcquisition completes, the Combined Group) may also assume unexpected contingent or otherliabilities, or be required to mark up the fair value of liabilities (or mark down the fair value of
assets) acquired upon the close of an acquisition.
1.10 The Combined Group’s operating results and financial condition may fluctuate due to anumber of factors and may not be comparable across periods.
The Combined Group’s operating results and financial condition may fluctuate from quarter toquarter and year to year for a number of reasons, including acquisitions, divestitures, major
product launches, patent expiration or expiration of regulatory data protection for key products
and other reasons. In particular, as part of Takeda’s efforts to refocus its business portfolio,
Takeda has recently entered into a number of significant transactions that are expected to affectits results of operations, including:•the Acquisition, if completed successfully;•

the acquisition of TiGenix NV in July 2018;•

the divestment of Wako Pure Chemical Industries, Ltd., one of Takeda’s consolidated
subsidiaries, to FUJIFILM Corporation in April 2017;•

the acquisition of ARIAD Pharmaceuticals, Inc. in February 2017;•

the sale of Takeda’s respiratory business to AstraZeneca in April 2016; and•the transfer of certain long-listed products, consisting of products for which patent
protection and regulatory data protection have expired, to Teva Takeda Yakuhin Ltd., awholly owned subsidiary of Teva Takeda Pharma Ltd., a joint venture Takeda formed with
Teva Pharmaceutical Industries Ltd., in April 2016, and the subsequent sale of sevenadditional long-listed products in May 2017.

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Takeda (and, if the Acquisition completes, the Combined Group) intends to continue to pursue
both acquisitions of new businesses and dispositions of existing businesses in the future. As aresult, period-to-period comparisons of the Combined Group’s results of operations may notalways be directly comparable, and these comparisons should not be relied upon as an indicationof future performance. The Combined Group’s operating results and financial condition are also
subject to fluctuations from the risks described throughout this Appendix I.
1.11 Takeda has significant global operations, which expose the Combined Group to additionalrisks.
Takeda’s global operations, which encompass more than 70 countries in diverse regions acrossthe world, are subject to a number of risks, including:•difficulties in monitoring and co-ordinating research and development, marketing, supplychain and other operations in a large number of jurisdictions;•risks related to various laws, regulations and policies, including those implemented
following changes in political leadership and trade, capital and exchange controls;•changes with respect to taxation, including impositions or increases of withholding andother taxes on remittances and other payments by Takeda’s overseas subsidiaries;•

varying standards and practices in the legal, regulatory and business cultures in which
Takeda operates, including potential inability to enforce contracts or intellectual property
rights;•trade restrictions and changes in tariffs;•

complex sanctions regimes in various countries such as Japan, the United States, the EU
and other jurisdictions, violations of which could lead to fines or other penalties;•risks related to political instability and uncertain business environments;•changes in the political or economic relationship between Japan and the other countries
and regions in which Takeda operates;•

acts of terrorism, war, epidemics and other sources of social disruption; and•difficulties associated with managing local personnel and preventing misconduct by local
third-party alliance partners.

Any one or more of these or other factors could, if the Acquisition completes, increase the
Combined Group’s costs, reduce the Combined Group’s revenues, or disrupt the CombinedGroup’s operations, with possible material adverse effects on the Combined Group’s business,financial condition and results of operations. Even before the announcement of the Acquisition,
further expansion overseas was one of Takeda’s key strategies, and, in the fiscal year ended
March 31, 2018, regions outside Japan accounted for 67.2 per cent. of Takeda’s consolidated
revenue, with the United States in particular contributing 33.8 per cent. of consolidated revenue.
Takeda expects that markets outside Japan, particularly the United States and also Europe,
Canada and emerging markets, will continue to be increasingly important to the CombinedGroup’s business and results of operations, increasing the likelihood that any of these risks isrealised.
1.12 The Combined Group may not be able to realise the expected benefits of investments inemerging markets.
Takeda has been taking steps to grow its business in emerging markets, which it defines toinclude Russia and the Commonwealth of Independent States, Latin America, Asia (excluding
Japan) and Other (including the Middle East, Oceania and Africa). Takeda’s revenue fromemerging markets was ¥278.1 billion (or 15.7 per cent. of Takeda’s total revenue) for the fiscal
year ended March 31, 2018, and Takeda intends to pursue (and, if the Acquisition completes, theCombined Group to pursue) further growth in such emerging markets.

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However, there is no guarantee that efforts to expand sales in emerging markets will succeed.
Some countries may be especially vulnerable to periods of global financial instability or may havevery limited resources to spend on healthcare. To successfully implement its emerging markets
strategy, Takeda (and, if the Acquisition completes, the Combined Group) must attract and retain
qualified personnel, despite the possibility that some emerging markets may have a relatively
limited number of persons with the required skills and training. Takeda (and, if the Acquisition
completes, the Combined Group) may also be required to increase its reliance on third-party
agents within less-developed markets, which may put it at increased risk of liability. In addition,
many emerging markets have currencies that fluctuate substantially, and if such currencies aredevalued and Takeda (and, if the Acquisition completes, the Combined Group) cannot offset thedevaluations, its financial performance in such countries may be adversely affected. Further,many emerging markets have relatively weak intellectual property protection and inadequate
protection against crime, including counterfeiting, corruption and fraud. Operations in certain
emerging countries, where corruption may be more prevalent than in more developed countries
and where internal compliance practices may not be well established, may also pose challenges
from a legal and regulatory compliance perspective.
For reasons including but not limited to the above, sales within emerging markets carry significant
risks, and the realisation of such risks could have a material adverse effect on the CombinedGroup’s business, financial condition and results of operations.
1.13 Takeda depends on its “growth driver” products to support its future growth, and any
events that adversely affect the markets for these products may adversely affect the
Combined Group’s business, financial condition and results of operations.
Takeda’s future growth depends largely on its “growth drivers”, which Takeda defines as products
in its core therapeutic areas of gastroenterology, oncology and neuroscience, as well as
emerging markets. As a result of Takeda’s focus on these therapeutic areas and markets, any
event that adversely affects products aimed at these therapeutic areas or markets could have amaterial and adverse effect on the Combined Group’s business, financial condition and results ofoperations. These events could include discovery of previously unknown adverse reactions, lossof intellectual property protection, increased costs associated with manufacturing, supply chain
issues or product shortages, regulatory proceedings, changes in labelling, publicity affecting
doctor or patient confidence in the product, material product liability litigation and introduction ofnew, more effective treatments.
1.14 The Combined Group’s results of operations and financial condition may be adversely
affected by foreign currency exchange rate fluctuations.
Takeda manufactures and sells products to customers in numerous countries, and has enteredinto (and, if the Acquisition completes, the Combined Group will continue to enter into)acquisition, licensing, borrowings or other financial transactions that give rise to translation andtransaction risks related to foreign currency exposure. Fluctuations in currency exchange rates
in the markets where Takeda is active could negatively affect the Combined Group’s results ofoperations, financial position and cash flows. For the fiscal year ended March 31, 2018, 67.2 per
cent. of Takeda’s sales were in markets outside Japan, and Takeda expects this proportion to beeven higher for subsequent fiscal periods, due to anticipated increases in overseas sales ofgrowth driver products and the contribution of Shire’s results to Takeda’s results of operations,particularly in the US market. Takeda’s consolidated financial statements are (and, if theAcquisition completes, the Combined Group’s consolidated financial statements will be)presented in Japanese Yen, and by translating the foreign currency financial statements of its
foreign subsidiaries into Yen, the amounts of its revenue, operating profit, assets and equity, on
a consolidated basis, are affected by prevailing rates of exchange. For example, an increase in
the value of Japanese Yen relative to the other currencies in which Takeda operates, particularly
the US Dollar and the Euro, during the fiscal year ended March 31, 2017 was a significant
downward factor that contributed to a decrease in consolidated revenue, presented in Japanese259

Yen, from the fiscal year ended March 31, 2016. In the fiscal year ended March 31, 2018, thistrend reversed, but increases in the strength of the Yen in future years may similarly negatively
affect Takeda’s (and, if the Acquisition completes, the Combined Group’s) results of operations.
Takeda utilises (and, if the Acquisition completes, the Combined Group will continue to utilise)certain hedging measures with respect to some of its foreign currency transactions. However,such hedging measures do not cover all exposures and, even to the extent they do, they may
only delay, or may otherwise be unable to completely eliminate, the impact of fluctuations inforeign currency exchange rates.
1.15 The Combined Group may not be able to adequately expand its product portfolio throughthird-party alliance arrangements.
Takeda expects that the Combined Group, if the Acquisition completes, will continue to rely on
third parties for key aspects of its business, including the discovery and development of new
products, in-licensing products and the marketing and distribution of approved products. A majorpart of Takeda’s research and development strategy is to enhance collaborations with third
parties in the biotechnology industry, academia and the public sector, and Takeda believes thatthe overall strength of its research and development programme and product pipeline depends
on its ability to identify and initiate partnerships, acquisitions, in-licensing arrangements and othercollaborations with third parties. For example, a number of Takeda’s key products, including
ADCETRIS, TRINTELLIX and AMITIZA, are in-licensed products developed through allianceswith third parties. Takeda believes that, if the Acquisition completes, the Combined Group’s
research and development strategy and programme will continue to be similarly reliant on third
parties. However, there can be no assurance that any of Takeda’s (and, if the Acquisition
completes, the Combined Group’s) third-party alliances will lead to the successful development
and marketing of new products. Moreover, reliance on third-party alliances will subject the
Combined Group to a number of risks, including:•

The Combined Group may be unable to identify suitable opportunities at a reasonable costand on terms that are acceptable to it due to active and intense competition among
pharmaceutical groups for alliance opportunities or other factors.

•

Entering into in-licensing or partnership agreements may require the payment of significant“milestones” well before the relevant products are placed in the market, without any
assurance that such investments will ultimately become profitable in the long term.

•

When the Combined Group researches and markets its products through collaboration
arrangements, the performance of certain key tasks or functions are the responsibility of
its collaboration partners, who may not perform effectively or otherwise meet the
Combined Group’s expectations.

•

Decisions may be under the control of or subject to the approval of the Combined Group’s
collaboration partners, and the Combined Group may have differing views or be unable toagree upon an appropriate course of action. Any conflicts or difficulties that the CombinedGroup may have with its partners during the course of these agreements or at the time of
their renewal or renegotiation or any disruption in the relationships with the CombinedGroup’s partners may affect the development, launch and/or marketing of certain of the
Combined Group’s products or product candidates.

In addition, a licensor may attempt to terminate its licence agreement with the Combined Groupor elect not to renew it to pursue other marketing opportunities. The Combined Group’s licensors
could also merge with or be acquired by another company, or experience financial or othersetbacks unrelated to the Combined Group’s licensing arrangements. Any of these events may
force the Combined Group to abandon a development project and adversely affect its ability toadequately expand or maintain its product portfolio.

2601.16 Takeda’s reliance on third parties for the performance of key business functions,particularly research and development and product commercialisation, heightens therisks faced by the Combined Group’s business.
Takeda relies (and, if the Acquisition completes, the Combined Group will rely) on suppliers,
vendors and partners, including alliances with other pharmaceutical companies, for key aspectsof its business, including research and development, manufacture and commercialisation of
products, support for information technology systems and certain human resource functions.
Takeda does not (and, if the Acquisition completes, the Combined Group will not) control thesepartners, but it does and will depend on them in ways that may be significant to its operations. If
these parties fail to meet expectations or fulfil their obligations, Takeda (and, if the Acquisition
completes, the Combined Group) may fail to receive the expected benefits. In addition, if any ofthese third parties fails to comply with applicable laws and regulations in the course of its
performance of services for us, there is a risk that Takeda (and, if the Acquisition completes, theCombined Group) may be held responsible for such violations as well. This risk is particularly
serious in emerging markets, where corruption is often prevalent and where many of the third
parties on which Takeda relies do not have internal compliance resources comparable with its
own. Any such failures by third parties, in emerging markets or elsewhere, could adversely affect
the Combined Group’s business, reputation, financial condition or results of operations.
1.17 Takeda is involved in litigation relating to its operations on an ongoing basis, and such
litigation could result in financial losses or harm the Combined Group’s business.
Takeda is involved in various litigation relating to its operations on an ongoing basis, including
claims related to product liability and intellectual property as well as to antitrust, sales andmarketing and other regulatory regimes. If the Acquisition completes, the Combined Group will
be involved in such litigation to the extent it has not previously been resolved, disposed of or
settled. Given the inherent unpredictability of litigation, it is possible that an adverse outcome inone or more pending or future litigation matters could have a material adverse effect on the
Combined Group’s operating results or cash flows. For a description of certain material litigation,
see paragraph 10 at Part VIII (Additional Information) of this document.
1.18 Economic and financial conditions may have a material adverse effect on the CombinedGroup’s business, financial condition and results of operations.
Growth of the global pharmaceutical market has become increasingly tied to global economic
growth. In this context, a substantial and lasting slowdown of the global economy or major
national economies could negatively affect growth in the global pharmaceutical market and, as aresult, adversely affect the Combined Group’s business. In particular, weak economic conditions
can have a particularly adverse impact on pharmaceutical demand in markets having significant
co-pays or lacking a developed third-party payer system, as individual patients may delay ordecrease out-of-pocket healthcare expenditures. Negative economic developments could also
reduce the sources of funding for national social security systems, leading to heightenedpressure on drug prices, increased substitution of generic drugs, and the exclusion of certain
products from formularies.
Following the global financial crisis in 2008, economic growth continues to be stagnant in major
developed countries while the pace of growth in many emerging economies has declined. The
referendum vote in the UK to leave the EU, known as “Brexit”, the transition to a new presidential
administration in 2017 and mid-term elections in 2018 in the United States and continued
instability in the Middle East and North Korea have increased political and economic uncertainty.
To the extent that economic or financial conditions weaken in any of the Combined Group’s major
operating markets, demand for its products or product pricing could be negatively affected. In
addition, to the extent that economic and financial conditions negatively affect the global
business environment, the Combined Group could experience a disruption or delay in theperformance of third parties on which the Combined Group relies for parts of its business,
including collaboration partners and suppliers. Such disruptions or delays could have a material

261

and adverse effect on the Combined Group’s business, financial condition and results ofoperations.
1.19 Government policies and other pressures to reduce medical costs could have an adverse
effect on sales of the Combined Group’s pharmaceutical products.
Takeda is (and, if the Acquisition completes, the Combined Group will be) subject togovernmental regulations mandating price controls in various countries in which it operates. The
growth of overall healthcare costs as a percentage of gross domestic product in many countries
means that governments and payers are under intense pressure to control spending even more
tightly.
In the United States, the largest market for Takeda’s products, there has been increasing pricing
pressure from managed care groups and institutional and governmental purchasers. In particular,
as managed care groups have grown in size due to market consolidation, pharmaceuticalcompanies have faced increased pressure in pricing and usage negotiations, and there is fierce
competition among pharmaceutical companies to have their products included in the careproviders’ formularies. Moreover, as a result of the Patient Protection and Affordable Care Act
enacted in 2010, as amended by the Health Care and Education Reconciliation Act (together, the“US Healthcare Legislation”), Takeda has experienced heightened pricing pressure on, andlimitations on access to, its branded pharmaceutical products sold in the United States. In
addition, there has been increasing attention paid to the level of pricing of pharmaceuticalproducts, including from the Trump administration and other politicians, which could lead topolitical pressure or legislative, regulatory or other measures being introduced to lower prices.
The future of the US Healthcare Legislation, as well as the potential impact of any new
legislation, is uncertain, but Takeda expects the healthcare industry in the United States willcontinue to be subject to increasing regulation as well as political and legal action.
In Japan, manufacturers of pharmaceutical products must have new products listed on the
National Health Insurance (the “NHI”) price list published by the Ministry of Health, Labour andWelfare of Japan. The NHI price list provides rates for calculating the price of pharmaceuticalproducts used in medical services provided under various public medical care insurance
systems. Prices on the NHI price list have been subject to revision generally once every two
years based on the actual prices at which the pharmaceutical products are purchased by medical
institutions in Japan after discounts and rebates from listed price. The average price of products
listed on the NHI price list has decreased as a result of each of the revisions in 2014, 2016 and2018. The Japanese government is currently undertaking healthcare reform initiatives with a goalof sustaining the universal coverage of the NHI programme, and is addressing the efficient useof drugs, including promotion of generic use with a target of 80 per cent. penetration by volume
by September 2020 with respect to products for which market exclusivity has expired. As part ofthese initiatives, the NHI price list is expected to be revised annually beginning in the fiscal year
ending March 31, 2022, which could lead to more frequent downward price revisions.
In Europe, as in the United States, drug prices have been subject to downward pressure due tomeasures implemented in each country to control drug costs, and prices continue to come underpressure due to parallel imports, generic competition, increasing use of health technology
assessment based upon cost-effectiveness and other factors. Takeda is also facing similar
pricing pressures in various emerging countries.
Takeda expects these efforts to control costs to continue as healthcare payers around the globe,in particular government-controlled health authorities, insurance companies and managed careorganisations, increasingly pursue initiatives to reduce the overall cost of healthcare, restrict
access to higher-priced new medicines, increase the use of generics and impose overall pricerevisions. Such further implementation of these policies could have a material adverse effect on
the Combined Group’s business, financial condition and results of operations.

