Rare diseases specialist Shire (SHP) has agreed to sell its oncology business for $2.4bn to French pharma company Servier, but investors may be curious if this impacts a potential takeover of Shire by Takeda which last month expressed a desire to buy the company.

While the sale of the oncology division may appear to detract value for Shire as a takeover target, broker Jefferies analyst Peter Welford disagrees.

He believes the sale will boost Shire’s negotiating position with the largest pharma company in Japan, Takeda, as its focus on gastrointestinal and neuroscience should be beneficial.

‘Shire’s leading global position in rare diseases would likely be attractive for most large pharma/biotech, particularly given the long duration assets in immunoglobulin and enzyme replacement therapy,’ says Welford.

Shire is around the same size in value terms as Takeda at £33.3bn, meaning the Japanese pharma firm may need to raise significant funds if it were to make a formal takeover offer. It has until 5pm on 25 April to either bid or walk away.

WHY DID SHIRE SELL ITS ONCOLOGY DIVISION?

Shire’s oncology portfolio includes treatments for acute lymphoblastic leukemia and metastatic pancreatic cancer.

‘While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire’s longer-term strategy,’ comments Shire chief executive officer Flemming Ornskov.

Funds from the sale will be used to ‘increase optionality’ and potentially for a share buyback once there is clarity on the Takeda situation.


Issue Date: 16 Apr 2018