Astellas announced Monday that it made an unsolicited offer to acquire all outstanding shares of OSI Pharmaceuticals in a deal worth $3.5 billion. The Japanese company's CEO Masafumi Nogimori said that the "offer follows attempts over the past 13 months to engage OSI in meaningful discussions," adding that "as recently as February 12" OSI rejected an [oral] offer from Astellas, saying it "very significantly undervalues" the company.

Nogimori remarked that Astellas first expressed interest in acquiring OSI "in January 2009, and made its first written proposal in February 2009," adding that "despite subsequent letters…and several face-to-face meetings" OSI has not shown an interest in entering talks. "As a result, Astellas has decided to commence a tender offer and go directly to the OSI stockholders," Nogimori said. The company will also seek to nominate directors to OSI's board at its upcoming annual meeting.

"We firmly believe in the compelling strategic rationale behind the combination and the opportunity it provides to the OSI stockholders," Nogimori stated. The drugmaker noted that the acquisition of OSI would support its strategy of becoming a "leader in oncology." Shares in OSI soared 46 percent following the news, putting it slightly above the offer price of $52 per share.

Commenting on the bid, Bank of Montreal analyst Jason Zhang noted that Roche, OSI's marketing partner for Tarceva (erlotinib), "is the logical" white knight for the company. "OSI will probably go to Roche and ask for a higher bid," he said. However, Eric Schmidt of Cowen & Co. remarked that announcing its bid may help Astellas close the deal, adding that he anticipates the Japanese drugmaker "will modestly sweeten its offer in order to complete the transaction on friendly terms."

In response to the news, OSI confirmed that it received the unsolicited proposal from Astellas, and advised its stockholders "to take no action at this time," until the company further reviews the bid.

Reference Articles

Astellas Pharma offers to acquire OSI Pharmaceuticals for $52.00 per share in cash - (Astellas)

OSI board rejects Astellas’ $3.5 billion hostile takeover offer - (Bloomberg)

Astellas in $3.5bn bid to expand role in US - (Financial Times)

Japan's Astellas bids $3.5 billion for OSI Pharma - (Forexyard)

Japan's Astellas offers to buy OSI Pharma for $3.5 bln - (IBTimes)

Astellas launches hostile $3.5 bln OSI Pharma bid - (MarketWatch)

OSI Pharmaceuticals confirms receipt of unsolicited proposal from Astellas Pharma - (OSI Pharmaceuticals)

Astellas makes $3.5 billion unsolicited bid for OSI - (The New York Times)

Astellas Pharma to make hostile bid for OSI Pharmaceuticals (free preview) - (The Wall Street Journal)

Astellas in hostile bid for OSI - (TheStreet.com)