262

1.20 The Combined Group may have difficulty in maintaining the competitiveness of its
products.
The pharmaceutical industry is highly competitive, and in order to maintain the competitivenessof its product portfolio, the Combined Group will be required to maintain ongoing, extensive
research for technological innovations, including new compounds, to develop and commercialise
existing pipeline products, to expand its product portfolio through acquisitions and in-licensing,and to market its products effectively, including by communicating the efficacy, safety and valueof its products to healthcare professionals. However, healthcare professionals and consumers
may choose competitors’ products over the Combined Group’s nonetheless, if they perceive
these products to be safer, more reliable, more effective, easier to administer or less expensive.
The success of any product depends on the Combined Group’s ability to communicate effectively
with and educate the healthcare professionals and patients and convince them of the advantage
of its products over those of its competitors. Takeda often carries out (and, if the Acquisition
completes, it is anticipated that the Combined Group will continue to complete) costly clinical
trials even after its products have been launched to produce data to be utilised for these
purposes, but such trials do not always produce the desired outcomes. Furthermore, many of
Takeda’s (and, if the Acquisition completes, the Combined Group’s) competitors have greater
financial and other resources to conduct such trials in more detail and with larger patient
populations, which may ultimately enable them to promote their products more effectively than it
does or the Combined Group will.
In Japan, reduced approval times for drugs already marketed outside Japan have led toincreased competition through the introduction of such drugs into the Japanese market by foreigncompetitors. In addition, new competing products or the development of superior medical
technologies and other treatment options could make the Combined Group’s products or
technologies lose their competitiveness or become obsolete. As discussed above, the CombinedGroup’s products are also subject to competition from inexpensive generic versions of its
products, as well as generic versions of its competitors’ products, upon the expiration or loss ofrelated patent protection and regulatory data protection, which may result in loss of market share.
If the Combined Group is unable to maintain the competitiveness of its products, the CombinedGroup’s business, financial position and results of operations could be materially and adversely
affected.
1.21 The Combined Group’s products may have unanticipated adverse effects or possible
adverse effects, which may restrict use of the product or give rise to product liability
claims.
As a pharmaceutical company, Takeda is (and, if the Acquisition completes, the Combined Groupwill be) subject to significant risks related to product liability. Unanticipated adverse reactions or
unfavourable publicity from complaints concerning any of the Combined Group’s products, or
those of its competitors, could have an adverse effect on the Combined Group’s ability to obtainor maintain regulatory approvals or successfully market its products, and may even result inrecalls, withdrawal of regulatory approval or adverse labelling of the product.
While Takeda’s products are (and, if the Acquisition completes, the Combined Group’s products
will be) subject to comprehensive clinical trials and rigorous statistical analysis during thedevelopment process before approval, there are inherent limitations with regard to the design ofsuch trials, including the limited number of patients enrolled in such trials, the limited time used
to measure the efficacy of the product and the limited ability to perform long-term monitoring. Ifsuch unanticipated adverse reactions are discovered, Takeda (and, if the Acquisition completes,
the Combined Group) may be required to add descriptions of the adverse reactions as“precautions” to the packaging of its products, recall and terminate sales of products or conduct
costly post-launch clinical trials. Furthermore, concerns relating to potential adverse reactions
could arise among consumers or medical professionals, and such concerns, whether justified ornot, could have an adverse effect on sales of the Combined Group’s products and its reputation.
The Combined Group could also be subject to product liability litigation by patients who have263

suffered or claim to have suffered such adverse reactions resulting in harm to their health. For
example, numerous claims for damages have been brought against Takeda in which plaintiffs
alleged to have developed bladder cancer or other injuries as a result of taking products
containing type 2 diabetes treatment pioglitazone, marketed as ACTOS in the United States.
Takeda reached a settlement to resolve the vast majority of ACTOS product liability lawsuits
pending against it in the United States, resulting in a charge of ¥274.1 billion (approximately$2.4 billion) in the fiscal year ended March 31, 2015. The Combined Group may also be subject
to claims regarding manufacturing defects and labelling problems.
Although Takeda maintains (and, if the Acquisition completes, the Combined Group will maintain)
product liability insurance at coverage levels that it believes are (or will be) appropriate, Takeda(or the Combined Group) could be subject to product liability that significantly exceeds suchlevels. Product liability coverage is also increasingly difficult and costly to obtain, and may not be
available in the future on acceptable terms. Therefore, in the future, it is possible that the
Combined Group may need to rely increasingly on self-insurance for the management of productliability risk. In cases where the Combined Group self-insures, the legal costs that the CombinedGroup would bear for handling such claims and potential indemnifications to be paid to claimants
could materially and adversely affect its financial condition. In addition, the negative publicity fromproduct liability claims, whether or not justified, may damage the Combined Group’s reputationand may negatively impact the number of prescriptions of the product in question or its otherproducts. As a result, the Combined Group’s business, financial condition and results ofoperations could be materially and adversely affected.
1.22 The manufacture of Takeda’s products is technically complex and highly regulated, andsupply interruptions, product recalls or other production problems caused by unforeseen
events may reduce sales, adversely affect the Combined Group’s operating results andfinancial condition and delay the launch of new products.
The manufacture of Takeda’s products is technically complex and highly regulated, and as aresult Takeda may experience difficulties or delays including but not limited to the following:•

seizure or recalls of products or shut-downs of manufacturing plants;•

problems with business continuity, including as a result of a natural or man-made disaster,at one of Takeda’s facilities or at a critical supplier or vendor;•

failure by Takeda or by any of Takeda’s vendors or suppliers to comply with current good
manufacturing practices applicable to the production of pharmaceutical products forhuman use and other applicable regulations and quality assurance guidelines, which could
lead to manufacturing shutdowns, product shortages and delays in product manufacturing;•problems with manufacturing, quality assurance/quality control or supply, or governmental
approval delays, due to Takeda’s consolidation and rationalisation of manufacturing
facilities and the sale or closure of certain sites;•

failure of a sole source or single source supplier to provide Takeda with necessary raw
materials, supplies or finished goods for an extended time, which could impact continuous
supply;•failure of a third-party manufacturer to supply Takeda with semi-finished or finishedproducts on time;•

construction or regulatory approval delays related to new facilities or the expansion ofexisting facilities;•

additional costs related to deficiencies identified by regulatory agencies in connection withinspections of Takeda’s facilities, and enforcement, remedial or punitive actions byregulatory authorities if Takeda fails to remedy any deficiencies; and

264

•

other manufacturing or distribution problems including limits to manufacturing capacity due
to regulatory requirements, changes in the types of products produced, physical limitations
or other business interruptions that could impact continuous supply.

If the Acquisition completes, the foregoing risks and uncertainties will apply equally to the
manufacture of the Combined Group’s products. Any of the above may reduce sales, delay thelaunch of new products and adversely affect the Combined Group’s business, financial condition
and results of operations.
In July 2018, Takeda acquired TiGenix NV, which develops novel stem cell therapies for serious
medical conditions. The development and manufacture of stem cell products and other biologics,
including products Takeda expects to add to its portfolio following the completion of theAcquisition, present heightened or additional risks. The manufacture of biologics, including stem
cell products, is highly complex and is characterised by inherent risks and challenges, such as
raw material inconsistencies, logistical and sourcing challenges, significant quality control andassurance requirements, manufacturing complexity (including heightened regulatory
requirements) and significant manual processing. Unlike products that rely on chemicals for
efficacy, such as most pharmaceuticals, biologics are difficult to characterise due to the inherent
variability of biological input materials. As a result, assays of the finished product may not be
sufficient to ensure that the product will perform in the intended manner. Problems with the
manufacturing process, even minor deviations from the normal process, could result in productdefects or manufacturing failures that result in lot failures, product recalls, product liability claims
or insufficient inventory, which could be costly to Takeda or result in reputational damage.
1.23 The illegal distribution and sale by third parties of counterfeit versions of the CombinedGroup’s products or products stolen from the Combined Group could have an adverse
effect on the Combined Group’s reputation and business.
Third parties may illegally distribute and sell counterfeit versions of the Combined Group’s
products, which do not meet the rigorous manufacturing and testing standards to which its
products are subject. A patient who receives a counterfeit drug may be at risk for a number ofdangerous health consequences. Reports of adverse reactions to counterfeit drugs or increased
levels of counterfeiting could materially affect patient confidence in the Combined Group’s
products, which could have a material adverse effect on the Combined Group’s reputation andfinancial results. In addition, thefts at warehouses, at plants or in transit of inventory that is notproperly stored or that is sold through unauthorised channels could adversely affect patient
safety, the Combined Group’s reputation and the Combined Group’s results of operations.
1.24 Takeda is (and, if the Acquisition completes, the Combined Group will be) increasingly
dependent on information technology systems and its systems and infrastructure face therisk of theft, exposure, tampering or other intrusions.
Certain important processes relating to the research and development, production and sales ofTakeda’s products (and, if the Acquisition completes, the Combined Group’s products) currently
depend and will in the future continue to depend heavily on its information systems, including
cloud-based computing, or those of third-party providers to whom Takeda (or, if the Acquisition
completes, the Combined Group) outsources certain business functions, including the storage
and transfer of critical, confidential, sensitive or personal information regarding patients, clinical
trials, vendors, customers, employees and others. The size and complexity of these computer
systems make them potentially vulnerable to service interruptions, malicious intrusions andrandom attacks. Cyber-attacks are increasing in frequency, sophistication and intensity. Suchattacks are made by groups and individuals with a wide range of motives (including, but notlimited to, industrial espionage) and expertise, including organised criminal groups, “hacktivists”,
nation-states and others. Cyber-attacks could include the deployment of harmful malware, denialof service attacks, worms, social engineering and other means to affect service reliability andthreaten data confidentiality, integrity and availability. The development and maintenance ofsystems to safeguard against such attacks is costly and requires ongoing monitoring and265

updating as technologies change and efforts to overcome security measures become
increasingly more sophisticated. Despite Takeda’s efforts, the possibility of a future datacompromise cannot be eliminated entirely, and risks associated with intrusion, exposure,tampering and theft remain.
If the Combined Group’s data systems are compromised, its business operations may be
impaired, the Combined Group may lose profitable opportunities or the value of thoseopportunities may be diminished, and the Combined Group may lose revenue because of
unlicensed use of its intellectual property. If personal information of the Combined Group’s
customers or employees is misappropriated, its reputation with its customers and employees
may be injured resulting in loss of business and/or morale, and the Combined Group may incur
costs to remediate possible injury to its customers and employees or be required to pay fines ortake other action with respect to judicial or regulatory actions arising out of such incidents. Data
privacy or security breaches by employees and others with permitted access to the CombinedGroup’s systems, including in some cases third-party service providers to which the CombinedGroup may outsource certain business functions, may also pose a risk that sensitive data,
including intellectual property or personal information, will be exposed to unauthorised persons
or to the public.
1.25 Changes in data privacy and protection laws and regulations, particularly in Europe, or
any failure to comply with such laws and regulations, could adversely affect the CombinedGroup’s business and financial results.
Takeda is subject to (and, if the Acquisition completes, the Combined Group will be subject to)laws and regulations globally regarding privacy, data protection and data security, including thoserelated to the collection, storage, handling, use, disclosure, transfer and security of personal
data. Significant uncertainty exists as privacy and data protection laws may be interpreted andapplied differently from country to country and may create inconsistent or conflicting
requirements. For example, the EU’s General Data Protection Regulation (the “GDPR”), which
imposes additional obligations on companies regarding the handling of personal data andprovides certain individual privacy rights to persons whose data are stored, became effective on
May 25, 2018. Furthermore, legislators and regulators in the United States are proposing new
and more robust cyber-security rules in light of the recent broad-based cyber-attacks at a numberof companies. Compliance with existing, proposed and recently enacted laws (including
implementation of the privacy and process enhancements called for under GDPR) andregulations can be costly; any failure to comply with these regulatory standards could subject the
Combined Group to legal and reputational risks. Misuse of or failure to secure personal
information could also result in violation of data privacy laws and regulations, proceedings
against the Combined Group by governmental entities or others or damage to the CombinedGroup’s reputation and credibility and could also have a negative impact on revenues and profits.
1.26 Social media platforms and new technologies present risks and challenges for the
Combined Group’s reputation and business.
Consumers, the media, pharmaceutical companies and other parties increasingly use social
media and other new technologies to communicate about pharmaceutical products and thediseases they are intended to treat. For pharmaceutical companies, the use of thesetechnologies requires specific attention, monitoring programmes and moderation of comments.
For example, negative or inaccurate posts or comments about the Combined Group or the
Combined Group’s products on any social media networking platforms could damage the
Combined Group’s reputation and business. Social media could also be used to bring negative
attention to the Combined Group or to the pharmaceutical industry as a whole, which could inturn cause reputational harm to the Combined Group and negatively impact the CombinedGroup’s business. The nature of evidence-based health-care, however, may prevent the
Combined Group from rapidly and adequately defending its interests against such comments. In
addition, the Combined Group’s employees and partners may use social media and mobile266

