Takeda has just over three weeks to make a firm bid for Shire.
The Japanese company publicly confirmed late last week that it is considering an approach to Shire regarding an offer for the company. It must make a formal bid by 25 April.
"Takeda’s consideration of such an offer is at a preliminary and exploratory stage and no approach has been made to the Board of Shire. There can be no certainty that an approach, if made, will lead to any transaction," said the company in a statement.
In response, Shire acknowledged Takeda's statement but confirmed it has not received an approach.
"There can be no certainty that any firm offer for the Company will be made nor as to the terms on which any firm offer might be made," it said.
The Ireland-based Shire has been the subject of takeover speculation for several months. It has gone through significant change in recent years culminating in 2016 with the US$32 billion takeover of Baxalta. It terminated a proposed US$55 billion merger with AbbVie in 2014 following changes to US tax laws.
Shire reported annual revenue of US$14.4 billion in 2017, led by its immunology and haematology portfolio, with 70 percent of sales generated from its rare diseases division.
In its statement, Takeda said it believed a potential transaction would represent an opportunity to advance its strategic objectives across three core therapeutic areas - oncology, GI and neuroscience - as well as accelerate its goal of becoming a leader in specialised and rare disease medicines.
Analysts expressed immediate concern over the potential financial implications of an acquisition, with both companies carrying debt from previous deals, but Takeda emphasised its "disciplined approach to acquisitions, including in relation to its dividend policy and credit rating, which are well-established."
"Any potential offer for Shire, if made, would have to align with this strict investment criteria," it said.
The Shire share price jumped almost 20 percent in response to the news while Takeda's fell around seven percent. Shire's market capitalisation is currently US$32 billion, but analysts predict an acquisition price of around US$40 billion.