After a two-month battle, OSI Pharmaceuticals said on Sunday that it had agreed to sell itself to Astellas Pharma of Japan for US$4 billion in cash, after its suitor raised its takeover offer.
Under the terms of the deal, OSI shareholders will receive US$57.50 a share, a 55 percent premium to OSI’s share price on Feb. 26, the last trading day before Astellas made its first takeover bid public in March.
The new price is 10.5 percent higher than Astellas’ first proposal of US$52 a share.
The sale ends a standoff over OSI, a biotechnology company whose main product is Tarceva, a drug used to treat several kinds of cancer in conjunction with chemotherapy.
Astellas initially unveiled a US$3.5 billion unsolicited offer in March, which OSI rejected soon after.
After Astellas began a tender offer for OSI’s shares and proposed a rival slate of directors, the US drug maker agreed to open its books to its unsolicited suitor.
Analysts have said that they expected Astellas to prevail, especially given an apparent paucity of rival bidders. But they expected that Astellas would need to raise its bid.
Shares in OSI closed on Friday at US$59.80, up nearly 4.5 percent, as investors expected Astellas to raise its offer for the company. OSI’s stock has risen 61.5 percent since Astellas made its first takeover proposal.
Colin Goddard, OSI’s chief executive, said in a statement: “We believe today’s announcement recognizes the significant value we have built for our stockholders while providing the merged companies the opportunity to forge a stronger collective path forward in a shared mission to provide innovative new medicines to patients around the world.”
Founded in 1983 and based in Melville, New York, OSI’s main product is Tarceva, primarily used to treat lung cancer. The drug generated US$1.2 billion in sales last year. OSI has sought to expand Tarceva’s use in cancer treatment.
The company reported US$75.9 million in net income last year, on US$428.1 million in revenue. It has 524 employees.
Astellas, based in Tokyo and one of Japan’s biggest drug makers, has made it clear that a priority was expanding its oncology drug pipeline.
The deal is a successful effort by Astellas to buy a US biotech company, after losing a battle over CV Therapeutics last year to Gilead Sciences.
“The merger with OSI provides Astellas with a top tier oncology platform in the US and an expanded product portfolio and pipelines,” Astellas chief executive Masafumi Nogimori said in a statement.
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