technologies inappropriately, which may expose the Combined Group to liability, or which could
lead to breaches of data security, loss of trade secrets or other intellectual property or public
disclosure of sensitive information, including information about the Combined Group’s
employees, clinical trials or customers.
1.27 Takeda’s dependence on third parties for the inputs for its products subjects it (and, if theAcquisition completes, will subject the Combined Group) to various risks, and changes in
the costs of materials may adversely affect the Combined Group’s profitability.
Although Takeda develops and manufactures (and, if the Acquisition completes, the CombinedGroup will continue to develop and manufacture) the active ingredients used in some of its
products at its own facilities, it is dependent on third-party suppliers for a substantial portion of
the raw materials and compounds used in such products. The price and availability of the raw
materials for such products, including chemical compounds and biologics, are subject to theeffects of weather, natural disasters, market forces, the economic environment, fuel costs andforeign exchange rates. If Takeda’s (or, if the Acquisition completes, the Combined Group’s) costfor such materials increases, it may not be able to make corresponding increases in the pricesof its products due to market conditions or Takeda’s (or the Combined Group’s, as applicable)
relationships with its customers and, as a result, the Combined Group’s profitability could bematerially and adversely affected. Sources of some materials may be limited to a single supplier,and if such supplier faces any difficulty in supplying the materials, Takeda (or the CombinedGroup, as applicable) may not be able to find an alternative supplier in a timely manner or at all.
If materials become unavailable or if quality problems related to the materials arise, Takeda (orthe Combined Group, as applicable) may be forced to halt production and sales of products that
use them. In the event that any of Takeda’s (or the Combined Group’s, as applicable) third-party
suppliers is delayed in its delivery of such raw materials or compounds, is unable to deliver thefull quantity ordered by it at the appropriate level of quality or is unable to deliver any raw
materials or compounds at all, Takeda’s (or the Combined Group’s, as applicable) ability to sell
its products in the quantities demanded by the market may be impaired, which could damage the
Combined Group’s reputation and relationships with customers. In such a case, the CombinedGroup’s business and results of operations could be adversely affected.
1.28 Sales to wholesalers are concentrated, which exposes Takeda (and, if the Acquisition
completes, will expose the Combined Group) to credit risks and pricing pressures.
A significant portion of Takeda’s global sales are made to a relatively small number of wholesale
distributors, retail chains and other purchasing groups. In the fiscal year ended March 31, 2018,
Takeda’s largest wholesale distributor accounted for 12.4 per cent. of its total revenue. If one of
Takeda’s significant wholesale distributors encounters financial or other difficulties, such
distributor may decrease the amount of business that it does with Takeda, and Takeda may beunable to collect the amounts that the distributor owes it on a timely basis or at all. Furthermore,
the concentration of wholesale distributors has been increasing through mergers andacquisitions. In addition to increased credit risks, this has resulted in such distributors gaining
additional purchasing leverage, which may increase pricing pressure on Takeda’s products. Suchcredit concentration risks and pricing pressure will continue to apply to the Combined Group if
the Acquisition completes and could adversely affect the Combined Group’s business, financial
condition and results of operations.
1.29 The Combined Group may incur substantial costs due to its environmental complianceefforts or claims relating to its use, manufacture, handling, storage or disposal ofhazardous materials.
Takeda’s research and development and manufacturing processes use (and, if the Acquisition
completes, the Combined Group’s equivalent processes will continue to use) hazardous
materials, including chemicals and radioactive and biological materials, and produce hazardous
waste. National and local laws and regulations in many of the jurisdictions in which Takeda
operates (and, if the Acquisition completes, the Combined Group will continue to operate) impose
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substantial potential liability for the improper use, manufacture, handling, storage and disposal ofhazardous materials as well as for land contamination, and, in some cases, this liability may
continue over long periods. Despite Takeda’s compliance efforts, it cannot completely eliminate
the risk of accidental contamination and any resultant injury from these materials. For example,
real properties that Takeda owned or used in the past or that Takeda owns or uses now or that
the Combined Group owns or uses in the future may contain undetected contamination resulting
from its manufacturing operations at those sites or the activities of prior owners or occupants.
While Takeda has not experienced any material expenses or liability in connection withhazardous materials, either it or the Combined Group may suffer from expenses, claims or
liability in the future that exceed its insurance coverage. Furthermore, changes to current
environmental laws and regulations may impose further compliance requirements on the
Combined Group that may impair the Combined Group’s research, development and production
efforts as well as its other business activities.
1.30 The Combined Group may suffer large losses in the event of a natural or other disaster,such as an earthquake, terrorist attack or other catastrophic event, in any of the markets
in which the Combined Group operates.
Japan and other regions in the world in which Takeda operates (and, if the Acquisition completes,
the Combined Group will continue to operate) are subject to the risk of earthquakes and othernatural disasters, including volcanic eruptions, tidal waves, typhoons, floods and hurricanes. For
example, the Great East Japan Earthquake and subsequent tsunami that occurred in March 2011
caused unprecedented property and other damage, although Takeda did not incur any significant
damage to its facilities. In addition, other events outside the Combined Group’s control, such aswar, civil or political unrest, deliberate acts of sabotage or industrial accidents such as fire andexplosion, whether due to human or equipment error, could damage, cause operational
interruptions or otherwise adversely affect certain of the Combined Group’s manufacturing orother facilities as well as potentially cause injury or death to the Combined Group’s personnel. In
the event of a major natural disaster or other uncontrollable event or accident, the CombinedGroup’s facilities, particularly its production plants, may experience catastrophic loss, operations
at such facilities may be halted, shipments of products may be suspended or delayed and large
losses and expenses to repair or replace facilities may be incurred. Such negative consequences
could cause product shortages, significant losses of sales or require significant unexpected
expenditures, and materially adversely affect the Combined Group’s business, financial condition
and results of operations.
Takeda regularly conducts inspections of all its facilities for maintenance purposes and to prevent
potential damage from disaster, and Takeda has global group insurance to cover property
damage and business interruption to cover certain potential losses at its production facilities,
although Takeda does not maintain earthquake insurance in Japan. These insurance policies(and any insurance parties of the Combined Group) may not be adequate to cover all possible
losses and expenses. In addition, the Combined Group’s business may also be adversely
affected if its suppliers or business partners were to experience a catastrophic loss due to natural
disasters, accidents or other uncontrollable events.
1.31 Takeda may have to recognise additional charges on its statements of income due toimpairment of goodwill and other intangible assets.
Takeda carries significant amounts of goodwill and intangible assets on its balance sheet as aresult of past acquisitions. If completed as expected, Takeda also expects to record significant
additional goodwill and intangible assets in connection with the Acquisition. As of March 31, 2018,
Takeda had goodwill of ¥1,029.2 billion and intangible assets of ¥1,014.3 billion. Goodwill andintangible assets recorded in relation to acquisitions are recognised on Takeda’s balance sheeton the acquisition date. Under IFRS, Takeda is required to examine such assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may

268not be recoverable. The recognition of such impairment charges may adversely affect the
Combined Group’s business, financial condition and results of operations.
1.32 The Combined Group may not be able to attract and retain key management and otherpersonnel.
In order to produce, develop, support and market its products, Takeda depends (and, if theAcquisition completes, the Combined Group will continue to depend) on the expertise andleadership of its senior management team and other key members of its organisation. The lossof key members of the Combined Group’s organisation, including senior members of its scientificand management teams, high-quality researchers and development specialists, could delay or
prevent the achievement of major business objectives. The market for such talents has become
increasingly competitive, including in specific geographic regions and in specialised fields suchas clinical development and biosciences, and Takeda is required (and, if the Acquisition
completes, the Combined Group will be required) to invest heavily in the recruitment, training andretention of qualified individuals, including salary and other compensation to reward performanceand incentivise employees. Despite Takeda’s (or the Combined Group’s, as applicable) efforts toretain them, key employees could terminate their employment with Takeda (or the CombinedGroup, as applicable) for any reason or for no reason, and there can be no assurance that
Takeda (or the Combined Group, as applicable) will be able to attract or retain key employees
and successfully manage them. Takeda’s (or the Combined Group’s, as applicable) inability to
attract, integrate and retain highly skilled personnel, particularly those in leadership positions,
may weaken its succession plans and may materially adversely affect its ability to implement its
strategy and meet its strategic objectives, which could ultimately adversely affect the CombinedGroup’s business and results of operations.
1.33 If Takeda fails to maintain effective internal control over financial reporting, the accuracy
and timeliness of its financial reporting may be adversely affected, which could cause
investors to lose confidence in its reported financial information and may lead to a decline
in the trading price of its ADSs.
Takeda’s common stock is currently listed only on the Tokyo Stock Exchange and the Local
Japanese Stock Exchanges, and Takeda has established internal control over financial reporting
pursuant to the requirements applicable to companies listed only in Japan. Once the Takeda
Shares and Takeda ADSs are registered under the US Exchange Act, Takeda will become subject
to, among other things, the requirements under the Sarbanes-Oxley Act of 2002 (the “SarbanesOxley Act”). The standards for internal control over financial reporting under the Sarbanes-Oxley
Act are significantly more extensive than those applicable to companies listed only in Japan. For
example, Takeda will be required, pursuant to Section 404 of the Sarbanes-Oxley Act (“Section404”), to furnish a report by management on, among other things, the effectiveness of Takeda’s
internal control over financial reporting. This assessment will need to include disclosure of any
material weaknesses identified by Takeda’s management in Takeda’s internal control overfinancial reporting, as well as a statement that Takeda’s independent registered public accounting
firm has issued an opinion on Takeda’s internal control over financial reporting. Pursuant to the
instructions to Form 20-F, Takeda expects to include this report in its second annual report filedwith the SEC following the effectiveness of this registration statement, which Takeda currently
expects will be filed by no later than July 31, 2020. Takeda is still in the costly and challenging
process of compiling the system and processing documentation necessary to perform theevaluation needed to comply with Section 404.
Neither Takeda’s management nor any independent registered public accounting firm has ever
performed a comprehensive evaluation of Takeda’s internal control over financial reporting inaccordance with the provisions of the Sarbanes-Oxley Act because no such evaluation has beenrequired, and Takeda cannot be certain that material weaknesses in its internal control overfinancial reporting will not develop or be identified. Any failure to achieve and maintain adequate
internal control over financial reporting or to implement required, new or improved controls, or269

difficulties encountered in their implementation could cause material weaknesses or otherdeficiencies in Takeda’s (and, if the Acquisition completes, the Combined Group’s) internal
control over financial reporting in the future. If Takeda (and, if the Acquisition completes, theCombined Group) is unable to successfully remediate any material weaknesses or otherdeficiencies in its internal control over financial reporting, the accuracy and timing of its financial
reporting may be adversely affected and investors may lose confidence in its financial reporting,and the price of Takeda’s ADSs may decline as a result. In addition, if the Combined Group isunable to continue to meet these requirements, the Combined Group may not be able to remain
listed on the NYSE.
2.

Risks relating to the New Takeda Shares

2.1

Rights of shareholders under Japanese law may be more limited than under the laws ofother jurisdictions.
The Takeda Articles, the Takeda Board regulations, the regulations of the Takeda audit andsupervisory committee and the Japanese Companies Act govern Takeda’s corporate affairs.
Legal principles relating to such matters as the validity of corporate procedures, directors’ andofficers’ fiduciary duties, and shareholders’ rights may be different from those that would apply toa non-Japanese company. Shareholders’ rights under Japanese law may not be as extensive asshareholders’ rights under the laws of other jurisdictions. ADS holders may have more difficultyin asserting their rights as a shareholder than such holders would as shareholders of acorporation organised in another jurisdiction. In addition, Japanese courts may not be willing toenforce liabilities against the Combined Group in actions brought in Japan that are based upon
the securities laws of other jurisdictions.

2.2

Investors holding less than a full unit of shares will have limited rights as shareholders.
The Takeda Articles provide that 100 Takeda Shares constitute one unit. In connection with thedirect holding of Takeda Shares, the Japanese Companies Act imposes significant restrictions
and limitations on holders of Takeda Shares that do not constitute a full unit. In general, holdersof Takeda Shares constituting less than one unit do not have the right to vote with respect tothose shares.

2.3

US investors may have difficulty in serving process or enforcing a judgment against
Takeda or Takeda’s directors or executive officers.
Takeda is a limited liability, joint stock corporation incorporated under the laws of Japan. Many of
Takeda’s directors and executive officers reside in Japan, Europe or elsewhere outside theUnited States, and a large portion of its assets and the assets of these persons are located inJapan and elsewhere outside the United States. It may not be possible, therefore, for US
investors to effect service of process within the United States upon Takeda or these persons or
to enforce against Takeda or these persons judgments obtained in US courts predicated upon thecivil liability provisions of the federal securities laws of the United States. There is doubt as to theenforceability in Japan, in original actions or in actions for enforcement of judgment of US courts,
of liabilities predicated solely upon the federal securities laws of the United States.

2.4

Takeda’s shareholders of record on a given record date may not receive the dividend they
anticipate.
The customary dividend payout practice of publicly listed companies in Japan may significantly
differ from that widely followed or otherwise deemed necessary or fair in foreign markets. Takeda
ultimately has a discretion to determine any dividend payment amount to its shareholders ofrecord as of a record date, including whether Takeda will make any dividend payment to suchshareholders at all, only after such record date. For that reason, Takeda’s shareholders of record
on a given record date may not receive the dividends they anticipate.

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3.

Risks relating to the New Takeda ADSs (and CDIs representing New Takeda ADSs)

3.1

A holder of New Takeda ADSs will have fewer rights than a shareholder has and suchholder will have to act through the depositary to exercise those rights.
The rights of shareholders under Japanese law to take various actions, including voting theirshares, receiving dividends and distributions, bringing derivative actions, examining a company’s
accounting books and records and exercising appraisal rights, are available only to holders ofrecord. Because the Takeda Depositary, through its custodian, is the record holder of the shares
underlying the New Takeda ADSs, only the depositary can exercise those rights in connection
with the deposited shares. The Takeda Depositary will make efforts to vote the shares underlying
the New Takeda ADSs as instructed by the Takeda ADS holders where required under the Takeda
Deposit Agreement and will pay to the Takeda ADS holders the dividends and distributions
collected from Takeda as provided for under the Takeda Deposit Agreement. However, in theircapacity as a Takeda ADS holder, such holder will not be able to bring a derivative action,
examine Takeda’s accounting books or records or exercise appraisal rights. Further, CDIs
representing New Takeda ADSs will not carry voting rights with respect to Takeda Shares.

3.2

Because of daily price range limitations under Japanese stock exchange rules, a holder
of New Takeda ADSs may not be able to sell his/her Takeda Shares at a particular price on
any particular trading day, or at all.
Stock prices on Japanese stock exchanges are determined on a real-time basis by theequilibrium between bids and offers. These exchanges are order-driven markets without
specialists or market makers to guide price formation. To prevent excessive volatility, theseexchanges set daily upward and downward price fluctuation limits for each stock, based on theprevious day’s closing price. Although transactions may continue at the upward or downward limit
price if the limit price is reached on a particular trading day, no transactions may take placeoutside these limits. Consequently, an investor wishing to sell at a price above or below therelevant daily limit may not be able to sell his or her shares at such price on a particular trading
day, or at all.

3.3

Dividend payments and the amount you may realise upon a sale of New Takeda ADSs will
be affected by fluctuations in the exchange rate between the US Dollar and the Japanese
Yen.
Cash dividends, if any, in respect of the Takeda Shares represented by New Takeda ADSs will
be paid to the depositary in Japanese Yen and then converted by the depositary into US Dollars,
subject to certain conditions. Accordingly, fluctuations in the exchange rate between theJapanese Yen and the US Dollar will affect, among other things, the US Dollar amounts a holder
of New Takeda ADSs will receive from the depositary in respect of dividends, the US Dollar valueof the proceeds that a holder of New Takeda ADSs would receive upon sale in Japan of theTakeda Shares obtained upon surrender of New Takeda ADSs and the secondary market priceof New Takeda ADSs.

3.4

Japanese tax treatment of CDIs representing New Takeda ADSs is unclear.
Due to a lack of guidance from the Japanese tax authorities, it is not clear whether, for Japanese
tax purposes, Shire Shareholders who have elected to receive CDIs representing New Takeda
ADSs would be treated as the owners of the underlying New Takeda ADSs and, consequently,
as the owners of the New Takeda Shares underlying those New Takeda ADSs. In particular, this
could mean that Shire Shareholders may not be able to claim either (a) a reduction, pursuant toa double taxation convention, of the rate of 15.315 per cent. at which it is expected that tax will
be withheld under Japanese law from dividends (or other distributions deemed to be dividends
for Japanese tax purposes) made or paid by Takeda in respect of New Takeda Shares
represented by New Takeda ADSs represented by CDIs or (b) a refund of such tax withheld inexcess of the rate provided for in a double taxation convention, in each case where they would
have been able to make the relevant claim had they held New Takeda Shares or New Takeda
ADSs rather than CDIs representing New Takeda ADSs.

271

APPENDIX IICORPORATE NOMINEE FACILITY TERMS AND CONDITIONS

Takeda Pharmaceutical Company
Limited Corporate Nominee Facility

Protecting your personal data

Our Privacy Notice explains how we use and protect yourinformation within Equiniti FS, and how your enhanced
rights apply from 25th May 2018. To read the latest versionof our Privacy Notice and understand more about how
Equiniti FS safeguards your data, please visit our Privacy
Centre at:privacy.equiniti.com
or contact us using the contact details in Section 1.

Terms and Conditions
November 2018
IMPORTANT:
These Terms and Conditions should be read in
conjunction with the accompanying scheme document
dated 12 November 2018 (the ‘Scheme Document’)containing the full terms and conditions of the Schemeof Arrangement. Unless the context otherwise
requires, the definitions used in the Scheme
Document also apply to these Terms and Conditions.

