Shire selling oncology unit to France's Servier for $2.4bn

Mae Love
April 16, 2018

Shire announced it's selling its oncology business to French immuno-oncology company Servier for $2.4 billion. Its biggest investors include US-based Blackrock, Capital Group and JP Morgan.

The oncology unit was an area that Takeda had identified as a driver for its potential takeover approach. "Shire's decision to buy back shares may also indicate a positive view of the bid, since increasing shareholder returns would make it easier to get approval for a deal, Kazuyoshi Saito, a senior analyst for Iwai Cosmo Securities Co". Ornskov said in the prepared remarks that Shire will consider using the sale proceeds for share buybacks after the period to review Takeda's possible acquisition offer has ended.

The divestment of the cancer business may be a deterrent for Takeda, since oncology was one of the areas it had highlighted as driving the case for a Shire deal, along with gastrointestinal medicine and neuroscience.

Shire is making it clear that is began looking to sell its oncology business in December and began the sale process in January. Such a bid is expected to be in the $50 billion range, since Shire has a market value of about $47 billion. Launched in 19 countries, Lonsurf generated €62 million ($76.8 million) in revenue during 2016-2017, according to a Servier announcement that did not furnish revenues for Pixuvri.

Explaining the move, Shire CEO Flemming Ornskov said that "while the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy", which lies mainly in rare diseases.

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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.

Its oncology business had sales of $262 million previous year, putting the divestment on a respectable revenue multiple of 9.2 times. " told Bloomberg in a phone interview".

"I$3 t is hard for us to believe that selling 2% of Shire's revenues - whether it was strategic to Takeda or not - would alter a contemplated transaction/approach by Takeda of this magnitude".

Servier believes that the acquisition will help the firm to establish direct commercial presence in the United States, in addition to expanding its oncology pipeline and portfolio of in-market drugs.

Olivier Laureau, the group president of Servier, said the deal will enable the company to become a key global player in oncology. "We thoroughly look forward to welcoming Shire's oncology teams who will join Servier after the closing".

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