The plot thickens: As OSI Pharmaceuticals' board rejected that $3.5 billion takeover offer from Japanese drugmaker Astellas Pharma--and the company started casting about for higher offers from other companies--a group of shareholders has sued the board to block the company's "poison pill" provisions, which would scotch the deal. Meanwhile, Astellas says it's pushing ahead with its bid.
The major point of contention--and the company's golden egg--is Tarceva, the cancer drug. OSI says it expects Tarceva sales to be worth much more than Astellas is bidding, as its potential for new indications is realized. And then there's the value of OSI's drugs in development. But Astellas claims that its $52-a-share offer is fair, and a spokesman wouldn't comment on whether the company might raise that bid.
At this point it's anybody's guess just where the battle will end, but analysts agree that Astellas will have to boost that offer. OSI shares hit a five-year high yesterday on the latest deal news, closing at around $58. Astellas could find itself in a bidding war; then again, Astellas might just call OSI's bluff by waiting to see if any other offers materialize. Whatever happens, it certainly won't be boring.