Shire and Takeda have finally, officially, agreed on a deal.

After weeks of bidding, the Japanese drugmaker agreed to shell out $62 billion on the rare disease specialist, 46% cash, 54% stock—roughly the same terms Takeda disclosed when it announced its fifth bid. The deal will vault Takeda into the top 10 pharma companies worldwide and add tens of billions to its debt load, while touching off a $1.4 billion round of cost cuts that will include deep cuts to the combined workforce.

A fair share of industry watchers initially expected that Takeda wouldn’t make it to the finish line since snapping up Shire would mean taking on a hefty debt load. And prospects looked increasingly dim after news of Takeda’s interest sent its shares south and Shire’s soaring. The deal is among biopharma's largest ever.

The way Jefferies analyst Peter Welford sees it, "the offer value is reasonable." It represents a 60% premium to the share price low from before Takeda confirmed its interest in a buy, he wrote in a Tuesday note to clients. Takeda shareholders will have to agree, though, and the deal hasn't been popular with investors so far. The company's shares are down significantly since the company first went public with its buyout interest.

The pair expects the deal to close in the first half of next year, and when it does, Shire shareholders will own around 50% of the combined company.

Takeda is counting on cash flow from the combined company to allow for a quick pay-down on the acquisition-related debt. And it intends to keep its investment-grade credit rating, targeting a debt-to-EBITDA ratio of 2x or less in a few years.

Keeping earnings as high as possible will be key. That's where the cost cuts come in: Takeda said it's planning to cut 6% to 7% of the combined workforce, or around 3,600 employees, based on the companies' latest empoyee tallies. All told, Takeda is aiming for $1.4 billion or more in savings by the end of the three years after the deal closes. Most of the cuts will hit SG&A, thanks to the two companies' overlapping operations in their gastrointestinal and neuroscience businesses, Welford said. Another 43% will come from R&D—about $600 million—mostly from removing "duplicate costs." The remaining 4% will hit manufacturing.

The deal should put to rest the worries of Shire investors, who haven’t been happy since Shire agreed to swallow Baxalta in early 2016.

That is, assuming everything goes through as planned. Shire has already agreed to one buyout deal—a $55 billion takeout from AbbVie—a pact the Illinois pharma later nixed after the U.S. Treasury erased its tax benefits. 

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