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Shire sells cancer drugs to Servier for $2.4 billion as Takeda circles

Reuters  |  LONDON 

By Ben Hirschler

LONDON (Reuters) - Shire, the that is a potential takeover target for Japan's Takeda Pharmaceutical, is selling its oncology business to unlisted French drugmaker for $2.4 billion.

The deal suggests there is value locked up within Shire's portfolio - despite a dismal share price performance in the past two years - as its management braces for a possible $50-billion bid battle with Japan's biggest drugmaker.

said on Monday it would consider returning proceeds from the sale to shareholders through a buyback and that further selective disposals of non-strategic assets were possible.

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 deal, along with gastrointestinal medicine and

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

A Takeda declined to comment.

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. Takeda's interest in was made public only at the end of last month.

Under UK takeover regulations, Takeda has until April 25 to announce whether or not it will bid for Shire, which has a market value of around $47 billion.

Britain has strict rules about the conduct of bids, including defensive actions taken by target companies. A said had consulted the UK Takeover Panel on the deal and been told it did not constitute a "frustrating action" under the Takeover Code.


Buying would be transformational for Takeda but would be a huge financial stretch, since the company is worth around $10 billion more than the Japanese group. also had debt of around $19 billion as of the end of 2017.

The drugs industry has seen a surge in deal-making this year as large players look for promising assets to improve their pipelines, but a Takeda-transaction would be by far the biggest yet.

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 bid.

said the sale of the oncology business to demonstrated the value embedded in as shares in the company rose 0.8 percent by 1230 GMT.

Jefferies analysts said the sale "should boost Shire's negotiating position on asking price in the current offer period with Takeda".

has long been seen as a likely takeover target and was nearly bought by U.S. drugmaker in 2014, until U.S. tax rule changes caused it to walk away.

itself also has a track record of acquisitions, but its biggest ever deal - the $32 billion purchase of in 2016 - was widely criticised by shareholders.

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

For privately held Servier, acquiring Shire's oncology operation allows it to establish a direct commercial presence in the and boosts its presence in cancer.

Drugs being acquired include the two already marketed products Oncaspar for acute lymphoblastic leukaemia and rights outside the to Onivyde for pancreatic cancer.

also gets the experimental drug calaspargase pegol for leukaemia and an early-stage immuno-oncology pipeline.

(Additional reporting by in London and Sam Nussey in Tokyo; Editing by Keith Weir)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, April 16 2018. 18:16 IST