Shire shareholders wary of potential sale or spin-off of neuroscience division - report
17 DEC 2017
Shire [LON:SHP], an Anglo-Irish pharmaceuticals company, has been urged by some shareholders not to spin-off or sell its neuroscience division without a compelling reason, The Sunday Times reported. The newspaper quoted Royal London Asset Management Fund Manager Joe Walters, who said no value will be created unless Shire is able to sell the neuroscience business at a premium. Royal London holds a 0.72% stake in Shire, the item said.
Shire on 3 August announced that it would conduct a strategic review of its Neuroscience division. The company is expected to decide within weeks whether to spin off the division, according to the report.
When shire announced the review, Shire’s Chief Executive Flemming Ornskov said that he was looking to focus on the company’s rare diseases unit and that spinning off the neuroscience business was one strategic option to be considered, the item noted.
Some shareholders are worried that Shire will finance another large acquisition with cash from a sale of the neuroscience division, the article said. Others say Shire should list or sell the neuroscience business only if the price is right, the report added.
Shire’s market capitalisation stood at GBP 34.22bn (EUR 38.80bn) at the close of trading in London on Friday, 15 December.
Background:
A Dealreporter report on 15 August said some Shire shareholders had questioned the rationale behind spinning off the neuroscience business. Shareholders cited by the report said they were reluctant to hold shares in the neuroscience business via any potential spin-off.
Shire’s neuroscience unit’s attention deficit hyperactivity disorder (ADHD) drug Vyvanse is expected to go off patent in 2023, the report said, adding that the neuroscience arm faces a “patent cliff.”
A minority shareholder quoted in the report said he would not be confident holding shares in a business focused on ADHD.