List of Charges

Annual Maintenance Charge

Transfer into Nominee
Transfer out of Nominee
Duplicate Statement (in the post)
Confirmation of holding(a) on the internet(b) by telephone(c) in writing
Annual management fee forunclaimed payments where sharebalance is zero (see Section 16
for further information)

In accordance with the Scheme of Arrangement thisagreement will end two (2) years from the Scheme
Effective Date. After such time, any remaining shares
will be sold and a Sterling cheque issued. For further
details see Section 15.
Risk warnings
Investments made under these Terms and Conditions
are in one company only and should therefore beconsidered as only one part of a balanced portfolio.
The value of shares and any income from them can go
down as well as up and you may not get back theamount of money you invest. Past performance is no
guide to future performance.
Suitability and AppropriatenessIf you are in any doubt about the suitability of thisService or investments held on your behalf under it,
you should consult an authorised financial adviser. We
will not assess the suitability or appropriateness ofinvestments held for you or other services provided toyou under these Terms and Conditions and you are
not subject to the FCA Rules on assessing suitability
and appropriateness. You agree that you have notasked for or received any advice from us and it is yourdecision to accept this Corporate Nominee Facility issuitable to your requirements.
About this agreement
This document sets out the terms and conditions
under which we will act as your service provider inproviding the Corporate Nominee Facility inconnection with your shares in the Company. These
Terms and Conditions will come into effect once wehave accepted your application to hold the shares in
our Corporate Nominee Facility. We reserve the rightto refuse an application where that application is not
validly made, and you must be aged 18 or over andresident in the UK, EEA, Channel Islands, Isle of Man,
Switzerland or Gibraltar in order to use this service.

£5.25 (incl VAT) per
annum (Please see
Section 16 for further
information)
FREE
FREE
FREE
FREE
FREE
FREE
Max £5 (incl VAT)
per annum

1. Contact Details and Definitions
1.1 When contacting Equiniti, you can telephone theShareholder Helpline on:
0330 123 5506 (+44 121 415 0856 if callingfrom outside the UK)
A text phone is also available on:
0371 384 2255 (+44 121 415 7028 if callingfrom outside the UK)
Lines open 8.30am to 5.30pm (UK time), Monday
to Friday (excluding public holidays in Englandand Wales).
Or write to us at:
The Manager, Equiniti Corporate Nominees
Limited, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6DA United
Kingdom
Or you can send us your query securely bycompleting the online form at:
help.shareview.co.uk
1.2 In these Terms and Conditions, the following
words have particular meanings:• the Company means Takeda Pharmaceutical
Company Limited.
• Corporate Nominee Facility means theservice provided by us to eligible
shareholders of the Company under theseTerms and Conditions.
• Custodian means Nomura Bank
(Luxembourg) S.A., (or any other company on

272

•
•

•
•

•

•
•

•

•

•

•

which we may decide in the future) whichacts as custodian of the shares on behalf ofEquiniti FS.
EEA means countries in the European
Economic Area.
Equiniti FS means Equiniti Financial Services
Limited, which is authorised and regulatedby the Financial Conduct Authority of
12 Endeavour Square, London, E20 1JN,
United Kingdom (under reference 468631).
The main business of Equiniti Financial
Services Limited is investment and generalinsurance services, and its registered office isin the UK at Aspect House, Spencer Road,
Lancing, West Sussex BN99 6DA, registeredin England and Wales no. 06208699.
References to Equiniti Financial Services
Limited also include any company to whom it
transfers its rights and obligations inaccordance with Section 12.
the Equiniti Group means Equiniti FS, its
subsidiaries and parent companies and any
subsidiary of any of its parent companies.
FCA and FCA Rules means respectively, theFinancial Conduct Authority and rules madeby the FCA which apply to the services
provided by us to you, as amended fromtime to time.
NomineeCo means Equiniti FS or any othercompany (whether or not in the EquinitiGroup) on which we may decide in the future
to hold shares on your behalf pursuant to the
Corporate Nominee Facility.
Scheme Effective Date means the date the
Scheme of Arrangement becomes effective
pursuant to its terms.
Scheme of Arrangement means the schemeof arrangement to be made between Shireand the Scheme Shareholders (as defined in
the Scheme Document) to implement theAcquisition of Shire by the Company.
Scheme Record Time means 6.00 p.m.
(London time) on the calendar day following
the date of the Court Sanction Hearing (asdefined in the Scheme Document)
shares means shares of common stock of nopar value in the Company received under the
Scheme of Arrangement or pursuant to
Section 3 of these Terms and Conditions andheld by NomineeCo on behalf of you and/or
other participants.
Shareview Portfolio means the online
portfolio service provided by the EquinitiGroup where quarterly statements will bemade available to you. Further information
can be found at:www.shareview.co.uk
Unclaimed payments means any payments
over twelve (12) months old that have been

2.
2.1

2.2

2.3

2.4

2.5

273

issued to you in accordance with thisagreement but have not been cashed.
• we, our, us means Equiniti FS. References to“we, our, us” also include any company towhich we may transfer our rights andobligations in accordance with Section 12.
• you, your, customer means:– you, the beneficial holder of shares in the
Company, and– if there is more than one of you, all the
joint holders jointly and individually,
and/or– your personal representative(s).
The nominee service we will provideYour shares will be registered and held in thename of NomineeCo, a company that will holdyour shares as we direct and for whose acts andomissions we will be responsible.
NomineeCo holds your shares as nominee foryou and you will remain the ‘beneficial owner’ of
the shares. In other words, although the shares
will be registered in the name of NomineeCo, itwill hold them for you, so that you have theeconomic interest in the shares. This willcontinue to be the case even if NomineeCo
becomes insolvent.
Your shares will be held by NomineeCo in apooled or omnibus account. We will keep arecord of your shares but your individual holding
may not be identifiable via separate sharecertificates or other paper or electronic proof of
title. This means that in the event of a default(for example, if NomineeCo improperly fails toretain all of the assets entrusted to it), any
shortfall in the investments registered in thename of NomineeCo may be shared pro rata by
all the investors whose holdings are so
registered.
You will be classified for the purposes of the FCA
Rules as a Retail Client. If however you would
otherwise be classified under the FCA Rules as
an Eligible Counterparty or a Professional Client,you may not necessarily have the rights of a
Retail Client under the Financial Services
Compensation Scheme.
For more information on complaints/
compensation, please see Section 23.
The Corporate Nominee Facility is only available
if you have a registered address in the EEA,
Channel Islands, Isle of Man, Switzerland or
Gibraltar as at the Scheme Record Time (subject
to Sections 13.2 and 13.3). For the duration ofthis agreement, you are also required to ensurethat you are not subject to regulations thatwould oblige us or the Company to comply withany governmental or regulatory procedures orsimilar formalities beyond those that would
ordinarily apply in the UK. You are responsible
for making sure you can validly take part and forcomplying with all necessary formalities. You
should consult a professional adviser if you are inany doubt about whether you are going to need
any governmental or other consent or to observe
any other formalities in order to hold shares via
our Corporate Nominee Facility.
3. Your dividends and other shareholder
entitlements
The terms here in Section 3 will always apply
except where a change in any laws or
regulations, or agreements between us and theCompany, prevent it.
3.1 Provided we have received the necessary funds
from the Company, we will, subject to any
instruction from you to the contrary as set out in
Section 3.2, pay any amounts due to you in
connection with your shares on the dividend
payment date or other due date or as soon asreasonably practicable thereafter.
Equiniti FS will hold the cash on your behalf witha bank in a client money account which issegregated from any money belonging to Equiniti
FS in our own right. You will not be paid interest
on cash balances, and we will keep any interest
earned or any equivalent fee that the bank inquestion pays us.
We will send you the money in Sterling (unless
we make available a Company facility to receive
the payment in a different currency) byelectronic payment, or by other payment
methods we may decide on from time to time,
which could include a cheque if we do not haveup-to-date bank details for you. To the extent we
receive dividends or other shareholder
distributions for you in Japanese Yen (or anotherforeign currency), we may convert it into Sterlingat the applicable exchange rate on the day wemake the conversion. Unless you instruct usotherwise, we will continue to observe any bankmandates or other instructions you have given us
or Equiniti Limited concerning your shares.
3.2 We may make available a service to enable youto:• reinvest any sums receivable on your sharesby way of a distribution or dividend bypurchasing more shares in the Company; or• receive new shares instead of a cash
dividend if declared by the Board of theCompany; or• receive any sums receivable on your dividendin any alternative payment method madeavailable by the Company.
Provided your instruction as to how you wish toreceive your dividend has been processed(subject to the Terms and Conditions), and thenecessary shares or funds have been received byus, we will reallocate them to you, subject tothese Terms and Conditions.

Where a transaction results in you being entitledto a fraction of a penny which cannot beremitted to you at the time we would normallyremit money to you, you consent to us releasing
any such amount to a registered charity of our
choice, for or on your behalf. Accordingly, youagree that we will not remit that amount to you,nor hold it as client money for you, and you shallnot have any claim, proprietary or otherwise,over such amount following payment to thecharity.
3.3 All cash balances will be held by us as clientmoney under the FCA Rules and as follows:• we will deposit the cash in the UK or EEA
with a suitably authorised bank or otherfinancial institution that is regulated and has
permissions within the UK or an EEA country
to provide services to hold deposits andother client monies;• the bank will hold the cash on our behalf in atrust account separate from any accountused to hold money belonging to us or
NomineeCo in our own right. Client monies
will be pooled with client money of our othercustomers. Equiniti is committed to holding
its client money with banks which are wellcapitalised as this better spreads the risk ofany default by these institutions which could
impact our customers;• we will not, however, be responsible for any
acts or omissions of the bank; and• if the bank becomes insolvent, we will have aclaim on behalf of our clients against thebank. If, however, the bank cannot repay allof its creditors, any shortfall may have to beshared pro rata between them.
If we are holding cash, we may withdraw thecash, any withdrawal will be applied towards
paying fees, charges and other sums due andpayable to us, as set out in these Terms andConditions and in accordance with FCA Rules.
If there has been no movement on your balance
for at least six (6) years (notwithstanding any
payments or receipts of charges, interest or
similar items), then provided we have taken
reasonable steps to trace you and to return themonies we may cease to treat that money asclient money and pay to a charity of our choice.
We undertake to make good any valid claims
against any released monies.
In accordance with FCA Rules, we are able todeposit some client monies with banks underunbreakable term deposit arrangements ornotice periods of up to ninety five (95) days. In
the unlikely event of any issues experienced by
us or any banks holding your client money it may
take longer to return money to you. This does
not in any way affect your ability to withdraw

274

3.4

3.5

3.6

3.7

3.8

funds from your account or undertake anytransactions under normal conditions.
If the law obliges us to deduct tax from any
payment owing to you, we will only send you thenet amount after the required deduction has
been made. If you are in any doubt as to yourtaxation position you should consult your own
professional adviser immediately.
If you need us to send a replacement payment
there may be a fee to pay.
Details of our standard fees when issuing
replacement payments can be found at:www.shareview.co.uk/clients/paymentreissue
Any fee will be deducted from the replacement
payment being sent to you.
If there is a rights issue in the Company or similar
corporate action, we will, if possible, makearrangements for you to take up your rights in
the Company in return for the necessary
payment and/or provide instructions to us as towhether those rights should be held or sold. We
will write to you if the Company proposes toissue such rights and explain the procedure you
should follow if you wish to participate, as wellas any costs or fees you may be charged for
doing so. If you would like us to take up thoserights on your behalf, we must receive yourcleared payment of that sum, whether in Sterlingor another currency, in time for the due payment
date or any other deadline we notify you about.
Where it is not practicable for you to take up
your rights, we will where practicable andpossible make arrangements for the sale of suchrights in the market (or off market to theCompany or third party at our discretion) andthe distribution of the proceeds of such a sale.
If there is a capitalisation issue, or other
distribution made up of additional shares in the
Company, we will, if possible, makearrangements for you to accept. We will write toyou if the Company proposes to make such a
distribution and explain the procedure you
should follow if you wish to participate.
In the event of a demerger, capital reorganisation
or restructuring of the Company, we will assess
what to do and contact you at the time. We will
not be obliged to take any action unless theCompany gives us reasonable notice and pays
any costs we may incur.
These are two possible courses of action:• if the resulting company offers a nominee
service, we will normally send you theirterms and conditions and, unless you tell us
otherwise, include your shares in thatalternative nominee service; or• if no nominee service is offered, we will
normally try to arrange for you to holdshares in the resulting company under theterms governing the demerger or
restructuring.
3.9 If there is a takeover or other offer for yourshares, we will not accept it unless we have yourspecific instructions to do so, or if the shares arebeing acquired compulsorily. On your behalf we
will accept any compulsory purchase notices
concerning your shares. In these circumstances
we will accept a cash offer if this is one of theavailable alternatives. We will not, however, be
liable for any resulting tax or other financial
liability.
3.10 If for any reason, any shares in the Company areallocated to NomineeCo, we will reallocate themto eligible customers, who qualify on the
Company’s determined qualifying date.
Reallocation will be on a pro rata basis whereby
the eligible customer’s share balance will be
divided by all eligible customers’ share balancesand multiplied by the number of Company
allocated shares.
If there are any fractional shares, less than wholeshares, these will be aggregated and sold with
the net proceeds being paid in cash to eligible
customers with fractions using the same pro rata
method described above.
3.11 Where after the application of 3.10 any
fractional shares or fractional amounts of cash ofless than a penny remain which cannot beremitted to you at the time we would normallyremit money to you, you consent to us releasing
any such amount to a registered charity of our
choice, for or on your behalf. Accordingly, youagree that we will not remit that amount to you,nor hold it as client money for you, and you shallnot have any claim, proprietary or otherwise,over such amount following payment to thecharity.
3.12 We will supply to you any other information
required to be sent to you by us under applicablelaw or regulation.
3.13 The Company may send you the summary
financial statements they send to all theirshareholders. If they fail to do so, we cannot beheld responsible. But if you contact us, we will
do our best to send you a copy of the full annual
review and accounts – so long as we can get
enough copies from the Company.
4. Voting at Company General Meetings
4.1 We will endeavour to arrange for you to attend
and vote at general meetings of the Company, so
far as this is reasonably practicable and possible.
4.2 You may also authorise NomineeCo to vote foryou at a Company general meeting in the way
you wish. Any instructions you want to give us
regarding your vote must reach us at least five(5) working days before the meeting in question– unless we notify you otherwise. We may, at our275absolute discretion, agree to accept voting
instructions electronically or by telephone.
In the absence of specific instructions from you,the votes attached to your shares will not be
used at all.
4.3 Notwithstanding paragraphs 4.1 and 4.2, you
acknowledge that the Company operates a unit
shares system in line with Japanese listing
requirements, with one unit being 100 shares of
the Company. To the extent you provide us withvoting instructions with respect to a partial unitof shares, we will endeavour to aggregate yourvoting instructions with other voting instructions
received to enable the maximum number ofvotes to be exercised.
5. Keeping you informed about your holding
We will send you a paper statement as soon as
you join the Corporate Nominee Facility.
On a quarterly basis we will make available astatement within your Shareview Portfolio. If you
would like this in paper format details of how torequest this will be made available on yourstatement notification.
You can also request more frequent paper
statements. Please contact us using the contact
details in Section 1 for details of the charge forthis service.
If you need us to confirm your holding in writingat any other time, there may be a fee to pay. But
you are welcome to check your holding at any
time on our website at:www.shareview.co.uk
6. Adding to your holding
Subject to Section 3, only shares issued as aresult of the Scheme of Arrangement can be held
under these Terms and Conditions. It is notpossible to transfer any other shares into the
Corporate Nominee Facility.
7. Dealing in your shares
7.1 A share dealing service will be made available toyou in respect of your shares. If you want to use
it to sell your shares, we will act on the
instructions of the share dealing service
providers nominated on your behalf by theCompany. For further details, please contact us.
In this case, the share dealing will be governedby the terms and conditions between you andthe share dealing service providers from time totime – you can ask for a copy of the sharedealing terms and conditions by getting in touchwith us directly.
7.2 If you want to use the services of a share dealing
service provider other than that of thosenominated by the Company, we will first need totransfer your shares to you or to a third party ofyour choice.
So if you plan to use an alternative share dealing
service provider, please let us know and we will
send you the transfer form to complete.

