Astellas Pharma plans unsolicited $3.5-billion takeover bid for OSI Pharmaceuticals

Monday, March 1, 2010

Astellas Pharma plans $3.5B takeover bid for OSI

Japanese drugmaker Astellas Pharma Inc. said Monday it will take a $3.5 billion takeover offer for OSI Pharmaceuticals directly to shareholders after being rebuffed several times by executives of the U.S. biotechnology company.

Astellas said it will start on Tuesday an offer to pay $52 per share in cash for all outstanding common shares of the OSI Pharmaceuticals Inc. stock — a premium of more than 40 percent over Friday’s close.

Shares of OSI, based in Melville, N.Y., soared above the offered price in Monday trading, suggesting some traders expect the bidding will go higher. OSI shares rose $19.23, or 51.9 percent, to close at $56.25 after rising to a 52-week high of $57 earlier in the session.

OSI said in response to the offer that stockholders should take no action “at this time.”

But Astellas said it will consider “all means necessary” to complete the deal. The drugmaker said in a statement it intends to nominate OSI directors at the company’s annual meeting “to give stockholders a voice in the outcome.”

OSI focuses on oncology, diabetes and obesity treatments. Astellas said the two companies will do better developing oncology drugs as a combination rather than separately, and the deal will help Astellas become an oncology leader.

Astellas said it first expressed interest in acquiring OSI in January 2009, made a written offer the next month and has reiterated interest several times.

Its CEO, Masafumi Nogimori, said in a letter to OSI counterpart Colin Goddard the Japanese drugmaker had presented the $52-per-share proposal to OSI executives on Feb. 12 and was told the offer “very significantly undervalues” the company.

That response indicated OSI executives had no intention “to engage in substantive discussions,” the company said, and the Astellas board authorized Nogimori to take the offer to OSI shareholders.

OSI said in a separate statement it had responded to the Feb. 12 proposal by offering to provide Astellas with “non-public information which is fundamental to its valuation of OSI.”

“The response to that letter was Astellas’ unsolicited proposal,” OSI said.

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