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 a French rival, putting into question whether a bid for the FTSE 100 firm from Japanese suitor Takeda will emerge.

But Monday's news that Shire has sold off its cancer treatment unit - which includes its ONCASPAR (leukaemia) and ONIVYDE (pancreas) treatments - has thrown that possible takeover into doubt.

"We will continue to evaluate our portfolio for opportunities to unlock further value and sharpen our focus on rare disease leadership with selective disposals of non-strategic assets". It said last month that any deal would strengthen its core therapeutic areas of developing medicines for cancer, gastroenterology and neuroscience. Cancer isn't one of the Shire's major units, with $262 million in 2017 sales, or about 1.8 percent of the company's total.

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

A Takeda spokesman declined to comment.

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"While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy", said Flemming Ornskov, Shire's chief executive. Those and all other early-stage immuno-oncology pipeline collaborations will now go to Servier.

The proceeds from the transaction, which is expected to close in this or next quarter, would "increase optionality". A decision on whether the firm will make a bid or not is required by April 25 as per United Kingdom regulation.

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

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.

Shire gained as much as 3.5 percent to 3,732 pence in early trading in London.

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