Takeda to buy Millennium Pharma for $8.8 billion

By Edwina Gibbs

TOKYO (Reuters) - Takeda Pharmaceutical Co Ltd (4502.T: Quote, Profile, Research, Stock Buzz) said on Thursday it has agreed to buy U.S. biotechnology company Millennium Pharmaceuticals Inc MLNM.O for $8.8 billion to bolster its cancer drug business, in the biggest overseas acquisition by a Japanese drugmaker.

Takeda agreed to pay $25 a share in cash, or 53 percent above Millennium's closing share price on Wednesday of $16.35. Millennium's shares rose $8.15 or nearly 50 percent on Thursday to $24.50.

The deal is the latest in a series of acquisitions in the biotech sector, as drugmakers scramble to secure promising pipelines and technologies developed by smaller companies, and it could spur a further wave of merger activity.

"While today's news is obviously positive for Millennium holders, we anticipate considerable spill-over into other names in mid-cap biotech," said Christopher Raymond, an analyst at Robert W. Baird, in a research report. "On our list, we especially highlight BioMarin Pharmaceuticals Inc (BMRN.O: Quote, Profile, Research, Stock Buzz), Human Genome Sciences Inc (HGSI.O: Quote, Profile, Research, Stock Buzz) and Amag Pharmaceuticals Inc (AMAG.O: Quote, Profile, Research, Stock Buzz) as good strategic fits for a number of capable and motivated acquirers."

Shares of Human Genome were up 7.5 percent in late morning trading, Amag was up 2.5 percent, and BioMarin was up 3.4 percent. The Nasdaq Biotechnology Index as a whole rose 3.5 percent.

Takeda, Japan's largest drugmaker, has long been under pressure to use its $10 billion war chest to strengthen its pipeline before a U.S. patent on its top-selling diabetes drug, Actos, expires in 2011. The Millennium acquisition is the latest in a flurry of M&A activity by Japanese drugmakers.

Late last year Eisai Co Ltd (4523.T: Quote, Profile, Research, Stock Buzz) agreed to acquire cancer specialist MGI Pharma Inc for $3.9 billion; the deal was completed in January.

Takeda recently agreed to buy Amgen Inc's (AMGN.O: Quote, Profile, Research, Stock Buzz) Japanese subsidiary. And last month it said it might pay Abbott Laboratories Inc (ABT.N: Quote, Profile, Research, Stock Buzz) up to $1.5 billion under an agreement to split their U.S. joint venture TAP Pharmaceutical Products, which would give Takeda the blockbuster heartburn drug Prevacid.