Astellas Pharma and OSI Pharmaceuticals (NASDAQ: OSIP) have made nice. Astellas has agreed to buy OSI for $4 billion in cash, or $57.50 per share, in a tender offer beefed up from its original hostile bid of $52. The deal will add OSI's cancer drug Tarceva to the mix at Astellas, which is facing generic competition for two of its top products.
Analysts cheered the price. At 9.3 times OSI's $428 million in revenue, the multiple is much lower than what other Japanese drugmakers have paid in recent deals, the Wall Street Journal points out. Takeda Pharmaceutical, for instance, paid 16.7 times revenue for Millennium Pharmaceuticals back in 2008. And after Astellas' first bid was rejected, some industry observers had worried that it might sweeten its bid a bit too much.
CEO Masafumi Nogimori says he's aiming to persuade OSI stockholders to tender 90 percent of the outstanding shares. And he's pleased that the deal turned from hostile to amicable. "I am very happy and find it very significant that we have reached the point where we can carry out this acquisition in a friendly manner," Nogimori said at a news conference earlier today (as quoted by Reuters).
Job One for Astellas will be to push new uses for Tarceva, to maximize revenue from that drug, which is currently approved in the U.S. for first-line treatment of pancreatic cancer and for certain patients with non-small cell lung cancer. The company's other plans for OSI are expected to be outlined in an Astellas strategy update next week.