Shire had said last month that it was “willing to recommend” the proposal – the fifth offer in a series of improved bids – subject to certain conditions being met.
The deal is expected to result in $1.4bn annual cost savings and will prompt a “review of the functions to be undertaken” at Shire’s headquarters in Dublin as well as possible “consolidation” of operations in the US, Singapore and Switzerland.
Shares in the FTSE 100 company climbed 4.6% to £40.34 a share by market close, though this was some way short of the £49 value under the terms of the offer, implying some doubt as to whether the deal would be backed by shareholders despite the unanimous recommendation of the board.
It will also require regulatory approval.
The deal would be the largest overseas acquisition by a Japanese company and propel Takeda into the top ranks of global drug firms.
Takeda, founded in Osaka in 1781, wants Shire, a specialist in the treatment of rare conditions, to help it expand globally – especially in the US – as it faces down the prospect of weaker drug prices in its home market.
It employs 30,000 people and operates in more than 70 countries.
Shire, founded in a small office in Basingstoke 32 years ago before embarking on a rapid expansion, is domiciled in Dublin for tax purposes but has its head office in London.
It employs 24,000 people, though fewer than 500 are in the UK.
Shire shareholders will own 50% of the enlarged group following the deal, which is expected to complete in the first half of 2019. It will be listed on the Tokyo stock exchange.
Takeda chief executive Christophe Weber said: “Shire’s highly complementary product portfolio and pipeline, as well as experienced employees, will accelerate our transformation for a stronger Takeda.
“Together, we will be a leader in providing targeted treatments in gastroenterology, neuroscience, oncology, rare diseases and plasma-derived therapies.”
Shire chief executive Flemming Ornskov said: “I believe that the combination of the two companies is in the best interests of shareholders and offers an opportunity to improve the lives of even more patients globally with rare and highly specialised conditions.”