Astellas, OSI Agree On $4 Billion Deal

Astellas Pharma and OSI Pharmaceuticals have come to a definitive agreement under which the Tokyo-based drugmaker will acquire OSI, a biopharmaceutical company based in Melville, N.Y., in a cash transaction valued at about $4 billion.

The deal follows Astellas' agreement to increase its bid to $57.50 per share from the $52.00 per share the company floated in a hostile offer earlier this year. The new bid represents a 55% premium over the closing price of OSI's shares on Feb. 26, the last trading day before Astellas' first announcement.

OSI, which focuses on oncology, has one drug on the market, Tarceva, codeveloped with Roche. The Swiss firm sells the product, which accounts for approximately 80% of OSI's sales. OSI reported revenues of $428 million in 2009 and an operating income of $153 million.

With the acquisition, Astellas will add oncology to its North American operations, which include cardiology, dermatology, infectious diseases, neuroscience, transplants, and urology. The firm operates in seven locations in the U.S. and Canada.

"The merger with OSI provides Astellas with a top-tier oncology platform in the U.S. and an expanded product portfolio and pipelines," says Astellas CEO Masafumi Mogimori. "In addition to Tarceva, we are pleased to add its oncology infrastructure, discovery platform, expanded pipelines, and talent base to our existing businesses."

 OSI agreed to the higher bid after a 15-month wrangle with the Japanese firm that became public in March. "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," says Colin Goddard, the firm's CEO.

The earlier standoff stoked speculation that a white-knight bidder might emerge (C&EN, March 8, page 10). Published reports speculated that OSI's partner in Tarceva, Roche, would take the role. And healthcare stock analyst Leerink Swan suggested that Pfizer and Celgene might step in, given these firms' current push in oncology.