Shire to Sell Oncology Unit for $2.4 Billion to Servier

Shire are displayed at a chemist's in northwest London Britain

Shire are displayed at a chemist's in northwest London Thomson Reuters

Shire, for whom the boss of Japanese drug maker Takeda is reportedly readying a £35bn bid, has agreed to sell its oncology business to Servier for $2.4bn in cash.

The London-listed rare diseases specialist announced today that it would consider returning proceeds from the sale to shareholders through a buyback and that further selective disposals of non-strategic assets were possible.

Shire is engaged in the development of novel therapies across various rare disease areas, including hematology, immunology, genetic diseases, neuroscience, as well as ophthalmics and oncology.

Shire's board of directors started looking at offloading the oncology business in December, and said that the process considered "multiple potential strategic buyers" across Europe, Japan and the US.

The deal is expected to complete in the second or third quarter of this year. A spokesman said Shire had consulted the UK Takeover Panel on the Servier deal and been told it did not constitute a "frustrating action" under the Takeover Code. A pursuit of Shire would be one of the biggest attempts by a Japanese company to buy a Western rival.

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At the end of last week, a report from Reuters citing two sources with direct knowledge of the matter claimed Takeda has even gone so far as sounding out potential lenders to help fund the deal.

Shire Chief Executive Flemming Ornskov said the sale of the oncology business to Servier demonstrated the value embedded in Shire as shares in the company rose 0.8 percent by 1230 GMT.

The business generated revenues of $262m in 2017, and the total consideration represents a revenue multiple of 9.2 times 2017.

"As an essential step in the evolution of the group, this acquisition allows us to establish a direct commercial presence in the United States, the world's leading pharmaceuticals market, and to strengthen our portfolio of marketed products in the territories where Servier is already present", Laureau said. Those and all other early-stage immuno-oncology pipeline collaborations will now go to Servier.

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