7.3 Share dealing charges will vary from time totime. Please contact us for details of the sharedealing service providers and their up-to-datefees and charges or how to obtain them.
8. Tax8.1 You will be responsible for paying any taxes orduties due in connection with your shares,
including but not limited to, any tax on theincome received in respect of your shares or on
any capital gains from disposing of your shares.
We will not be liable for them. If you are in any
doubt as to your taxation position you should
consult your own professional adviser
immediately. Your own tax treatment will
depend on your individual circumstances.
8.2 Our policy on correcting any shortfalls in moneyor assets held on behalf of customers
Regardless of all the controls and measures wehave, there can be instances when shortfalls inmoney or assets can occur. Sometimes such
shortfalls last for less than a single working day
but occasionally they may last for a longer
period.
In accordance with the principles and rules set
by the FCA we will ensure there is adequate
protection for customers’ assets when we areresponsible for them. A key measure in ensuring
and demonstrating such protection is thereconciliation of all money and assets due to ourcustomers.
Such reconciliation includes the correction of any
shortfalls in the money and/or assets due tocustomers that may be identified, using our own
funds and resources where necessary.
This policy ensures that no customer would bedisadvantaged should they request an
immediate return of their money and/or assets
or if it becomes necessary for us to return all
money and assets to customers.
For all money held on behalf of customers we
use controls, during each business day, tomonitor these balances and provide same day
funding for any identified shortfalls (i.e. weensure that the total amount of money actually
held for customers in a segregated ‘client money’bank account is equal to the total amount ofmoney due to customers as per our internalcustomer account records). The funding by us ofany shortfalls that may occur will remain in place
until such time as the reason for the shortfall has
been identified and corrected.
We also monitor all assets (i.e. stock) held incustody for customers during the normal courseof business each day to ensure these equal the
total assets due to customers as per our internalcustomer account records. In the event a276

shortfall is identified, we will instigate thefollowing actions:(a) Establish if this has arisen as a result of a routine
timing issue which will address the shortfall indue course and monitor this through tocompletion.
(b) If the shortfall is not as a result of a routine
timing issue, we will establish the most recently
available market valuation of the asset and credit
the ‘client money’ bank account with theequivalent cash value of the shortfall.
(c) Ensure that our records clearly show whichcustomers may be impacted by the asset
shortfall (these customers will be entitled toclaim against this cash provision in the event that
Equiniti FS were to become insolvent before theasset shortfall is resolved).
(d) Where we ascertain that the delivery of assets
will occur in due course to address the shortfall,then we will maintain an equivalent cash
position in the ‘client money’ bank account until
such time as these assets are delivered. This cash
amount will be reviewed during each business
day against the relevant market value of theassets and adjusted accordingly. We may apply
an additional and appropriate margin to thisvaluation where the asset type is held on an
overseas market which is open outside of normal
UK business hours.
(e) Where we ascertain that the delivery of thestock to correct the shortfall is unlikely to occur
or will not occur then we will arrange topurchase the relevant asset in the market tocorrect the shortfall. The equivalent cash value
placed into the ‘client money’ bank account willremain in place until the trade has settled andthe stock amount is represented in the overallcustomer asset position.
9. Joint holders and trusts
9.1 NomineeCo may hold shares for up to four joint
holders.
9.2 Normally we will only accept instructions thathave been consented to by or on behalf of all
joint holders. We may, however, always at oursole discretion, agree to act on instructions
signed by one or more joint holders – rather thanby every one of you. We will not be liable for any
loss a joint holder may suffer as a result.
9.3 We and NomineeCo cannot and will not takeformal notice of any trust affecting the shares,
whether express, implied or constructive.
10. The security in your shares
10.1 Your shares will not be lent to, nor deposited ascollateral with, a third party. No money will beborrowed by us against the security of yourshares.
10.2 You must not assign or transfer your interest in
the shares to anyone else or borrow money
against the security of your shares. Neither we

nor NomineeCo will be bound to take notice of,nor arrange to carry out, any trust, mortgage,
charge, pledge or claim in favour of anyone else.
We may decline any notice we receive
concerning the right, title, interest or claim ofanyone else to an interest in your shares, except
when that interest has arisen throughbankruptcy, court order or death.
11. Communications between you and us
11.1 Any communication or agreement between you
and us under these Terms and Conditions must
be in the English language. We will always
communicate with you in English.
11.2 Please address all letters, instructions, notices,and other documents for us to the address
detailed in Section 1.
Until your communication actually reaches us at
this address, we will not be able to treat it as
officially received, nor to act on it.
You must send us any instructions or notices inwriting – and we need an original paper
document please, not a fax or email. In a few
special circumstances and at our sole andabsolute discretion we may be able to waive therequirement for your instructions to be inwriting.
11.3 All quarterly statements will be added to yourShareview Portfolio and will not be sent by post
(unless you have instructed us in accordancewith Section 5).
In addition, we will have discretion to makeavailable to you through your Shareview
Portfolio any other notices or documents related
to this service.
For example, we may advise you via the
Shareview Portfolio of dividend payment
confirmations or amendments to our Terms andConditions, rather than sending this information
to you (and all other users of our Corporate
Nominee Facility) individually by post. An
exception to this is where amendments to ourTerms and Conditions are material and we are
required to contact you directly giving you priornotice as per Section 17.
All email notifications will be sent to holders
using the latest valid email address provided.
Where we choose to use paper communication
we will continue to address all payments, notices
and other documents to the sole or first-named
joint holder at the address on our register, or theholder and address given to us most recently forcorrespondence purposes.
If you provide us with an email address but
subsequently decide that you do not want us tocommunicate with you by email or using a
website, please send us a letter in the post
stating this and we will resume using the last
postal address we have for you.

277

We may choose not to send out a document if
we have reason to believe its distribution in yourcountry may be forbidden by law.
11.4 Everything we send you is at your own risk,
including any cheque or electronic payments. If
we are unable for any reason to send you apayment electronically, we will send it by chequeinstead.
11.5 We cannot take any part in, nor take any
responsibility for, arrangements between joint
holders over sharing information or accounting
among themselves.
11.6 If there should be any dispute or court
proceedings concerning your shares or yourbeneficial interest in them, you must let us know
as soon as practicable. If we become aware of adispute between you and a third party, or
between any joint holders, over ownership of
the shares, we may decide that we must see anagreement signed by the disputing parties or a
court order before we can act on any further
instructions. If an agreement or court order ofthis kind is ever made affecting your shares, youagree to supply us with a copy as soon as
possible afterwards.
11.7 If communications from us to you are returnedby the Post Office marked ‘Gone Away’, or if, for
any other reason, it is our reasonable belief thatyou no longer live at the address that you haveregistered with us, we will stop sending
communications to you and will attempt tore-establish contact.
In order to do this, we will write to your last
known address seeking information about yourcurrent whereabouts. If you have a dividend
mandate instruction in place, we will also write
to your bank asking them to forward our contact
details on to you.
If we are still unable to re-establish contact withyou, we may instruct a professional tracing agent
to locate and make contact with you. If the
tracing agent is successful, and you contract withthem to use their services, they may charge you.
If we have reason to believe your email address
is invalid we will stop sending electronic
communications and will resume using the last
postal address we have for you. Your quarterly
statements will continue to be made available toyou in accordance with Section 5.
12. Transferring our obligations
In accepting these Terms and Conditions you
agree that we may transfer our obligations under
this agreement to any other company, if that
other company writes to you and undertakes tocarry out all our duties and obligations under thisagreement. If it does so, you agree that we will
be released from all those duties and obligations
that such company has undertaken to carry out.

We shall satisfy ourselves that any such company
is competent to carry out those functions andduties transferred and is regulated to do so by
the FCA, if such regulation is required. As part oftransferring our rights and obligations to a third
party, we may transfer all of the cash,
investments and information we hold underthese Terms and Conditions to that third party or
its nominee. Where funds are held by us as clientmoney the third party will continue to hold thisas client money. If you receive a written noticeunder this Section, and you decide you wish toend this agreement, you may do so by sending us
instructions as explained in Section 13. No
charge will be payable by you for this if yourinstructions reach us within one month of thedate of the written notice.
13. Ending this agreement
13.1 You may cancel this agreement at any time byletting us know in writing. This is in addition to
your legal right to cancel this agreement within
fourteen (14) days of the agreement between us
being made.
Your cancellation letter will take effect as soon as
we receive it, although this will not prevent thecompletion of any transactions that are alreadyunder way. The normal charges will be made forthese transactions.
13.2 If you have asked to cancel this agreement, or
you are no longer eligible to hold your shares in
our Corporate Nominee Facility (i.e. you change
address to outside the EEA, Channel Islands, Isleof Man, Switzerland or Gibraltar), you will needto provide a valid instruction to transfer yourshares back into your own name, to transfer yourshares to a third party of your choice, or to sell
your shares.
All transactions are subject to the usual fees
unless otherwise notified.
13.3 If this agreement is terminated in accordancewith Section 15, we will procure that any
remaining shares held on your behalf throughthe Corporate Nominee Facility are sold inaccordance with the Sales Policy and the net
proceeds of the sale (converted into pounds
Sterling and after deductions specified in theSales Policy) be remitted to you in pounds
Sterling by way of cheque drawn on a branch of a
UK clearing bank.
14. Notification of death
The rights to your shares pass to your legal
representatives on your death.
To register the death we will need to see theoriginal UK Grant of Representation, or a sealed
office copy (we are not able to accept certified
copies). This could be:• Grant of Probate;• Letters of Administration; or• Certificate of Confirmation (Scotland).

278

If the relevant shares are held on behalf of morethan one person, and after the event the sharesare to be held on behalf of the other person(s)then we will arrange for the shares to betransferred into their name(s) to remain in the
Corporate Nominee Facility.
In order to complete the transfer of shares into
new name(s) after the event, we may need torequest additional information and until thisinformation is available the shares will continue
to be held in the original name(s).
15. Terminating our Corporate Nominee Facility
15.1 Subject to Section 15.2, this agreement willterminate:(a) automatically two (2) years from the Scheme
Effective Date;(b) by us giving you three (3) months’ notice wherea change in applicable law or regulation meansthat we are precluded from providing the
Corporate Nominee Facility to you; or(c) automatically if you no longer hold any shares in
the Corporate Nominee Facility and any
outstanding dividends or other entitlements
have been cashed in accordance with yourinstructions.
15.2 Notwithstanding Section 15.1, in the event that
this agreement terminates in accordance with
Section 15.1 (a) or 15.1 (b), any such termination
shall be without prejudice to the continuation ofSections 2, 3, 8, 10 , 11, 13.3, 14 , 18 to 23(inclusive) and this Section 15.2 until such time
that: (i) we have sold any remaining shares which
are held on your behalf through the Corporate
Nominee Facility; and (ii) we have remitted thenet proceeds of such sale (converted into pounds
Sterling and after deductions specified in theSales Policy) to you, in each case in accordancewith Section 13.3.
16. Charges for our Corporate Nominee Facility
We may charge fees for some other services
provided under this agreement.
We will not charge you for holding your shares in
our Corporate Nominee Facility and taking careof much of the administration. Details of fees are
set out in these Terms and Conditions.
The Annual Maintenance Charge for holding yourshares via our Custodian may be waived at oursole discretion.
We may review these charges from time to time.
We may charge an annual management fee(which we will notify to you in advance of the fee
being applied) if we no longer hold any shares on
your behalf under this agreement but continue
to hold unclaimed payments which have beenpreviously notified to you. We will withdraw thisfrom your unclaimed payments up to the
maximum stated in these Terms and Conditions.
We will let you know in writing before we change
any of our fees under these Terms andConditions (see also Section 17). If at any time
you would like an update on our fees they areavailable from us on request.
In addition to the charges outlined above, we
receive fees from the Company sponsoring theservice. The Company sponsors this service sothat you can benefit from holding your shares inan electronic account at low cost. The fees
charged to the Company reflect the size,
complexity and value of the service and theoverall relationship with the Company. We also
receive fees from brokers with whom theCompany has set up arrangements for you to sell
your shares or buy additional shares. These fees
are charged by us for trade settlement andregister access administration.
The broker should give you details of these feesat the time of your trade. More information
about these fees is available on request.
17. Changing this agreement
We may change these Terms and Conditions
from time to time in order to:• comply with changes in law or regulation;• correct inaccuracies, errors or ambiguities;• take account of any corporate reorganisation
inside our group of companies or a transferof our rights, benefits and/or obligations
under these Terms and Conditions to a third
party; and/or• reflect changes in the scope and nature of
the service we are able to provide, having
regard to:– our agreement with the Company;– our computer or database systems;– our administrative procedures androutines; and/or– market practice and overall customer
requirements.
If we intend to change the Terms and Conditions
and the alteration is material, we will give you atleast sixty (60) days’ advance written notice of
the alteration, unless such changes are requiredby law or regulation to be effected earlier, or it isotherwise impracticable to do so.
See also Section 11.3 as to when we may use
email or a website to provide you with such
notice.
Remember also, if you do not like an alterationthat we propose to make to these Terms andConditions, that you have a right to leave the
Corporate Nominee Facility at any time byfollowing the procedure in Section 13.
18. The extent of our liability
18.1 We will not be responsible for any losses or
expenses you incur under this agreement, unlesscaused by our breaching FCA Rules, or our fraud,wilful default or negligence.
Even in the event of our wilful default or
negligence, to the fullest extent permitted by279

law, we will not be liable for any loss attributable
to a failure by you to let us know about addressor name changes, other changes in personal
details, or bankruptcy, or any problem or defectin your ownership or title to the shares (unlesscaused by us).
18.2 Neither we nor NomineeCo act as agent for theCompany or accept any responsibility foranything the Company does or does not do.
18.3 Neither we nor NomineeCo will be responsiblefor:• acting in accordance with a court order (ofwhatever jurisdiction) or failing to act inaccordance with a court order about which
we have not been notified;• forged or fraudulent instructions. So long as
we have shown all due care, we will beentitled to assume:– that signatures that purport to be yours
are genuine; and– if we have agreed to accept a particular
instruction over the phone or by email,that the caller’s or emailer’s identity is
genuine – unless it ought to be obvious
to anyone that it is not;• any kind of loss or damage you suffer in theevent of ‘force majeure’ – meaning any
failure, interruption or delay in theperformance of our obligations because of:– industrial disputes;– the malfunction or failure of any
telecommunications or computer
service;– the failure of third parties to carry out
their obligations;– the activities of government orinternational authorities, includingchanges in law or regulations; and/or– any other event or circumstance notwithin our reasonable control provided,
where relevant, that we have compliedwith the FCA Rules on business
continuity. If this type of situation arises,
however, we will remedy the situation assoon as reasonably possible; or• any indirect, special or consequential loss
(including direct or indirect loss of
profit),other than where this results fromfraud or a breach of the Conduct of Business
Sourcebook or Client Assets Sourcebook in
the FCA Rules on our part.
18.4 We and NomineeCo reserve the right to delay
acting on any particular instruction you give us,
in order that we can get additional informationfrom you, and/or comply with any law or
regulations, and/or investigate the validity or any
other aspect of the instruction. Neither we nor
NomineeCo will be responsible for any financial
loss resulting from such a delay.

