Japan's Eisai to buy MGI Pharma for $3.9 bln

By Edwina Gibbs

TOKYO (Reuters) - Eisai Co Ltd (4523.T: Quote, Profile, Research, Stock Buzz) said on Monday it would buy U.S. biotech firm MGI Pharma Inc MOGN.O for $3.9 billion in cash to strengthen its cancer pipeline, marking the largest overseas acquisition by a Japanese drugmaker.

The deal -- struck at 23 percent above Friday's close -- is the latest example of accelerating M&A in the biotech sector, which has seen a scramble by big drugmakers to secure promising technologies and pipelines developed by smaller firms.

It is a bold step by Eisai, which has yet to bring any of its own cancer drug candidates to market, to increase its foothold in the fast-growing cancer drug business and its international presence.

The nation's fourth-biggest drug firm said the deal would ensure growth in the U.S. market after the patent on its main earnings driver, Alzheimer's treatment Aricept, runs out in 2010.

It also comes after a major setback for an experimental medicine for Parkinson's disease, which failed to meet its key goal in a late-stage trial.

"To tackle these issues, management has moved flexibly and quickly, and the first impression is positive," said Kumi Miyauchi, analyst at the Daiwa Institute of Research.

Japan's drugmakers, including industry leader Takeda Pharmaceutical Co Ltd (4502.T: Quote, Profile, Research, Stock Buzz), have been criticized in the past for not being sufficiently aggressive to clinch major deals.

Eisai will offer $41 per share in a bid approved by MGI. That represents a 39 percent premium to MGI's closing share price on November 28, the last business day before MGI said it was exploring strategic alternatives. The price is 23 percent more than MGI's Friday close of $33.45.