Servier to Acquire Shire's Oncology Business for $2.4B

Servier to Acquire Shire's Oncology Business for $2.4B

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 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.

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.

"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".

Takeda said in March it was considering a bid for Shire and identified its oncology business as one of the main reasons for its interest.

"This transaction is a key milestone for Shire, demonstrating the clear value embedded in our portfolio", said Flemming Ornskov, Shire's chief executive officer, in a statement.

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The deal is expected to close in the second or third quarter this year.

If Takeda does make an official bid for Shire, this sale might make it slightly more affordable. "Shire also had debt of around $19 billion as of the end of 2017".

The Dublin-based company said the deal covers its already-marketed drug Oncaspar (pergaspargase) for acute lymphoblastic leukaemia (ALL), as well as ex-US rights to pancreatic cancer therapy Onivyde (irinotecan pegylated liposomal formulation) and long-acting Oncaspar follow-up calaspargase pegol - under FDA review for ALL.

A year ago the Oncology business created revenues of $262 million.

Meanwhile, buying Shire's oncology business bolster's Servier's presence in oncology. Meanwhile, privately held Servier says adding Shire's cancer drugs will give it a commercial presence in the US while also strengthening its portfolio in the parts of the world where the France-based company is already established.

Servier Group president Olivier Laureau said: "It is a major step in the transformation of the Group, allowing us to establish a direct commercial presence in the USA, as well as to strengthen our portfolio of marketed products in the ex-US territories where Servier is already present".

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