18.5 Neither we nor NomineeCo will be responsible inany way to anyone for any shortfall that mightarise because we are accountable for tax on anyof the shares, or any part of the shares, or on any
income or capital distribution or other payment
they produce, or from any sale proceeds. In
order to comply with any tax liabilities of thiskind that might arise, we will be entitled torecover the money by making deductions fromthe income arising from your shares, or by selling
any or all of the shares and making deductions
from the proceeds.
18.6 We and NomineeCo will be entitled to make any
agreement with, or give any undertakings to, any
tax authority as regards the taxation status of thetransactions made under this agreement, and do
everything necessary to abide by any suchagreement or undertakings.
18.7 We and NomineeCo may do, or stop doing,
anything that, in our reasonable opinion, isnecessary in order to comply with any laws,
rules, regulations or the requirements of any
regulatory or other body that are binding on us.
18.8 We reserve the right to correct yourshareholding, at our expense, without reference
to you, if we discover we have made an error,
and will notify you (where relevant) of any
correction made. In the event that we make anerror on your shareholding and realise a financial
gain in putting your shareholding back in thecorrect position we will retain this.
19. Indemnifying us
19.1 You agree to indemnify us and NomineeCo andour respective agents, officers and employees forany liabilities we incur arising from anything
done by us in the proper performance of ourduties in accordance with this agreement inrelation to your shares, except for liabilities thatare the result of our or NomineeCo’s, or our or
NomineeCo’s respective agents, officers or
employees, wilful default, negligence or fraud ora breach of the FCA Rules.
19.2 Your obligations under this indemnity will survive
even in the event of:• complete or partial termination of thisagreement, or• our or NomineeCo’s resignation or
replacement.
19.3 If you are liable under the terms of thisagreement to pay us a sum of money and thelaw requires tax to be deducted or withheld fromthat sum, you must pay us enough to cover bothyour liability and the tax sum involved in full. We
and you agree to make any payments andadjustments necessary to achieve this.
20. Conflicts of interest
20.1 We have organisational and administrative
arrangements in place, that are intended toprevent conflicts of interest from adversely280affecting the interests of our clients. So, we takeall appropriate steps to identify and prevent ormanage conflicts of interest:(a) between us and our clients; and(b) between one client and another, that arise in thecourse of providing an investment and/or
ancillary service.
If these arrangements are not sufficient toensure, with reasonable confidence, that the riskof damage to you will be prevented, we will tell
you about the nature and/or sources of conflictsof interest, and the steps we have taken to
mitigate these risks, in providing these services.
20.2 You will find full details of our Conflicts Policy on
our website at:www.shareview.co.uk/info/policies
or you can request a printed copy by contacting
us using the contact details in Section 1.
20.3 At the time of the issue of this document nomaterial conflicts of interest were identified
which could not be managed in accordance with
Section 20.1.
21. Governing law
These Terms and Conditions are governed by
English law. Any disputes relating to theagreement between us will be subject to thejurisdiction of the courts of England and Wales.
22. No third party rights
This agreement is only between you and us. It
will not give any benefits to, nor be enforceable
by, a third party.
23. Complaints and compensation
If you have a complaint of any kind, please be
sure to let us know. We will do our utmost to
resolve the issue. You can put your complaint inwriting to us at:
Complaint Resolution Team, Equiniti
Financial Services Limited, Aspect House,
Spencer Road, Lancing, West Sussex,
BN99 6DA United Kingdom
or email us at:concerns@equiniti.com
or call us using the contact details in Section 1.
If we cannot resolve the issue between us, you
may – so long as you are eligible – ask theindependent Financial Ombudsman Service toreview your complaint.
A leaflet with more details about our complaints
procedure is available – you are welcome to ask
us to supply you with a copy at any time.
We are a member of the Financial Services
Compensation Scheme, set up under the
Financial Services and Markets Act 2000.
If we cannot meet our obligations, you may beentitled to compensation from the Financial
Services Compensation Scheme. This will dependon the type of agreement you have with us andthe circumstances of the claim. For example, theFinancial Services Compensation Scheme covers

corporate sponsored nominees, individual
savings accounts and share dealing.
Most types of claims for FCA regulated businessare covered for 100% of the first £50,000 perperson.
This limit is applicable to all assets with
Equiniti FS.
For more details about the Financial Services
Compensation Scheme, you can call their
helpline:
0800 678 1100 or +44 207 741 4100
or go to their website at:www.fscs.org.uk
or write to them at:
Financial Services Compensation Scheme
10th Floor, Beaufort House, 15 St Botolph
Street, London EC3A 7QU United Kingdom
Alternative Formats
To request these Terms and Conditions in analternative format, for example, large print,
braille, or an audio tape, please contact us using
the contact details in Section 1.

281

APPENDIX III
STATEMENT ON QUANTIFIED FINANCIAL BENEFITS
Takeda has made the following quantified financial benefits statement in paragraph 4 of Part II(Explanatory Statement) of this document (the “Quantified Financial Benefits Statement”):“The Takeda Directors expect recurring pre-tax cost synergies for the Combined Group to reacha run-rate of at least $1.4 billion per annum by the end of the third fiscal year following
completion of the Acquisition. Takeda expects these anticipated synergies to accrue as a direct
result of the Acquisition and that they would not otherwise be achieved on a standalone basis.
Significant recurring cost synergy potential
The constituent elements of quantified cost synergies, which are expected to originate from thecost bases of both Shire and Takeda, include:•

Manufacturing and supply: approximately four per cent. of the identified cost synergies
are expected to be generated from savings from in-sourcing Oral Solid Dose
manufacturing through Takeda excess capacity, efficiencies in operational procurement
spend and reduced overheads;•

R&D: approximately 43 per cent. of the identified cost synergies are expected to begenerated from removal of duplicated R&D costs, through rationalising ongoing researchand early stage pipeline programs to optimise value of R&D spend and reducing
overlapping resources; and•Sales, marketing and administrative efficiencies: approximately 53 per cent. of theidentified cost synergies are expected to be generated from the reduction of overlapping
marketing presence in gastroenterology (GI) and neuroscience, consolidation of
overlapping office locations, the elimination of duplicated IT systems, the optimisation ofmarketing and sales employee and non-employee costs and the reduction of duplicate
costs across central support functions.

Realisation costs and cost dis-synergies
The Takeda Directors expect the realisation of the quantified synergies will require estimatedone-off cash costs of approximately $2.4 billion incurred in the first three fiscal years following
completion of the Acquisition.
The Takeda Directors do not expect any other material cost dis-synergies to arise in connection
with the Acquisition.”
Further information supporting the Quantified Financial Benefits Statement, including the principal
assumptions and sources of information, is set out below.
Bases of belief for the Quantified Financial Benefits Statement
Synergy planning commenced in advance of the first approach by Takeda to the Shire Board, when a
Takeda synergy team was established to evaluate and assess the potential synergies available fromthe Acquisition and undertake an initial planning exercise.
The Takeda synergy team has engaged with senior subject matter experts in the R&D, manufacturing,finance and commercial functional areas within the Takeda organisation to provide input into thedevelopment of the cost synergy plan and identification of potential savings. This has included input
from the Takeda executive leadership team.
In preparing a detailed synergy plan, the Takeda synergy team has also worked alongside and with thesupport of external consultants engaged by Takeda.
282

In preparing the Quantified Financial Benefits Statement, both Takeda and Shire have shared certain
operating and financial information to facilitate an analysis in support of evaluating the potential
synergies available from the Acquisition. In circumstances where data has been limited for commercial
or other reasons, the Takeda synergy team has made estimates and assumptions to aid its
development of individual synergy initiatives. The assessment and quantification of the potential
synergies have in turn been informed by Takeda management’s industry experience and knowledge ofthe existing businesses.
The baseline used for the quantified cost synergies is Shire’s budgeted cost base for the financial year
ended December 31, 2018, supported where relevant by certain information from Takeda’s cost basefor the financial year ended March 31, 2018 and Takeda’s budgeted cost base for the financial year
ending March 31, 2019.
In general, the synergy assumptions have in turn been risk adjusted, exercising a degree of prudence
in the calculation of the estimated synergy benefit set out above.
In arriving at the Quantified Financial Benefits Statements, the Takeda Directors have assumed:•

no material change in macroeconomic, political or legal conditions in the markets and regions inwhich Takeda or Shire operate that materially impact on the implementation or costs to achieve
the proposed cost savings;•

no material impact on the underlying operations of either company or their ability to continue to
conduct their businesses;•

no material change in current foreign exchange rates;•

no change in tax legislation or tax rates or other legislation or regulation in the countries in which
Takeda and Shire operate that could materially impact the ability to achieve any cost savings; and•the completion of the disposal of the oncology business by Shire, as announced by Shire on April
16, 2018.

Reports
The Takeda Board believes that the Combined Group should be able to achieve the synergies set out
in the Quantified Financial Benefits Statement.
As required by Rule 28.1(a) of the Takeover Code, Deloitte LLP, as reporting accountants to Takeda,
and Evercore, J.P. Morgan Cazenove and Nomura, as financial advisers to Takeda, have provided thereports required under that Rule.
Copies of the reports were set out in the Rule 2.7 Announcement.
Confirmation of validity
The Takeda Directors have confirmed that:•

there have been no material changes to the Quantified Financial Benefits Statement since May
8, 2018 and the Quantified Financial Benefits Statement remains valid; and•each of Deloitte LLP, Evercore, J.P. Morgan Cazenove and Nomura has confirmed to Takeda that
their respective reports produced in connection with the Quantified Financial Benefits Statement
continue to apply.

Notes
1.

The statements of estimated cost savings and synergies relate to future actions andcircumstances which, by their nature, involve risks, uncertainties and contingencies. As a result,the cost savings and synergies referred to may not be achieved, or those achieved could bematerially different from those estimated.
283

2.

No statement in the Quantified Financial Benefits Statement, or this Announcement generally,should be construed as a profit forecast or interpreted to mean that Takeda’s earnings in the full
first full year following the Acquisition, or in any subsequent period, would necessarily match or
be greater than or be less than those of Takeda and/or Shire for the relevant preceding financial
period or any other period.

3.

Due to the scale of the Combined Group, there may be additional changes to the CombinedGroup’s operations. As a result, and given the fact that the changes relate to the future, theresulting cost savings may be materially greater or less than those estimated.

284

APPENDIX IVNOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINEDFINANCIAL DATA
An unaudited pro forma condensed combined financial statements reflecting the following:(a)the Acquisition;(b)

the financing obtained by Takeda to fund the cash portion of the Consideration; and(c)the issue of New Takeda Shares to Shire Shareholders at the Scheme Record Time,(the “Transactions”) is included in paragraph 5.1 of Part II (Explanatory Statement) of this document.
This Appendix IV sets out the notes to the unaudited pro forma condensed combined financial
statements.
Basis of preparation
The unaudited pro forma condensed combined statement of financial position as at March 31, 2018 andthe unaudited pro forma condensed combined statements of income for the year ended March 31, 2018reflect adjustments that are: (i) directly attributable to the Transactions; (ii) factually supportable; and(iii) with respect to the pro forma condensed combined statement of income, expected to have acontinuing impact on the combined results following the consummation of the Transactions.
The unaudited pro forma condensed combined statement of financial position has been prepared by
combining Takeda’s statement of financial position as of March 31, 2018 and Shire’s balance sheet asof December 31, 2017 and applying the pro forma adjustments described below. The unaudited pro
forma condensed combined statement of income has been prepared by combining Takeda’s statementof income for the year ended March 31, 2018 and Shire’s for the year ended December 31, 2017 andapplying the pro forma adjustments described below. Management has elected to combine thehistorical financial information based on the respective fiscal year end of each company, as permitted
by the SEC. The historical Shire balance sheet and income statement have not been updated for any
significant events that may have occurred between December 31, 2017 and March 31, 2018. In
addition, the historical financial information of Shire has been prepared based on US GAAP, which has
been converted to IFRS and Takeda’s accounting policies. The pro forma condensed combined
statement of financial position has been prepared assuming completion of the Acquisition occurred on
March 31, 2018 and the pro forma condensed combined statement of income has been preparedassuming completion of the Acquisition occurred on April 1, 2017.
The pro forma adjustments for the Transactions are made on the basis that it is a business combinationthat is accounted for under the acquisition method of accounting in accordance with IFRS 3, Business
Combinations. Accordingly, Takeda has estimated the fair value of Shire’s assets acquired and liabilities
assumed and conformed Shire’s accounting policies to its own for material policy differences and basedon available information.
The unaudited pro forma condensed combined financial statements have been prepared by Takeda
based upon currently available information and assumptions deemed appropriate by Takeda
management and for informational purposes only and should be read in conjunction with Takeda’s andShire’s financial statements. The preparation of these unaudited pro forma condensed combined
financial statements requires management to make estimates and assumptions deemed appropriate.
The unaudited pro forma condensed combined financial statements are not intended to represent, or
be indicative of, the actual financial position and results of operations that would have occurred if theTransactions described below had been affected on the dates indicated, nor are they indicative of
Takeda’s future results.

285

Pro forma adjustments(A)

The historical financial statements of Shire were prepared in accordance with US GAAP and
prepared in US Dollars. The historical Shire financial information presented in the pro forma
condensed combined financial information has been conformed from Shire’s historical financial
information to IFRS and Takeda’s accounting policies for material accounting policy differences
based on information available at the time of preparation and converted to Japanese Yen. A
reconciliation of the historical Shire financial information to the Shire financial information basedon IFRS and the foreign currency rates used to convert the historical financial statements toJapanese Yen are presented in Note K below.
Based upon the available information, Takeda is not aware of any additional accounting policy
differences that would have a material impact on the unaudited pro forma condensed combined
financial information and that have not been reflected in the conversion shown in Note K below.
Takeda will review Shire’s accounting policies subsequent to completion of the Acquisition in
more detail. As a result of that review, Takeda may identify differences between the accounting
policies of the two companies that, when conformed, could have a material impact on theunaudited pro forma condensed combined financial information.

(B)

Reflects the preliminary purchase price allocation among assets acquired and liabilities assumed
as set forth below (in millions of JPY):
Amount—————Estimated purchase price:
Cash
Takeda Shares

3,099,271
3,357,528—————
6,456,799

Total (i)Preliminary estimate of assets acquired and liabilities assumed (ii)
Net assets of Shire at December 31, 2017
Less: Cash for estimated transaction expenses (note C)
Less: Historical goodwill
Less: Historical intangible assets
Adjusted net book value of liabilities assumed
Increase inventory to fair value
In-process research and development at fair value
Other identifiable intangible assets at fair value
Increase property, plant and equipment to fair value
Deferred tax impact of fair value adjustments (ii)(b)Cash settled share-based award liability (iii)

4,100,323(24,126)(2,238,458)(3,744,677)(1,906,938)
451,998
280,535
5,262,837
37,479(581,156)—————(114,391)—————
3,026,435—————

Preliminary allocation to goodwill

286

(i)

The aggregate preliminary purchase price is calculated as follows (in millions of JPY
except per share data):
Amount—————Calculation of estimated cash consideration(a):Number of Shire Shares to be purchased
Cash consideration per share ($30.33 per share) in ¥ (a)Estimated cash paid for shares and vested share settled awards (b)910,746,641
3,403
—————
3,099,271—————

Calculation of estimated fair value of shares issued as consideration:
Shire Shares outstanding
910,746,641
Conversion ratio (as per agreement)
0.839
—————
Estimated New Takeda Shares to be issued
764,116,432
Fair value per share based on Takeda share price
4,394
—————
Estimated fair value of shares issued as consideration (c)3,357,528

—————

(a)

Cash consideration per share was converted to JPY at an assumed rate of US$1.00
to ¥112.214 as of October 12, 2018.

(b)

The number of shares to be purchased represents the shares outstanding of Shireat March 31, 2018 and the estimated number of vested share settled awards to betreated as shares in the Acquisition.
Cash consideration for shares was estimated based on 910,670,167 Shire Shares
outstanding expected to be purchased as of March 31, 2018.
Cash consideration for vested Shire Share settled awards was estimated based on
76,474 Shire Share award units. This represents the share awards expected to bevested on completion of the Acquisition and are expected to be settled the same as
Shire’s ordinary outstanding shares.
Cash paid for share settled awards relate to Baxalta share units which will becancelled upon a change in control in return for a cash payment of their value. The
total cash consideration related to these awards is based on an assumed number ofunits of 4,555,361 at ¥7,142 per share, which represents the estimated total price tobe paid by Takeda for each Shire share outstanding.
The total cash consideration will vary based on the USD to JPY exchange rate on
the date of the Acquisition. From the date on which Takeda’s initial offer was madepublic on May 8, 2018 to October 12, 2018, the foreign currency exchange rate from
USD to JPY ranged from ¥108.729 to ¥114.101 per US$1.00, or a range ofapproximately five per cent. A five per cent. weakening of the Japanese Yen to US
Dollar would increase the cash amount by ¥155,738 million and a five per cent.
strengthening of the Japanese Yen to the US Dollar would decrease the cash
amount by ¥154,827 million.

