Japan’s Eisai has restated its intent to expand in the USA and boost its oncology operations by paying out $3.9 billion to acquire the US biotechnology firm firm MGI Pharma.
In a deal that has surprised many observers, Eisai has offered $41 per share, which represents a premium of around 39% to MGI’s closing share price on November 28, the day before the latter had announced that it was exploring “strategic alternatives”. Eisai is setting up a new subsidiary, Jaguar Acquisition Corp, to complete the deal which will be financed from its existing cash reserves and bank loans. The purchase is expected to be completed in the first quarter of 2008.
For its money, Eisai is acquiring Aloxi (palonosetron) for chemotherapy-induced nausea, Dacogen (decitabine) for the treatment of myelodysplastic syndromes and the brain tumour drug Gliadel Wafer (carmustine implant). MGI posted third-quarter revenues of $112.5 million in revenues and net income of $10.9 million.
Eisai’s chief executive Haruo Naito said that the deal will significantly strengthen its oncology business “and increase the likelihood of achieving our current strategic plan targets and our future revenue and earnings growth”. The deal is part of the Tokyo-based firm’s “Dramatic Leap Plan” to expand in all regions with “a special focus on integrative oncology”. Just over a year ago, it acquired four oncology products and in April bought of Morphotek, a US group which specialises in the development of protein and antibody gene evolution technology. Eisai is also building a new oncology facility at its North Carolina site.
MGI’s chief executive Lonnie Moulder said that the firm, along with its financial advisors, has been reviewing strategic alternatives “for the past several months,” and the board has agreed that linking up with Eisai represents the best way forward. If for some reason the US firm decides to pull out of the deal, it will be liable to pay a termination fee of $129 million.
