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 on Monday 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.
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 U.S., 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 market value of around $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 by far the biggest yet.