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May 17, 2010 5:43 PM

MoFo, Skadden on $4 Billion Astellas-OSI Merger

Posted by Drew Combs

For Astellas Pharma Inc. and OSI Pharmaceuticals Inc., the difference between a hostile takeover bid and a friendly acquisition amounted to about $500 million. 

The two companies announced Monday that Japanese drugmaker Astellas Pharma will acquire Melville, N.Y.--based OSI Pharmaceuticals--known for its cancer medications including Tarceva--for $57.50 a share, or roughly $4 billion.

The announcement comes about two months after Astellas launched a hostile takeover bid for OSI in which the former offered the latter's investors $52 a share (or about $3.5 billion in total)--an offer that OSI asserted undervalued the company. 

The dispute between the two companies prompted Astellas's lawyers at Morrison & Foerster to file suit in Delaware Chancery Court in an effort to force OSI's directors to negotiate. 

On March 29 the two companies entered into an agreement that allowed Astellas to study OSI's financial records in exchange for a promise by Astellas not to buy any additional OSI shares until the Astellas tender offer expired on May 15, according to The Wall Street Journal

The agreement ultimately resulted in Astellas boosting its per-share offer to $57.50. That figure represents a 55 percent premium over the stock's $37.02 closing price as of February 26, 2010, the last trading day before the announcement of Astellas's tender offer, but less than the $59.80 price at which OSI’s shares recently traded. 

In a statement announcing the deal, Masafumi Nogimori, president and chief executive of Astellas, said the merger will provide his company with a top-tier oncology platform in the U.S. and an expanded product portfolio and pipelines.

In the same statement, OSI chief executive Colin Goddard said he believes the acquisition “recognizes the significant value we have built for our shareholders while providing the merged companies the opportunity to forge a stronger collective path forward.” 

Astellas was advised by Morrison & Foerster during the deal. New York-based partner Michael Braun, who cochairs the firm's U.S.-based Japan practice, led a team that also included corporate partners Craigh Leonard and John Hempill. 

OSI was advised by a group of lawyers at Skadden, Arps, Slate, Meagher & Flom that included mergers and acquisitions partners Roger Aaron in New York, Robert Pincus in Wilmington, and Steven Daniels in Wilmington. Also on OSI’s Skadden team were Wilmington-based litigation partner Robert Saunders, New York-based antitrust partner Michael Weiner, New York-based executive compensation partner Stuart Alperin, New York-based tax partner David Rievman, and London-based tax partner Tim Sanders.

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