Takeda to buy Millennium Pharma for $8.8 billion
TOKYO (Reuters) - Takeda Pharmaceutical Co Ltd (4502.T) 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), Human Genome Sciences Inc (HGSI.O) and Amag Pharmaceuticals Inc (AMAG.O) 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.NBI 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) 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) Japanese subsidiary. And last month it said it might pay Abbott Laboratories Inc (ABT.N) 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.
"I see this as a positive move. Major drug companies, including Takeda, need to develop new drugs before their patents expire," said Kumi Miyauchi, an analyst at the Daiwa Institute of Research.
The Millennium deal, which would add blood cancer drug Velcade to Takeda's portfolio, was reached in just two months of negotiations. Takeda plans to retain Millennium's senior management and as many employees as it can. Its plan is for Millennium to operate as an independent unit.
Takeda President Yasuchika Hasegawa told a news conference that he wants Takeda to become one of the world's top three oncology companies by 2020.
But he said the company's cash available for acquisitions has now been used up and he does not plan to make any additional purchases in the immediate future.
Takeda said it believes Velcade, which had global sales of $800 million last year, will achieve blockbuster status of well over $1 billion in its current uses.
It is jointly marketed in the United States with Johnson & Johnson (JNJ.N), which also markets the drug in other countries.
Millennium expects to book between $320 million and $345 million in Velcade sales in 2008, up from $265 million last year. The company reported revenue last year of $528 million.
UBS (UBSN.VX) advised Takeda on the deal while Goldman Sachs (GS.N) advised Millennium.
Takeda also said on Thursday it would buy back up to 60 billion yen ($593 million) of its own shares.
Takeda shares fell 2.5 percent on Thursday to close at 5,410 yen before the bid was announced, underperforming a 1.3 percent fall in the Nikkei share index. .N225.
($1=101.24 Yen)
(Additional reporting by Rodney Joyce, Junko Fujita and Toni Clarke; Editing by Lincoln Feast and Gerald E. McCormick)
