Servier buys Shire can­cer drugs unit

$2.4 bil­lion deal may de­ter Japan’s Takeda from seek­ing to ac­quire Shire

Viet Nam News - - MARKETS -

LON­DON — Shire, the Lon­don­listed rare dis­eases spe­cial­ist that is a po­ten­tial takeover tar­get for Japan’s Takeda Phar­ma­ceu­ti­cal, is sell­ing its on­col­ogy busi­ness to un­listed French drug­maker Servier for US$2.4 bil­lion.

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.

Shire said yes­ter­day it would con­sider re­turn­ing pro­ceeds from the sale to share­hold­ers through a buy­back and that fur­ther se­lec­tive dis­pos­als of non-strate­gic as­sets were pos­si­ble.

The di­vest­ment of the can­cer busi­ness may be a de­ter­rent for Takeda, since on­col­ogy was one of the ar­eas it had high­lighted as driv­ing the case for a Shire deal, along with gas­troin­testi­nal medicine and neu­ro­science.

Still, given the small con­tri­bu­tion of the can­cer busi­ness to Shire’s over­all prof­its, Deutsche Bank an­a­lysts said this was un­likely to be a deal breaker.

A Takeda spokesman de­clined to com­ment.

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 US, Euro­pean and Ja­panese buy­ers. Takeda’s in­ter­est in Shire was made pub­lic only at the end of last month.

Under UK takeover rules, Takeda has un­til April 25 to an­nounce whether or not it will bid for Shire, which has a to­tal mar­ket value of about $47 bil­lion.

Buy­ing Shire would be trans­for­ma­tional for Takeda but would be a huge fi­nan­cial stretch, since the com­pany is worth around $10 bil­lion more than the Ja­panese group. Shire also had debt of around $19 bil­lion as of the end of 2017.

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 con­sid­er­ably the big­gest so far.

Two sources with di­rect knowl­edge of the mat­ter said last week that Takeda had sounded out its ma­jor cred­i­tors for loans to fund a po­ten­tial Shire bid.

Shire Chief Ex­ec­u­tive Flem­ming Orn­skov said the sale of the on­col­ogy busi­ness to Servier demon­strated the value em­bed­ded in Shire as shares in the com­pany rose 0.5 per cent by 08:35 GMT.

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

Shire has long been seen as a likely takeover tar­get and was nearly bought by US drug­maker Ab­bVie in 2014, un­til US tax rule changes caused it to walk away.

Shire it­self also has a track record of ac­qui­si­tions, but its big­gest ever deal - the $32 bil­lion pur­chase of Bax­alta in 2016 - was widely crit­i­cized by share­hold­ers.

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

For pri­vately held Servier, ac­quir­ing Shire’s on­col­ogy oper­a­tion al­lows it to es­tab­lish a di­rect com­mer­cial pres­ence in the United States and boosts its pres­ence in can­cer.

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. — REUTERS

Takeda Phar­ma­ceu­ti­cal Co’s Ac­tos di­a­betes drug sits on the shelf at a phar­macy in Ky­oto, Japan. — Photo japan­times.co.jp

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