Astellas Pharma will commence a tender offer to acquire OSI Pharmaceuticals for $52 per share in cash, or an aggregate of approximately $3.5 billion. A successful transaction would provide the Japanese firm with an oncology business in the U.S. and an expanded product portfolio and pipeline.
Astellas says that it has been trying to engage OSI in takeover discussions for the past 13 months, but its offer was deemed below value by OSI’s board. Astellas believes, however, that its bid, representing a 40% premium on OSI’s last closing price, is robust. The firm is thus taking its proposal directly to shareholders.
The acquisition of OSI would support Astellas' strategy of becoming a leader in oncology. OSI manufactures and sells Tarceva, approved for non-small-cell lung and pancreatic cancers. It is also being evaluated in other cancers, including Phase III trials in ovarian and colorectal cancer. OSI’s clinical pipeline has at least three other anticancer candidates at various stages of development. OSI would also augment Astellas' existing franchises in urology and immunology.
“This offer follows our attempts over the past 13 months to engage OSI in meaningful discussions,” comments Masafumi Nogimori, president and CEO of Astellas. “We firmly believe in the compelling strategic rationale behind the combination and the opportunity it provides to the OSI stockholders to realize full and fair value, in cash, immediately.
“As recently as February 12, 2010, Astellas presented this proposal to acquire OSI, which reflected a 50% premium on that date. However, we received a response stating that our offer ‘very significantly undervalues’ OSI. That response was the latest indication to us that OSI is not interested in engaging in substantive discussions.
“We are therefore taking our offer directly to OSI's stockholders. Our proposal and its significant premium recognize both the value created by OSI to date and its future prospects. Of course, we are open to and we hope that OSI's board and management will commence discussions with us to effect a negotiated transaction.”
Astellas’ last major acquisition bid was made last year for CV Therapeutics to the tune of $1 billion. The company was beat out by Gilead Sciences, however, which agreed to pay $1.4 billion.