Fujifilm launches $1.45 bln bid for Toyama Chemical

TOKYO (Reuters) - Digital camera and medical equipment maker Fujifilm Holdings Corp (4901.T) said it will spend up to 155 billion yen ($1.45 billion) to take control of Toyama Chemical Co 4518.T as it seeks a foothold in the pharmaceuticals market.

Fujifilm is flush with cash and has made a string of acquisitions in the past few years to cultivate new growth drivers while shifting resources away from unpromising businesses such as photographic film.

The move is the latest in the realignment of Japan's pharmaceuticals sector as drugmakers, struggling under mounting costs to develop new products, look for ways to split research and development expenses.

Fujifilm is already a major player in medical equipment, holding the No. 2 spot behind Olympus Corp (7733.T) in endoscopes, camera-equipped tubes used to examine the intestinal system.

Acquiring Toyama, which is best known for a bird flu drug candidate, T-705, and has 10 experimental medicines in its pipeline, would allow it to make a serious entry into the pharmaceuticals market where it only has a minimal presence.

"According to a United Nations estimate, in the case of a bird flu pandemic, 25 percent of the global population or 1.6 billion people will be affected and 150 million people will die," Fujifilm Chief Executive Shigetaka Komori told a news conference.

"Commercializing T-705 as soon as possible and establishing a stable supply system is our social responsibility."

Toyama Chemical President Masuji Sugata said the company aims to launch its bird flu drug in 2009.

"I think this is a positive move for Fujifilm in the long run since it was able to secure a foothold in the pharmaceuticals field," JPMorgan analyst Hisashi Moriyama said.

"Of course there are concerns about the initial and acquiring costs, but the deal would give Fujifilm an edge as it enters the pharmaceuticals business, which has a high entry barrier."

Fujifilm's Komori said he aims to boost revenue at its medical and life science division to 1 trillion yen in 10 years from the current 300 billion yen, and that additional acquisitions are possible.

Fujifilm, also a major supplier of flat panel display components and office equipment such as copiers and printers, expects 2.85 trillion yen in sales for the year ending in March.

ANOTHER DAY, ANOTHER DEAL

Fujifilm will pay 880 yen for each share of Toyama Chemical in a tender offer from February 19 to March 18 -- a 39 percent premium to its close on Tuesday.

Fujifilm said it would buy up to 153.1 million shares in the tender, or all the shares available with the exception of the 22 percent stake held by top shareholder Taisho Pharmaceutical Co Ltd 4535.T. That would cost Fujifilm about 135 billion yen.

In addition, Fujifilm will buy about 20 billion yen worth of new shares issued by Toyama Chemical in a private placement at the end of February. Taisho Pharmaceutical will also buy about 10 billion yen worth of newly issued shares.

Fujifilm said that its stake in Toyama could total about 76 percent following the tender offer and private placement, but that it will eventually sell some of its stake to Taisho so that its stake is 66 percent and Taisho holds 34 percent.

A Fujifilm spokesman said the sale of that stake would bring its bill down to about 130 billion yen, still its biggest acquisition since it spent 160 billion yen to raise its stake in office equipment joint venture Fuji Xerox to 75 percent in 2001.

News of the bid was first reported in the morning edition of the Nikkei business daily, or one day after Taisho's announcement it would spend up to 27.3 billion yen to take a 62 percent stake in Biofermin Pharmaceutical Co Ltd (4517.OS) to strengthen its product line-up.

Shares of Fujifilm fell 1.5 percent to close at 3,890 yen, while Taisho dropped 1.6 percent to 2,195 yen. Toyama's stock was untraded throughout the day due to a glut of buy orders and closed at 731 yen, up 15.8 percent.

The benchmark Nikkei average .N225 rose 0.4 percent.

(Reporting by Mayumi Negishi, Edwina Gibbs, Nathan Layne and Yoko Kubota; Editing by Chris Gallagher)