Monday, May 17, 2010��Astellas Pharma Inc. reached agreement with the board of OSI Pharmaceutical Inc. (Nasdaq: OSIP) Monday to buy the U.S.-based oncology and diabetes drug maker in an all-cash deal valued at $4 billion.
Japan's second-largest pharmaceutical will pay $57.50 per OSI share following two-plus-years of negotiations, beginning December of 2008. Astellas' boosted offer from $52 per share clinched the deal, paving way for the deal to complete sometime mid-June.
"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," OSI CEO Colin Goddard, said in a prepared statement.
Astellas' bid for OSI forwards the Japanese pharmaceutical's quest for expansion of its anti-cancer drug business worldwide. To this end, the acquisition of OSI's flagship anti-lung cancer drug Tarceva is expected to add $1.2 billion in global sales to Astellas' fiscal 2009 revenue of $9.9 billion.
"The merger with OSI provides Astellas with a top tier oncology platform in the U.S. and an expanded product portfolio and pipelines," Astellas' chief executive Masafumi Nogimori, said in a statement.
The deal is anticipated to alleviate Astellas' falling operating margin stemming from some portfolio drugs falling off patent. For instance, PROGRAF, the company's dermatological agent, registered sales of nearly $600 million in 2009 is set to expire March 2013.
Joint development between the two companies is expected in the oncology, diabetes and obesity areas��markets critical to Astellas' future revenue stream and operating margin.
OSI posted total revenue of $429 million in 2009, attributing more than 80 per cent of sales related to Tarceva. In April, OSI and partner Switzerland-based ! Roche Ph armaceutical received approval of the U.S. Food and Drug Administration to market Tarceva for the treatment of lung cancer.
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