Astellas Pharma Inc., a global pharmaceutical company, will commence a tender offer to acquire all outstanding shares of common stock of OSI Pharmaceuticals for $52.00 per share in cash, or an aggregate of approximately $3.5 billion on a fully diluted basis.
The all-cash offer, set forth in Astellas' letter to OSI delivered this morning, represents a significant premium of over 40 per cent on the closing price of OSI's common stock of $37.02 per share on February 26, 2010, a 53 per cent premium to its three-month average of $34.01 per share, and a 31 per cent premium to its 52-week high of $39.66 per share. Astellas' offer is not subject to any financing conditions.
The acquisition of OSI - a biotechnology company primarily focused on the discovery, development and commercialization of molecular targeted therapies addressing medical needs in oncology, diabetes and obesity - would support Astellas' growth strategy of becoming a Global Category Leader in oncology. OSI manufactures and sells Tarceva (erlotinib), a leading cancer medication and has several prospective new oncology medications in its R&D pipeline. The transaction would provide Astellas with a top-tier oncology business in the US and an expanded product portfolio and pipeline. OSI would also augment Astellas' strong existing franchises in urology and immunology.
Astellas' scale and financial strength will help OSI realize the value of its current product pipeline, as well as continue the necessary funding of its discovery engine. Adding Astellas' strong business operations and experience in the development and sales of new products will enable the combined company to accelerate their development and ensure their successful commercialization. Astellas has great respect for the OSI organization and expects to integrate the strengths of OSI's business and employees into its operations as it has in the past with similar strategic acquisitions.
Masafumi Nogimori, president and chief executive officer of Astellas, commenting on the offer, said, "This offer follows our attempts over the past 13 months to engage OSI in meaningful discussions. We firmly believe in the compelling strategic rationale behind the combination and the opportunity it provides to the OSI stockholders to realize full and fair value, in cash, immediately. As recently as February 12, 2010, Astellas presented this proposal to acquire OSI, which reflected a 50 per cent premium on that date. However, we received a response stating that our offer 'very significantly undervalues' OSI. That response was the latest indication to us that OSI is not interested in engaging in substantive discussions. We are therefore taking our offer directly to OSI's stockholders. Our proposal and its significant premium recognize both the value created by OSI to date and its future prospects. Of course, we are open to, and we hope that OSI's Board and management will commence, discussions with us to effect a negotiated transaction."
Astellas has made numerous attempts to engage in substantive discussions to acquire OSI. Astellas first raised its interest in acquiring OSI during a meeting with OSI's CEO in January 2009 and made its first written proposal in February 2009. Despite subsequent letters reiterating Astellas' interest in March and June 2009 and several face-to-face meetings, including a meeting between the two CEOs on February 12, 2010, OSI has refused to engage in a meaningful discussion. As a result, Astellas has decided to commence a tender offer and go directly to the OSI stockholders. Astellas will consider all means necessary to secure a completed transaction. Among other things, Astellas intends to nominate directors at OSI's upcoming annual meeting to give stockholders a voice in the outcome.
Astellas commenced a tender offer on March 2, 2010, to purchase all outstanding common stock of OSI for $52.00 per share in cash. Following successful completion of the tender offer, a merger will be completed at the same price. The complete terms and conditions of the offer will be filed with the US Securities and Exchange Commission and disseminated to OSI stockholders. Astellas has cash and cash equivalents on hand to complete the transaction. The offer is not subject to any financing or due diligence conditions, and will be subject only to customary closing conditions, including the tender of a majority of OSI's shares of common stock on a fully diluted basis, and OSI's Board taking all necessary actions to make its stockholder rights plan and Section 203 of the Delaware Corporation Law inapplicable to Astellas' offer. There are no anticipated regulatory hurdles to completion.
Citigroup is acting as exclusive financial advisor to Astellas and Morrison & Foerster LLP is acting as legal counsel.
Astellas Pharma Inc., located in Tokyo, Japan, is a pharmaceutical company dedicated to improving the health of people around the world through the provision of innovative and reliable pharmaceuticals.