OSI is taken under at $57.50 by Astellas. Apparently no one else was interested in upping the ante more than Astellas' $5.
graham
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online.wsj.com
Japanese drug maker Astellas Pharma Inc. clinched a $4 billion deal Monday for cancer-drug maker OSI Pharmaceuticals Inc., ending a months-long pursuit of the Melville, N.Y., company.
Astellas is paying $57.50 a share for OSI, making the deal a "takeunder," meaning that it is being bought for less than its recent trading price of $59.80.
Astellas initially offered OSI $52 a share in cash, valuing the company at $3.5 billion. OSI rejected that as too low, given its potential for growth as an independent company. It also invited other potential suitors to bid.
On March 29, the two companies entered into an agreement that allowed Astellas to study parts of OSI's financial records. In exchange, Astellas agreed not to buy any more OSI shares until its tender offer expired May 15. Since March, OSI shares have soared more than 60% to close Friday at $59.80 on the Nasdaq Stock Market, indicating that the market expected a higher bid from Astellas or another bidder.
The price paid is still a rich one. Last year, OSI reported operating income of $153 million, meaning that Tokyo-based Astellas is paying more than 26 times last year's earnings.
OSI's Tarceva drug, which targets the growth of tumor cells, is used to treat certain types of advanced lung and pancreatic cancers. OSI markets it through partnerships with Swiss drug giant Roche Holding AG, and Astellas expects it to be a high-growth product. Tarceva, whose generic name is erlotinib, also is being tested for the treatment of other types of cancer.
Large drug companies have been on the lookout for new sources of revenue as patents on traditional drugs expire, and small to medium-size biotech companies with successful niche products are attractive targets.
Last year, Astellas, which is Japan's second-largest drug maker, made a hostile bid for CV Therapeutics, only to be trumped by Gilead Sciences Inc.
Centerview Partners LLC, Lazard Ltd. and law firm Skadden, Arps, Slate, Meagher & Flom advised OSI; Citigroup and law firm Morrison & Foerster advised Astellas. |
