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

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

Takeda clearly stated that strengthening its core therapeutic area of oncology (alongside gastrointestinal and neuroscience) was a key reason it wanted to gobble up Shire.

The deal is expected to close in the second or third quarter this year. The move comes as Japan's Takeda prepares to bid for the FTSE 100 group.

According to the company, its board of directors began scouting divestments for the oncology business in December 2017, identifying "multiple potential strategic buyers across the US, Europe and Japan" a month later.

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-Shire transaction would be by far the biggest yet.

"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 CEO Flemming Ornskov, the key narrator in Shire's makeover story, in a statement.

Ornskov added that the company would consider returning the proceeds to shareholders through a share-buyback "after the current offer period regarding Takeda's possible offer concludes".

Shire has always been seen as a likely takeover target and was almost bought by USA drugmaker AbbVie (LSE: 0QCV.L - news) in 2014, until US tax rule changes caused it to walk away. Shire said the deal covers the transfer of its oncology arm including in-market products Oncaspar, a component of multi-agent treatment for acute lymphoblastic leukaemia and ex-US rights to Onivyde, which is a component of multi-agent treatment for metastatic pancreatic cancer post gemcitabine-based therapy.

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

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

Servier believes that the acquisition will help the firm to establish direct commercial presence in the U.S., in addition to expanding its oncology pipeline and portfolio of in-market drugs.