(c)

The estimated fair value of shares issued was calculated based on the outstanding
shares and share awards at March 31, 2018, multiplied by the exchange ratio of
0.839, and Takeda’s closing share price as of October 12, 2018 of ¥4,394 per share.
The fair value of the Consideration settled in shares is subject to change based on
movements in Takeda’s share price. From the date on which Takeda’s initial offer
was made public on May 8, 2018 to October 12, 2018, Takeda’s closing share pricehas ranged from ¥4,203 to ¥4,899, or a range of approximately 17 per cent. A 20 per
cent. decrease in Takeda’s share price would reduce the value of the shares issuedby ¥671,506 million and a 20 per cent. increase in Takeda’s share price would
increase the value of the shares to be issued by ¥671,506 million.
287

As noted above, the final Consideration transferred is contingent upon the share price ofTakeda Shares on the date of the completion of the Acquisition and the foreign currency
exchange rate on the date of Acquisition. A difference in any of these factors from theamount assumed herein will result in a change in the purchase price and, as aconsequence, a change in goodwill recognised.
(ii)

The preliminary estimates are based on the data available to Takeda and may change
upon completion of the final purchase price allocation. Any change in the estimated fairvalue of the assets and liabilities acquired will have a corresponding impact on the amountof the goodwill. In addition, a change in the amount of property plant and equipment andother identifiable intangible assets will have a direct impact on the amount of amortisationand depreciation recorded against income in future periods. The impact of any changes in
the purchase price allocation may have a material impact on the amounts presented in thispro forma condensed combined financial information and in future periods.
(a)The pro forma adjustment for intangible assets is calculated as follows (in millionsof JPY):
AmountFair value of in-process research and development
Fair value of other intangible assets
Less: Historical intangible assets—————
280,535
5,262,837(3,744,677)—————
1,798,695—————

Pro forma adjustment(b)

The estimated tax impact is based on assumed tax rate of 25 per cent., which
represents Takeda’s 2017 estimated global blended statutory tax rate applicable tothe fair value step-ups.

(c)

The acquired assets and liabilities assumed are reflected at their preliminarily
estimated fair values with the excess consideration recorded as goodwill. The pro
forma adjustment for goodwill is calculated as follows (in millions of JPY):
AmountPreliminary allocation to goodwill
Less: Historical goodwill—————

Pro forma adjustment
(iii)

—————
3,026,435(2,238,458)—————
787,977

Reflects the fair value of Shire share-based awards that Shire will cash settle upon thechange in control. The total cash consideration related to these awards is based on anassumed number of units of 16,135,116 at ¥7,090 per share, which are illustrative figures
based on assumptions deemed appropriate by Takeda management and may vary. The
amount that will be ultimately payable will be based on the higher of: (i) the average closing
middle market price of a Shire stock price during the 30 days prior to the Court Sanction
Hearing; and (ii) the value of the consideration offered by Takeda to each Scheme
Shareholder per share at the date of the Court Sanction Hearing. The payment will bemade after the Effective Date. The final amount payable is contingent upon, Shire’s stock
price, the share price of Takeda shares on the date of the Court Sanction Hearing, theforeign currency exchange rate on the date of the Court Sanction Hearing and the numberof Shire share-based awards which will vest, including the extent to which such awards
may vest. A difference in any of these factors from the amount assumed herein will change
the cash-settle award liability.

288

(C)

Reflects the impact on cash and cash equivalents of the Transactions calculated as follows (inmillions of JPY):
AmountNet proceeds from borrowings (Note (D))
Estimated Takeda transaction costs (Note (E))
Estimated Shire transaction costs (i)Debt issuance costs (Note (D))
Cash consideration for the Acquisition—————

Pro forma adjustment
(i)
(D)

—————
3,333,405(55,266)(24,126)(30,027)(3,099,271)—————
124,715This represents estimated transaction costs expected to be paid by Shire at close which
will reduce cash acquired by Takeda.

Reflects the borrowings to be entered into in connection with the Acquisition (in millions of JPY):
AmountBridge financing (i)Term loan (ii)Senior Short-Term Loan Facility Agreement (iii)
EUR Senior Notes and Potential Future USD Notes (iv)(v)
Total (vi)Less: Estimated debt issuance costs—————
415,192
841,605
500,000
1,576,608—————
3,333,405
30,027—————3,303,378—————

Pro forma adjustment(i)

On May 8, 2018 Takeda entered into the Bridge Credit Agreement, with aggregate
commitments of $30.85 billion. Takeda expects to fully replace this bridge facility prior tocompletion of the Acquisition with other borrowings. The bridge facility has been reducedby the Term Loan Credit Agreement and the Senior Short-Term Loan Facility Agreement
and will be further reduced by the EUR Senior Notes and the Potential Future USD Notes.
The pro forma balance sheet reflects borrowings under the Bridge Credit Agreement forthe portion that has not been replaced by other financing or from the EUR Senior Notes
and the Potential Future USD Notes.

(ii)This represents the Term Loan Credit Agreement entered into by Takeda on June 8, 2018.

(iii)

This represents the Senior Short-Term Loan Facility Agreement entered into on
October 26, 2018, that has an aggregate commitment of ¥500 billion.

(iv) and (v) Takeda expects, subject to market conditions, to complete an offering of seniornotes comprised of the EUR Senior Notes and the Potential Future USD Notes. The
pro forma financial information is based on assumed total proceeds of $14.05 billion
with 57 per cent. of the notes as the EUR Senior Notes and 43 per cent. as the
Potential Future USD Notes. The actual mix of the EUR Senior Notes and thePotential Future USD Notes may differ from this assumption.
(vi)

The total proceeds have been based on the assumed foreign currency composition of USD
and Euro debt assuming total proceeds of $14.05 billion and a foreign currency exchange
rate of USD to JPY of ¥112.214 per US$1.00.

In addition to the above, on October 26, 2018, Takeda entered into a Subordinated Loan
Agreement with aggregate commitments of ¥500 billion. Takeda is not required to draw upon the
Subordinated Loan. However, if Takeda chooses to draw on all or part of the Subordinated Loan,
the proceeds will be used to refinance all or a part of any indebtedness incurred pursuant to the
Senior Short-Term Loan Facility Agreement.

289

(E)

Represents the elimination of Shire’s historical equity and the impact of the transactions on equity
calculated as follows (in millions of JPY):
Share
Capital—————(9,255)
1,678,764–—————
Total pro forma adjustment 1,669,509

Eliminate Shire equity
Issuance of shares (i)Transaction costs (ii)

SharePremium—————(2,827,075)
1,678,764(29,624)—————(1,177,935)

Treasury
Shares—————31,942––—————
31,942Retained
Earnings—————(1,140,737)–(24,760)—————(1,165,497)

Other
Componentsof Equity—————(155,198)––—————(155,198)

Total

—————
(4,100,323)
3,357,528(54,384)—————(797,179)————— ————— ————— ————— ————— —————

Represents impact of the New Takeda Shares to be issued in respect of the non-cash portion of
the Consideration. This is based on an assumed Takeda Share price at the Effective Date of¥4,394 and the issue of 764,116,432 New Takeda Shares. As noted above, the number of New
Takeda Shares and the value of the New Takeda Shares will be based on the Takeda Share priceat completion of the Acquisition and may differ from these amounts.
Represents the impact on retained earnings of the transaction costs to be paid by Takeda thatwill be recorded at the time of the Acquisition, net of the associated tax benefit related to the tax
deduction of these costs. These costs include ¥24,760 million that will be expensed in future
periods and ¥29,624 million related to registration of equity that will be recorded directly to equity.
The tax benefit is based on the estimated tax-deductible portion of transaction expenses and anassumed tax rate of 25 per cent., which represents Takeda’s 2017 estimated blended global
statutory tax rate, and is shown as a pro forma adjustment to deferred tax asset. Thesetransaction costs are excluded from the pro forma condensed combined statement of income, as
they are non-recurring in nature.
(F)

Represents the incremental depreciation expense based on the preliminary fair value of property,
plant and equipment and an estimated remaining useful life of 15 years calculated as follows (inmillions of JPY):
Fair value
adjustment

Asset category——————Land
Buildings and structures
Machinery and vehicles

—————
1,077
8,603
27,799—————37,479

—————

Total

Estimated
useful life—————
Indefinite
15 years
15 years

Pro forma
adjustment

—————
n/a
574
1,853
—————
2,427

—————

If the weighted average estimated useful life of depreciable assets were to increase by one year,
pro forma depreciation expense would decrease by ¥3,099 million or increase by ¥3,541 million
if the weighted average estimated useful lives were to decrease by one year. If the estimated fairvalue of estimated depreciable assets were to change by 10 per cent., pro forma annual
depreciation expense would increase or decrease by ¥4,958 million.
(G)

Reflects the incremental amortisation expense resulting from the recognition of other identifiableintangible assets. The proforma adjustment is based on recognition of amortisable intangible
assets of ¥5,543,372 million (Note (B)) and estimated weighted average life of 5-18 years. If thefair value were to change by 10 per cent., it would result in a ¥53,024 million impact onamortisation expense. If the estimated useful life of amortisable intangible assets were toincrease by one year, pro forma annual amortisation expense would decrease by ¥58,496 million
and would increase ¥79,946 million if the estimated useful life were to decrease by one year.

290

(H)

Reflects the incremental interest expense related to the financing of the Acquisition described in
Note (D) calculated as follows (in millions of JPY):

AmountBridge financing (i)Term loan (ii)Senior Short-Term Loan
Facility Agreement (iii)
Senior EUR Notes (iv) (v)Potential Future USD Notes (iv) (v)Estimated debt issuance costs (vi)
Pro forma adjustment (vii)

Term

Weighted
average
Interest
Rate

Pro formainterest
expense—————415,192
841,605—————
1 year
5 years

—————
3.41%
2.34%

—————
14,137
19,701500,000
904,424
672,184(30,027)—————
3,303,378

0.5 year2-12 years
2-5 years

0.23%
1.54%
4.06%

566
13,901
27,28622,988—————98,579(i)

The interest is based on the assumption that 100 per cent. of the bridge financing is in
USD. The interest under the agreement is based on LIBOR plus a margin, which totals
3.41 per cent.

(ii)

The interest assumes that 53.3 per cent. of the term loan financing is in USD and 46.7 percent. is in Euros. The interest under the agreement is based on LIBOR or EURIBOR plus
a margin. The interest rate is calculated based on the applicable rate for USD and EUR
borrowings, which resulted in a weighted average interest rate of 2.34 per cent.

(iii)

The Senior Short-Term Loan Facility Agreement is denominated in JPY and the interest
under the agreement is based on TIBOR plus a margin, which totals 0.23 per cent.

(iv) and (v) Represents the interest expense associated with the issuance of senior notes. Thisis based on the assumed amount of Senior EUR Notes and Potential Future USD
Notes as described above.
The Senior EUR Notes are expected to be comprised of fixed and variable rateborrowings. Takeda have assumed that the Senior EUR Notes are 25 per cent. variable
rate borrowings and 75 per cent. fixed rate borrowings, with an estimated weighted
average interest rate of 1.54 per cent. If the interest rate on the Senior EUR Notes were toincrease or decrease by 0.125 per cent. the pro forma interest expense would change by¥1.131 million.
The Potential Future USD Notes are expected to be comprised of fixed and variable rateborrowings. Takeda have assumed that the Potential Future USD Notes are 25 per cent.
variable rate borrowings and 75 per cent. fixed rate borrowings, with an estimatedweighted average interest rate of 4.06 per cent. If the interest rate on the Potential Future
USD Notes were to increase or decrease by 0.125 per cent. the pro forma interest expense
would change by ¥840 million.
The total interest expense will also be impacted by a change in the mix of notes between
Senior EUR Notes and Potential Future USD Notes.
(vi)

The debt issuance costs are amortised over the life of the associated borrowings and theamortisation expense are included in interest expense. Takeda have assumed a weighted
average term of 2.4 years.

The actual terms and conditions of the Financing, including the amount of debt actually incurred,
the currency of the borrowings, the interest rate and the form of the borrowings (as noted in Note(D)) have not been finally determined and are subject to change.

291

(I)

Reflects the elimination of non-recurring transactions costs incurred during the year ended March
31, 2018 that are directly related to the Acquisition and are reflected in the historical Takeda
statement of income.

(J)

Reflects the tax impact of the pro forma adjustments based on assumed rate of 25 per cent.,
which represents Takeda’s 2017 estimated global blended statutory tax rate.

(K)

The following is a reconciliation of Shire’s historical financial information from US GAAP to IFRS
and Takeda’s accounting policies (amounts in millions of JPY unless otherwise noted):292

Unaudited Shire Condensed Balance Sheet IFRS Conversion
As of December 31, 2017————————————————————————————————————
Historical
Shire(USD)(i)ASSETS
Non-current assets:
Property, plant and equipment
Goodwill
Intangible assets
Deferred tax asset
Other
Total non-current assets
Current assets:
Inventories
Trade and other receivables

Historical
IFRS
Shire
conversion(JPY)(ii) adjustments(iii)

—————

—————

—————

6,636
19,832
33,046
189

749,0122,238,458
3,729,935
21,333446—————
60,149—————50,340—————6,789,078
—————

–
–
14,742
22,055(7,777)–—————29,020
—————

3,292
3,010

371,571339,742

511
795
—————
7,608
—————
67,757

Note

——

(a.)
(b.)
(c.)

Classification
adjustments(iii)

—————

Note

——

749,0122,238,458
3,744,677
35,611

–
—————
–
—————

50,340—————6,818,098—————

57,67789,732—————858,722—————
7,647,800–
27,411
27,711–(b.)(27,711)—————
27,411—————
27,411

16,752

1,890,815

–

–
4,748
2,198

–
535,912
248,090

–
–
1,489

—————
23,698——————————2,674,817
—————

—————
1,489
—————

(38,565)
6,722
66,056–(d.)
38,565(6,722)(66,056)
—————
–
—————

(k.)
(k.)
(k.)
(k.)
(k.)
(k.)
(k.)

2,789
4,184

314,797472,252

–
–

–

–

–

909

102,600

–

—————
7,882
—————
31,580——————————889,649—————3,564,466
—————

—————
–
—————
1,489
—————

(849)
(193,509)(206,991)
27,411
206,991
193,509849—————
27,411—————
27,411
—————

(k.)
(k.)
(g.)
(f.)
(g.)
(k.)
(k.)

82
25,0829,255
2,831,030

Treasury shares
Retained earnings

(283)
9,921

(31,942)
1,119,793

Other components of equity
Equity attributable to ownersof the company
Non-controlling interests

1,375

155,198–
3,822(7,777)–(3,822)
14,742(1,489)11,513––36,177–—————36,177—————

4,083,334–—————
4,083,334—————

Total current assets
Total assets
LIABILITIES
Non-current liabilities:
Bonds and loans
Net defined benefit liabilities
Deferred tax liabilities
Other

Total non-current liabilities
Current liabilities:
Bonds and loan
Trade and other payables
Provisions
Other
Total current liabilities
Total liabilities
EQUITY
Share capital
Share premium

Total equity
TOTAL LIABILITIESAND EQUITY————— ————— —————

(f.)
(k.)
(k.)

—————

(e.)
(c.)
(e.)
(a.)
(d.)
(b.)

—————

–
–
–
–

–
–
–
–
(10,542)—————(10,542)—————
18,478Cash and cash equivalents
Other current assets

Historical
Shire IFRSConversion(JPY)

371,571394,864
57,67751,479—————875,591—————
7,693,689—————
1,858,972

66,056535,912215,366—————
2,676,306—————
313,948
71,752
234,402
296,958—————
917,060—————
3,593,366
—————

–
–

9,255
2,827,075––––(31,942)
1,140,737––

155,198

16,989–—————16,989
—————

–
–
—————
–
—————

4,100,323–—————
4,100,323—————————— ————— —————

—————

—————

67,757

7,647,800

293

18,47827,411

7,693,689

Unaudited Shire Condensed Statement of Income IFRS Conversion
Year ended December 31, 2017————————————————————————————————————
Historical
Shire(USD)(i)Revenue
Cost of sales
Selling, general andadministrative expense

Historical
IFRS
Shire
conversion(JPY)(ii) adjustments(iii)

NoteClassification
adjustments(iii)

Note

Historical
Shire IFRSConversion(JPY)————— ————— ————— —— ————— —— —————
15,161
1,703,475––
1,703,475(4,701)(528,200)
(778)
(e.)
(136)
(h.)
(529,114)(3,531)(396,740)(2,124)
(197)

(e.)
(d.)

