Shire to sell oncology business to Servier for $2.4bn

Jeannie Matthews
April 16, 2018

Bloomberg reported that the Servier acquisition of Shire's oncology business would have the effect of "potentially making it more attractive to Takeda Pharmaceutical it considers a bid".

The agreement comes as Takeda's chief executive Christophe Weber is reported to be in the USA canvassing investor support for a potential bid for Shire, and will no doubt complicate attempts to put a fair value on the business with just a few days to go before the Japanese company must propose an offer or press pause for six months as required under European Union takeover laws.

The oncology unit was an area that Takeda had identified as a driver for its potential takeover approach.

Still, given the small contribution of the cancer business to Shire's overall profits, Deutsche Bank (IOB: 0H7D.IL - news) analysts said this was unlikely to be a deal breaker.

Shire has suggested the proceeds from the sale may be returned to shareholders via a buyback.

It's possible the sale will make Shire less desirable for Takeda, since Shire's oncology business was part of the rationale for buying the company. The market value of Shire is about $47 billion. "Shire also had debt of around $19 billion as of the end of 2017".

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Oncaspar is a component of multi-agent treatment for acute lymphoblastic leukemia, while Onivyde is a component of multi-agent treatment for metastatic pancreatic cancer post gemcitabine based therapy.

Its oncology business had sales of $262 million a year ago, putting the divestment on a respectable revenue multiple of 9.2 times.

Two sources with direct knowledge of the matter said last week that Takeda had sounded out its major creditors for loans to fund a potential Shire bid. "I have an impression that Takeda and Shire are heading in the same direction", Saito said.

Servier bolstered its oncology business last year by boosting its cancer-related share of R&D activity over the past two years from 14% to 37% today, with plans to reach 50% within the next two years.

Servier Group president Olivier Laureau said: "The acquisition of Shire's oncology franchise enables Servier to meet its strategic ambitions to become a global key player in oncology". Meanwhile, privately held Servier says adding Shire's cancer drugs will give it a commercial presence in the USA while also strengthening its portfolio in the parts of the world where the France-based company is already established. Our goal is to bring these treatments to greater numbers of cancer patients around the world.

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