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Astellas to buy OSI Pharma for $4 billion in cancer push


    TOKYO (Reuters) - Astellas Pharma, Japan's No.2 drugmaker, agreed to buy U.S. biotech OSI Pharmaceuticals for $4 billion in cash in a sweetened bid that allows it to add OSI's blockbuster cancer drug Tarceva to its line-up.

    Astellas, known for its urinary and transplant drugs, wants OSI to boost its U.S. footprint and oncology presence as it faces generic competition for its own drugs.

    Astellas said it would pay $57.50 per OSI share, up from a previously proposed $52. The new price represents a 55 percent premium to OSI's last closing price before Astellas launched its hostile bid on March 1.

    The boards of directors of both companies have unanimously approved the deal, Astellas said in a statement.

    "It's positive that it was cheaper than some market expectations of over 60 dollars per share. But it will take a while for Astellas to generate synergies from the acquisition," said Atsushi Seki, a drugs analyst at Barclays Capital.

    Astellas shares were down 1.1 percent at 3,110 yen, outperforming a 1.8 percent decline for the broader market.

    "The merger with OSI provides Astellas with a top-tier oncology platform in the U.S. and an expanded product portfolio and pipelines," Astellas President Masafumi Nogimori said in the statement.

    Tarceva, which totaled $1.2 billion in sales last year, is currently approved as a second-line treatment for patients whose lung cancer has gotten worse after at least one round of chemotherapy. OSI is hoping to expand Tarceva's approved use for first-line maintenance therapy for lung cancer.

    OSI's management has touted their firm as a rare profitable mid-cap biotechnology company fully integrated with discovery and commercial capabilities.

    The OSI bid is Astellas' second attempt to push into the U.S. market after it failed last year with a hostile bid for CV Therapeutics. Then, Astellas refused to raise its offer and lost to Gilead Sciences.

    Astellas extended the period of its tender offer for OSI twice as OSI shares stayed well above the Astellas' first offer price. Analysts had said Astellas would need to sweeten its offer to complete the deal.

    "Investors were worried that Astellas might fail to buy a foreign firm again. That they have managed to clinch the deal will probably wipe out investor anxiety about Astellas' management," said Seki at Barclays.

    (Reporting by Nobuhiro Kubo; Editing by Edwina Gibbs)