136
5,684

(h.)
(i.)

(393,241)(1,763)(198,089)(597)
14,742

(e.)
(a.)

(102)
–

(j.)

(184,046)(1,768)(198,651)

–

(943)

(105,954)

—————
2,455

—————
275,841(323)
11,528—————22,251(e.)(l.)(5,684)
1,361
—————
1,259

(i.)
(k.)

(99,072)–—————
299,351(562)(63,146)(1,292)(d.)(1,361)(k.)(65,799)

3—————
Profit before tax
1,896
Income tax (expense)/benefit
2,358

337
—————
213,032
264,943
—————

–
—————
(102)
(b.)
102
(c.)
—————

337
—————
233,889(j.)
278,821

—————

–
—————
20,95914,124
(348)
—————

4,254

477,975

34,735–

512,710

18
—————
4,272

2,023
—————
479,998–—————
34,735

–
—————
–

2,023
—————
514,733

Research anddevelopment expense
Amortization and impairment
losses on intangible assets
associated with products
Other operating income(expense), net (iv)
Operating profit
Finance income (expense),
net (v)
Share of profit (loss) ofinvestments accounted forusing the equity method

Net profit for the year, before
discontinued operations
Gain/(loss) from discontinued
operations
Net profit for the year(i)————— ————— —————

–

—————

(198,651)

—————

—————

Represents the historical balance of Shire at December 31, 2017 and the income statement for the year ended
December 31, 2017.

(ii) The historical USD balance sheet and income statement of Shire are converted to JPY based on a USD to JPY
exchange rate of ¥112.871 per US$1.00 for the balance sheet and ¥112.359 per US$1.00 for the income statement.
For the balance sheet, the spot rate at December 31, 2017 of ¥112.871 per $1.00 was used. For the income
statement, the average rate for the prior 12 months of ¥112.354 per $1.00 was used.
(iii) A summary of the differences between US GAAP and Takeda’s accounting policies is as follows:(a) Reflect adjustment to eliminate expense recorded by Shire for collaboration payments related to products thatare not yet commercialised and to recognise in-process research and development based on Takeda’s
accounting policy.
(b) Reflect adjustments to record a deferred tax asset and reclassify prepaid taxes to tax expense on intercompany
inventory transfers under IFRS reporting requirements and to record the cumulative effect on retained earnings.
(c) Reflect adjustments to record the deferred tax asset and tax expense for stock-based compensation under IFRS
reporting requirements.
(d) Reflects adjustments to net periodic benefit costs and net defined benefit obligation due to the measurement
differences between US GAAP and Takeda accounting policies. These measurement differences relate to theremoval of expected return on plan assets and inclusion of interest income on plan assets.
(e) Reflect stock compensation expense based on graded vesting under IFRS. Under US GAAP, Shire elected torecord the expense on a straight-line basis.
(f)

Reclassify Shire’s chargeback and sales discounts reserve from trade and other receivables to provisions.

(g) Reclassify accrued rebates, accrued managed care, accrued Medicare and Medicaid reserves, accrued sales
returns, litigation reserves, and other accruals from trade and other payables to current provisions.
(h) Reclassify freight insurance expenses from selling, general and administrative expenses to cost of sales.
(i)

Reclassify charitable donations from selling, general and administrative expense to other operating expenses.

294

(j)

Reclassify research and development investment tax credits from research and development to income tax
expenses.

(k) Reclassify assets and liabilities to align the Shire classification to the Takeda classification.
(l)Reflect adjustment to decrease restructuring expenses in 2017 as this expense would have been recorded in an
earlier period under IFRS. There is no corresponding adjustment to the balance sheet as the cumulative retained
earnings impact does not change.

(iv) Other operating expenses includes integration and acquisition costs, reorganisation costs and gain on sale of productrights.
(v) Finance income (expense), net includes interest income, interest expense and other income/(expense), net.

295

APPENDIX VPROPOSED MEMBERS OF THE FUTURE TAKEDA EXECUTIVETEAM (POST-EFFECTIVE DATE)
1.

Andy Plump, R&D

2.

Camilla Soenderby, Patient Value & Product Strategy

3.

Christophe Bianchi, Global Oncology Business Unit

4.

Christophe Weber, President & CEO

5.

Costa Saroukos, Global Finance

6.

Gerard (Jerry) Greco, Global Quality

7.

Giles Platford, Europe & Canada Business Unit

8.

Haruhiko Hirate, Corporate Communication and Public Affairs

9.

Helen Giza, Integration

10.

Julie Kim, Global Plasma-Derived Therapies Business Unit

11.

Marcello Agosti, Global Business Development

12.

Masato Iwasaki, Japan Pharma Business Unit

13.

Milano Furuta, Corporate Strategy

14.

Mwana Lugogo, Global Ethics & Compliance

15.

Padma Thiruvengadam, Global Human Resources

16.

Rajeev Venkayya, Global Vaccine Business Unit

17.

Ramona Sequeira, US Business Unit

18.

Ricardo Marek, Emerging Markets Business Unit

19.

Thomas Wozniewski, Global Manufacturing and Supply

20.

Yoshihiro Nakagawa, Global Legal

296

APPENDIX VI
NON-GAAP RECONCILIATIONSPART A
(in millions)
Reconciliation of U.S. GAAP net income to Non GAAP EBITDA and Non GAAP operating income:3 months ended
September 30,————————————
2018
2017

U.S. GAAP net income
Add back/(deduct):
Loss/(gain) from discontinued
operations, net of taxes
Equity in (losses)/earnings of equity
method investees, net of taxes
Income taxes
Other expense, net
U.S. GAAP operating income fromcontinuing operations
Add back/(deduct) Non GAAP
adjustments:
Expense related to the unwindof inventory fair value adjustments
Program wind-down and one-time
employee related costs
Impairment of acquired intangible assets
Costs relating to license arrangements
Legal and litigation costs
Amortization of acquired intangible assets
Integration and acquisition costs
Reorganization costs(Gain)/loss on sale of Oncology andproduct rights
Depreciation
Non GAAP EBITDA
Depreciation
Non GAAP operating income
Net income margin(1)Non GAAP EBITDA margin(2)—————$537.2—————$550.8–9 months ended
September 30,——–——————————
2018
2017

—————
$1,703.3—————$1,166.1

0.4–(18.6)

(4.7)
203.3
220.0
—————

3.4
13.5
140.5
—————

(11.2)
371.0
417.2
—————

(0.1)
44.6
412.9
—————

955.8

708.6

2,480.3

1,604.9

1.6

63.3

40.9

688.7

3.3
–
–
–
433.7
93.0
254.8

–
–
–
1.0
482.4
237.0
5.4

3.3
10.0
10.0
–
1,375.3
512.0
268.9

(4.0)
20.0
123.7
8.6
1,280.5
696.7
24.5(267.2)
157.6—————
1,632.6(157.6)—————$1,475.0

0.3
119.9
—————
1,617.9(119.9)—————$1,498.0(267.2)432.8—————
4,866.3(432.8)—————$4,433.5

(0.4)
363.5
—————
4,806.7(363.5)—————$4,443.2

14%
—————
42%
—————

15%
—————
44%
—————

15%
—————
42%
—————

11%
—————
44%
—————

————— ————— ————— —————(1) Net income as a percentage of total revenues.
(2) Non GAAP EBITDA as a percentage of total revenues.

297

Reconciliation of U.S. GAAP gross margin to Non GAAP gross margin:
3 months ended
September 30,————————————
2018
2017

U.S. GAAP total revenues
Cost of sales (U.S. GAAP)
U.S. GAAP gross margin(1)
Add back Non GAAP adjustments:
Expense related to the unwind of
inventory fair value adjustments
Depreciation
Non GAAP gross margin
U.S. GAAP gross margin(1)(2)
Non GAAP gross margin(2)—————$3,871.7(1,157.6)—————
2,714.1—————$3,697.6(1,001.4)—————
2,696.2

1.6
89.4
—————
$2,805.1
70.1%
72.5%

9 months ended
September 30,——–——————————
2018
2017

—————
$11,556.9(3,398.3)—————
8,158.6—————$11,015.7(3,437.3)—————
7,578.4

63.3
70.1
—————
$2,829.6

40.9
228.2
—————
$8,427.7

688.7
209.2
—————
$8,476.3

72.9%
76.5%

70.6%
72.9%

68.8%
76.9%

————— ————— ————— —————(1) U.S. GAAP gross margin excludes amortization of acquired intangible assets.
(2) U.S. GAAP gross margin as a percentage of total revenues. Non GAAP gross margin as a percentage of total
revenues.

Reconciliation of U.S. GAAP net income to Non GAAP net income:3 months ended
September 30,————————————
2018
2017

—————
U.S. GAAP net income$537.2
Expense related to the unwind of
inventory fair value adjustments
1.6
Program wind-down and one-time
employee related costs
3.3
Impairment of acquired intangible assets–
Costs relating to license arrangements–
Legal and litigation costs–
Amortization of acquired intangible assets
433.7
Integration and acquisition costs
93.0
Reorganization costs
254.8(Gain)/loss on sale of Oncology andproduct rights(267.2)
Amortization of one-time upfront
borrowing costs for Baxalta and Dyax–
Loss/(gain) on sale of non-core investments–
Loss/(gain) from discontinued operations–
Costs related to bond tender offer
40.6
Fair value adjustment for joint venture
net written option
11.0
Non GAAP tax adjustments
10.7
—————
Non GAAP net income$1,118.7—————$550.89 months ended
September 30,——–——————————
2018
2017

—————
$1,703.3—————$1,166.1

63.3

40.9

688.7

–
–
–
1.0
482.4
237.0
5.4

3.3
10.0
10.0
–
1,375.3
512.0
268.9

(4.0)
20.0
123.7
8.6
1,280.5
696.7
24.5

0.3

(267.2)

(0.4)

1.9
4.3
0.4
–

2.3
–
–
40.6

5.4
(8.9)
(29.6)––(189.0)—————$1,157.8

8.0(229.7)—————$3,477.7–(576.5)—————$3,394.8————— ————— ————— —————

298

(in millions, except per ADS amounts)
Reconciliation of U.S. GAAP diluted earnings per ADS to Non GAAP diluted earnings per ADS:
3 months ended
September 30,————————————
2018
2017

—————
$1.75
U.S. GAAP diluted earnings per ADS
Expense related to the unwind of
inventory fair value adjustments
0.01
Program wind-down and one-time
employee related costs
0.01
Impairment of acquired intangible assets–
Costs relating to license arrangements–
Legal and litigation costs–
Amortization of acquired intangible assets
1.41
Integration and acquisition costs
0.30
Reorganization costs
0.83(Gain)/loss on sale of Oncology andproduct rights(0.87)
Amortization of one-time upfront borrowing
costs for Baxalta and Dyax–
Loss/(gain) on sale of non-core investments–
Loss/(gain) from discontinued operations–
Costs related to bond tender offer
0.13
Fair value adjustment for joint venture
net written option
0.04
Non GAAP tax adjustments
0.03
—————
Non GAAP diluted earnings per ADS
$3.64

—————
$1.81

9 months ended
September 30,——–——————————
2018
2017

—————
$5.57

—————
$3.84

0.21

0.13

2.26

–
–
–
0.00
1.59
0.78
0.02

0.01
0.03
0.03
–
4.50
1.68
0.88

(0.01)
0.07
0.41
0.03
4.21
2.29
0.08

0.00

(0.87)

0.00

0.01
0.01
0.00
–

0.01
–
–
0.13

0.02
(0.03)(0.10)––(0.62)
—————
$3.81

0.03
(0.75)—————$11.38–(1.90)—————$11.17————— ————— ————— —————

Reconciliation of U.S. GAAP net cash provided by operating activities to Non GAAP free cash flow:
3 months ended
September 30,————————————
2018
2017

Net cash provided by operating
activities
Capital expenditures
Payments relating to milestone andlicense arrangements
Non GAAP free cash flow
Non GAAP net debt comprises:

—————

—————

$857.6(203.3)316.2—————$970.59 months ended
September 30,——–——————————
2018
2017

—————

—————

$1,055.2(174.4)$2,807.5(564.6)$2,737.1(565.5)20.0—————$900.8401.2—————$2,644.1

40.0
—————
$2,211.6

September 30,
2018

December 31,
2017————— ————— ————— ——————————— ——————$193.2$472.4(10,740.7)(16,410.7)(4,239.2)(2,781.2)(366.8)(349.2)——————————$(15,153.5)$(19,068.7)

Cash and cash equivalents
Long term borrowings (excluding capital leases)
Short term borrowings (excluding capital leases)
Capital leases————— —————

Non GAAP net debt

299

Reconciliation of full year 2018 U.S. GAAP diluted earnings per ADS Outlook to Non GAAP diluted
earnings per ADS Outlook:
Full Year 2018 Outlook

U.S. GAAP diluted earnings per ADS
Expense related to the unwind of inventory fair value adjustments
Legal and litigation costs
Amortization of acquired intangible assets
Integration and acquisition costs
Reorganization costs
Costs relating to license arrangements
Costs related to bond tender offer
Gain from the sale of the Oncology franchise
Non GAAP tax adjustments
Non GAAP diluted earnings per ADS

300—————–———————
Min
Max
—————
—————
$7.17
$7.77
0.12
0.05
6.60
2.20
0.89
0.10
0.13
(0.87)(1.62)$14.77$15.37——————————

PART B(in millions)
12 months ended 12 months ended
December 31,
December 31,
2017
2016

U.S. GAAP net income
Add back/(deduct):(Gain)/loss from discontinued operations, net of taxes
Equity in (earnings)/losses of equity method investees, net of taxes
Income taxes
Other expense, net
U.S. GAAP operating income from continuing operations
Add back/(deduct) Non GAAP adjustments:
Revenue from upfront license fee
Expense related to the unwind of inventory fair value adjustments
Inventory write down related to U.S. manufacturing site closure
One-time employee related costs
Impairment of acquired intangible assets
Costs relating to license arrangements
Legal and litigation costs
Amortization of acquired intangible assets
Integration and acquisition costs
Reorganization costs
Gain on sale of product rights
Depreciation
Non GAAP EBITDA

U.S. GAAP net income
Add back/(deduct):
Loss/(gain) from discontinued operations, net of taxes
Equity in (earnings)/losses of equity method investees, net of taxes
Income taxes
Other expense, net
U.S. GAAP operating income from continuing operations
Add back/(deduct) Non GAAP adjustments:
Expense related to the unwind of inventory fair value adjustments
Program wind-down and one-time employee related costs
Impairment of acquired intangible assets
Costs relating to license arrangements
Legal and litigation costs
Amortization of acquired intangible assets
Integration and acquisition costs
Reorganization costs(Gain)/loss on sale of Oncology and product rights
Depreciation
Non GAAP EBITDA

301——————$4,271.5——————$327.4(18.0)(2.5)(2,357.6)
561.8
—————
2,455.2

276.1
8.7(126.1)
476.8
—————
962.9

(74.6)
747.8
–
(4.0)
20.0
131.2
10.6
1,768.4
894.5
47.9
(0.4)
495.8
—————
$6,492.4–
1,118.0
18.9
20.0
8.9
110.0
16.3
1,173.4
883.9
121.4(16.5)
292.9—————$4,710.1

9 months ended
September 30,
2018

9 months ended
September 30,
2017–(11.2)
371.0
417.2
—————
2,480.3(18.6)
(0.1)
44.6
412.9
—————
1,604.9

40.9
3.3
10.0
10.0
–
1,375.3
512.0
268.9(267.2)432.8—————$4,866.3

688.7
(4.0)
20.0
123.7
8.6
1,280.5
696.7
24.5
(0.4)
363.5
—————
$4,806.7——————$1,703.3——————$1,166.1

sterling 171700