PHARMACEUTICALS group Shire was among the big gainers on the FTSE 100 after it emerged Takeda had reached a takeover deal for the company, valuing it at £46 billion.
The boards of both firms finalised the terms of the deal, settling on an offer of £49.01 per Shire share. Takeda said it represents a premium of around 64% compared with the price of its shares in late March, when rumours of Takeda's interest began to swirl.
Shire's shares jumped 4.63% by the market close. Shareholders will now need to approve the deal.
David Madden, market analyst at CMC Markets, said: "Takeda's share price has dropped by 30% from the high in January, and given the downward trend, some Shire shareholders might not be enticed by the offer due to Takeda's shares underperforming recently."
Oil prices plunged on Tuesday as traders awaited news on whether the US would remain in the Iranian nuclear deal.
US President Donald Trump has openly criticised the agreement, which was pushed through by his predecessor Barack Obama.
Brent crude fell 1.3% to 74.537 US dollars per barrel.
The FTSE 100 closed the day flat at 7565.75, while the pound fell against the US dollar by 0.18% to 1.353. Against the euro, the pound rose 0.27% to 1.140.
In Germany, the Dax dropped 0.28% to 12912.21, and the Cac 40 in France was also down, falling by 0.17% to 5521.
Shares in rail and bus firm FirstGroup tumbled after its private equity suitor Apollo Management walked away from making a bid for the transport giant.
The competition watchdog has referred the potential merger between Npower and SSE's retail operations for a full investigation after the two energy giants failed to address concerns.
The Competition and Markets Authority (CMA) said the deal would now face a so-called stage two in-depth inquiry after its initial probe found the tie-up could reduce competition, potentially leading to higher prices for households. SSE's shares closed the day down 8.5p at 1,387p.
Standard Life Aberdeen (SLA) has launched a challenge against Lloyds Banking Group's decision to end a mammoth £109 billion contract with the asset manager, claiming it does not have "the right" to do so.
SLA said it "does not agree" it should lose the lucrative Scottish Widows contract and is disputing claims that competition issues were created by the merger of Aberdeen and Standard Life last year.
SLA's shares ended the session up 4.2p at 366.5p, while Lloyds Banking Group's closed 0.5p higher at 65.88p.
Meanwhile, William Hill shareholders vented their anger over excessive executive salaries, with a significant number rejecting a pay rise for the bookmaker's chief executive.
Over 30% of voting investors cast ballots against the firm's remuneration report at its annual meeting on Tuesday. Shares rose 1.7p over the day to 280.6p.
The biggest risers on the FTSE 100 were Shire up 178.5p to 4,034.5p, Ashtead Group up 71p to 2,158p, International Airlines Group up 22.2p to 700.2p, and Hargreaves Lansdown up 45p to 1,841p.
The biggest fallers on the FTSE 100 were Fresnillo down 32p to 1,277p, British American Tobacco down 79p to 3,809p, Sainsbury down 5.9p to 295.4p and WPP down 21.5p to 1,259.5p.
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