Shire sells cancer drugs to Servier as Takeda circles

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Shares in Ireland-based biotech Shire have zoomed up two per cent this morning after it revealed it will sell its oncology business to France's Servier for $2.4bn (£1.7bn) as it seeks to become a leader in rare disease treatment.

The deal comes as Takeda boss Christophe Weber is understood to be lining up meetings with its major holders ahead of making a potential £35bn offer for Shire.

Takeda clearly stated that strengthening its core therapeutic area of oncology (alongside gastrointestinal and neuroscience) was a key reason it wanted to gobble up Shire. The Japanese drugmaker announced in March that it was considering a bid for Shire and has until April 25 to make a formal offer or walk away under United Kingdom takeover rules.

Ornskov added that the company would consider returning the proceeds to shareholders through a share-buyback "after the current offer period regarding Takeda's possible offer concludes". Takeda declined to comment further on Monday.

"While the oncology business has delivered high growth and profitability, we have concluded that it is not core to Shire's longer-term strategy", Chief Executive Officer Flemming Ornskov said in the statement.

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The proceeds from the transaction, which is expected to close in this or next quarter, would "increase optionality".

Shire's board of directors started looking at offloading the oncology business in December, and said that the process considered "multiple potential strategic buyers" across Europe, Japan and the US.

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

But Monday's news that Shire has sold off its cancer treatment unit - which includes its ONCASPAR (leukaemia) and ONIVYDE (pancreas) treatments - has thrown that possible takeover into doubt. In 2017, the oncology business generated $262 million in revenue.

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