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Astellas Pharma Inc. Offers to Acquire OSI Pharmaceuticals for 3.5 billion

Mon, 03/01/2010 - 3:34am

Astellas Pharma Inc.,

a global pharmaceutical company, will commence a tender offer to acquire all

outstanding shares of common stock of OSI Pharmaceuticals for

$52.00 per share in cash, or an aggregate of approximately $3.5 billion on a

fully diluted basis.

The all-cash offer, set forth in Astellas' letter to OSI delivered this

morning, represents a significant premium of over 40% on the closing price of

OSI's common stock of $37.02 per share on February 26, 2010, a 53% premium to

its three-month average of $34.01 per share, and a 31% premium to its 52-week

high of $39.66 per share. Astellas' offer is not subject to any financing

conditions.

The acquisition of OSI - a biotechnology company primarily focused on the

discovery, development and commercialization of molecular targeted therapies

addressing medical needs in oncology, diabetes and obesity - would support

Astellas' growth strategy of becoming a Global Category Leader in oncology.

OSI manufactures and sells Tarceva (erlotinib), a leading cancer medication

and has several prospective new oncology medications in its R&D pipeline. The

transaction would provide Astellas with a top-tier oncology business in the

U.S. and an expanded product portfolio and pipeline. OSI would also augment

Astellas' strong existing franchises in urology and immunology.

Astellas' scale and financial strength will help OSI realize the value of

its current product pipeline, as well as continue the necessary funding of its

discovery engine. Adding Astellas' strong business operations and experience

in the development and sales of new products will enable the combined company

to accelerate their development and ensure their successful commercialization.

Astellas has great respect for the OSI organization and expects to integrate

the strengths of OSI's business and employees into its operations as it has in

the past with similar strategic acquisitions.

Masafumi Nogimori, President and Chief Executive Officer of Astellas,

commenting on the offer, said, "This offer follows our attempts over the past

13 months to engage OSI in meaningful discussions. 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 has made numerous attempts to engage in substantive discussions

to acquire OSI. Astellas first raised its interest in acquiring OSI during a

meeting with OSI's CEO in January 2009 and made its first written proposal in

February 2009. Despite subsequent letters reiterating Astellas' interest in

March and June 2009 and several face-to-face meetings, including a meeting

between the two CEOs on February 12, 2010, OSI has refused to engage in a

meaningful discussion. As a result, Astellas has decided to commence a tender

offer and go directly to the OSI stockholders. Astellas will consider all

means necessary to secure a completed transaction. Among other things,

Astellas intends to nominate directors at OSI's upcoming annual meeting to

give stockholders a voice in the outcome.

Astellas will commence a tender offer on March 2, 2010, to purchase all

outstanding common stock of OSI for $52.00 per share in cash. Following

successful completion of the tender offer, a merger will be completed at the

same price. The complete terms and conditions of the offer will be filed with

the U.S. Securities and Exchange Commission and disseminated to OSI

stockholders. Astellas has cash and cash equivalents on hand to complete the

transaction. The offer is not subject to any financing or due diligence

conditions, and will be subject only to customary closing conditions,

including the tender of a majority of OSI's shares of common stock on a fully

diluted basis, and OSI's Board taking all necessary actions to make its

stockholder rights plan and Section 203 of the Delaware Corporation Law

inapplicable to Astellas' offer. There are no anticipated regulatory hurdles

to completion.

Citigroup is acting as exclusive financial advisor to Astellas and

Morrison & Foerster LLP is acting as legal counsel.

 

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