Shire takeover in the balance after $2.4bn divestment

● London-listed pharma giant sells oncology business to France’s Servier

The odds lengthened yesterday on a huge takeover deal for London-listed Shire by Japan’s Takeda after the Irish pharma giant sold its oncology arm to French drugmaker Servier for $2.4 billion (£1.7bn).

Shire said that it would look at possibly returning proceeds from the sale to investors through a share buyback and that further disposals of fringe assets were possible. A Takeda spokesman declined to comment.

Cityphar ma analysts said the divestment of the cancer business may deter the Japanese group as oncology was one of the areas it had highlighted as driving the case for a Shire deal, along with gastro-intestinal medicine and neuroscience.

However, given the relatively small contribution of the cancer business to Shire’s bottomline profitability, Deutsche Bank analysts said yesterday’s disposal was unlikely to disreported suade Takeda from making a full takeover bid.

Shire chief executive Flemming Ornskov said the sale of the business to Servier showed the value embedded in his company. He added: “While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire’s longer-term strategy.”

But shares in the Irish group closed down 1.3 per cent, or 47.5p, at 3,559p on fears it would derail the bigger merger and acquisitions potential.

Analysts at Jefferies said yesterday’s sale “should boost Shire’s negotiating position on asking price in the current offer period with Takeda”.

Shires’s stock market value is about $47bn – about $10bn more than Takeda. Shire also had debt of about $19bn at the end of 2017.

The Japanese firm admitted it was considering a bid for the FTSE 100 company at the end of March. It has just over a week to table a final offer or walk away.

Christophe Weber, the French boss of Takeda, is to be lining up meetings with its biggest investors, including Blackrock and Jpmorgan, to take soundings of their support for any bid.

The pharma industry has seen a surge in deal-making this year as major players look for promising assets to improve their drug pipelines, but a Takeda-shire merger would be the biggest yet by far.

Shire’s board has agreed the disposal to Servier, which does not require shareholder approval and is now expected to close in the second or third quarter of 2018.

The group, which has its headquarters in Dublin, started looking at offloading the oncology business in December, and said the process considered “multiple potential strategic buyers” across Europe, Japan and the US.

The division had sales of $262m last year, with analysts saying it put yesterday’s divestment on a respectable revenue multiple of 9.2 times.

Takeda was founded in 1781 and employs 30,000 people, having a strong presence in emerging markets and operating in more than 70 countries globally.