Shire selling oncology unit to France's Servier for $2.4bn

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The move comes as Japan's Takeda prepares to bid for the FTSE 100 group.

Shire Plc agreed to sell its cancer unit to France's Servier SAS for $2.4 billion, tightening the USA -based drugmaker's focus on rare diseases and potentially making it more attractive to Takeda Pharmaceutical Co. as it considers a bid. Shire's shares have lost a little over a fifth of their value over the past year, as compared with about a 1.1-percent drop in the Footsie. It said last month that any deal would strengthen its core therapeutic areas of developing medicines for cancer, gastroenterology and neuroscience. The process identified multiple potential strategic buyers across the U.S., Europe and Japan, Shire said. A pursuit of Shire would be one of the biggest attempts by a Japanese company to buy a Western rival. Shire also had debt of around $19 billion as of the end of 2017.

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.

Under takeover United Kingdom takeover rules, the Japanese firm has until April 25 to announced whether or not it will make a bid for Shire.

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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.

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

The Shire unit sells Oncaspar, used in the treatment of a form of leukemia, and Onivyde for pancreatic cancer, the Lexington, Massachusetts-based company said in a statement Monday. The portfolio also includes Calaspargase Pegol (Cal-PEG), which is under FDA review for the treatment of ALL, and early stage immuno-oncology pipeline collaborations.

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