Shire sells oncology unit to Servier for $2.4bn

Drugmaker Shire has agreed to sell its oncology business to Servier for $2.4bn

Drugmaker Shire has agreed to sell its oncology business to Servier for $2.4bn

Shares in Shire (LON:SHP) have advanced in London this morning as the London-listed rare disease specialist offloaded its oncology business for $2.4 billion.

Shire was at pains to point out that it started exploring the sale of oncology in December and commenced the disposal process in January, during which it identified multiple possible U.S., European and Japanese buyers.

"The proceeds from the transaction increase optionality and Shire's Board will consider returning the proceeds of the sale to shareholders through a shareholder-approved share buyback after the current offer period regarding Takeda's possible offer for Shire concludes".

Shire's chief executive Flemming Ornskov called the deal a "key milestone" for the firm, which clearly demonstrates the value embedded in its portfolio.

"While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy".

But the move also means Shire becomes less attractive to Takeda, which has until 25 April to formally announce a takeover bid under United Kingdom stock market rules, after expressing an interest earlier this month.

The deal comes as Takeda boss Christophe Weber is understood to be lining up meetings with its major holders ahead of making a potential £35bn offer for Shire.

Takeda, which was founded in 1781 and employs 30,000 people, has a strong presence in emerging markets and operates in more than 70 countries.

Still, given the small contribution of the cancer business to Shire's overall profits, Deutsche Bank analysts said this was unlikely to be a deal breaker.

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

When stripped of legacy Baxalta sales, revenues rose only 11% to 1.8 billion USA dollars (£1.39 billion).

Olivier Laureau, Servier Group President, said: "The acquisition of Shire's oncology franchise enables Servier to meet its strategic ambitions to become a global key player in oncology".

"Our goal is to bring these treatments to greater numbers of cancer patients around the world. We thoroughly look forward to welcoming Shire's oncology teams who will join Servier after the closing".