Will OSI offer touch off a bidding war?

In the wake of Astellas' $3.5 billion hostile bid, OSI Pharmaceuticals' stock skyrocketed past the $52-a-share offering price, while Astellas stock dropped. What's that say about the prospects for a deal?

For one thing, it says investors--as well as some analysts--think the Astellas offer could lead to a bidding war. If another potential buyer jumps into the fray, that could push the Japanese drugmaker to pay lots more for OSI and its best-selling cancer drug Tarceva. "Lots more" as in "maybe too much." One potential rival for OSI's affections: Roche, the Swiss drugmaker that's OSI's Tarceva partner.

For another, it says that some Astellas-watchers think buying OSI isn't such as great deal at $52 a share, either. With Roche in the mix, holding overseas rights to Tarceva, the drug's growth prospects are necessarily limited, analysts say. "We think the potential synergies are limited for the foreseeable future," Barclays Capital analyst Toshihide Yoda tells Reuters.

Obviously, Astellas disagrees. In fact, it disagrees so much that it has sued OSI for rejecting that $3.5 billion bid, saying that the company's board isn't acting in the best interest of shareholders.

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