Shire to Sell Oncology Unit for $2.4 Billion to Servier

Nellie Chapman
April 16, 2018

The UK Takeover Panel gave the Japanese firm a deadline of April 25 to announce a firm intention to bid or walk away.

French pharmaceutical firm Servier has signed an agreement to acquire the oncology business of Shire for $2.4bn.

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

Shire is engaged in the development of novel therapies across various rare disease areas, including hematology, immunology, genetic diseases, neuroscience, as well as ophthalmics and oncology. Another leukemia therapy, Calaspargase Pegol, is now under review.

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.

The deal also covers Calaspargase Pegol (Cal-PEG), which is under FDA review for the treatment of ALL, and early stage immuno-oncology pipeline collaborations.

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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", the pharmco's chief executive Flemming Ornskov commented in the statement, adding that the company would "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".

The French pharmaceutical firm will market its products in the USA through newly-created subsidiary, Servier Pharmaceuticals.

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 business generated revenues of $262m in 2017, and the total consideration represents a revenue multiple of 9.2 times 2017.

Shire's stock $SHPG rose 2% in pre-market trading, going at $155.9 per share.

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