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Astellas makes second unsolicited bid to acquire CV Therapeutics for $1 billion
by Amy Swinderman  |  Email the author

TOKYO—Spurred by a strong yen and a chance to pursue business outside of its native Japan, Astellas Pharma Inc., the country's second-largest drug maker after Takeda Pharmaceutical Co., made a $1 billion public bid for U.S. biotechnology firm CV Therapeutics Inc. on Jan. 27. The proposal was initially reviewed and rejected by CV Therapeutics in November, but the company agreed to assess the revived deal's long-term shareholder value while simultaneously extending the expiration date of its shareholder rights by one year.

Astellas offered to acquire all outstanding common shares of CV Therapeutics for $16 per share in cash, a 41 percent premium over CV Therapeutics' closing share price of $11.35 on Jan. 26 and a 69 percent premium over its 60-day average closing price. The premium was even higher in November, when the offer was first made and CT Therapeutics stocks were trading under $9.

Masafumi Nogimori, Astellas president and CEO of Astellas, said the offer was made because CV Therapeutics' product portfolio, including its angina treatment agent Ranexa—which saw nearly $100 million in sales last year—would complement Astellas' U.S.-based hospital and cardiology business. Astellas also owns the U.S. rights to CV Therapeutics' drug Lexiscan, which is used in patients who cannot exercise sufficiently for a coronary stress test. In turn, Astellas' infrastructure and commercialization track record would provide an ideal platform to increase CV Therapeutics' value, Nogimori added.

"Astellas has built a productive partnership with CV Therapeutics around Lexiscan over several years, and we have watched and helped the company grow during this time," Nogimori wrote in a letter to CV Therapeutics' board of directors. "We are enthusiastic about Ranexa, but we believe it will be a significant challenge for CV Therapeutics to deliver the full value of Ranexa to your stockholders given CV Therapeutics' limited commercial presence and the difficult macro environment. We believe Astellas is better positioned to maximize the value of CV Therapeutics, and Ranexa in particular, by leveraging Astellas' infrastructure and marketing expertise."

CV Therapeutics rejected the initial bid, concluding it was not in the best interests of the company and its stockholders, but agreed to entertain Astellas' revived bid. However, the company extended the expiration date of its shareholder rights plan from Feb. 1, 2009 to Feb. 1, 2010 to fend off hostile takeovers. The companies did not respond to a request for comment.

Nogimori said the $1 million bid is the company's best offer and asserted, "We believe our proposal takes into full account the future potential of CV Therapeutics—with no execution risk to your stockholders. We remain enthusiastic and committed to a transaction with CV Therapeutics, and we continue to believe our proposal provides your stockholders with significant immediate value that we believe far exceeds the value CV Therapeutics could reasonably expect to achieve as a standalone company in the foreseeable future."

After the bid was made public, Astellas shares climbed 1.5 percent on the Nikkei 225 Stock Exchange, while CV Therapeutics shares rose 20 cents in pre-market trading. Astellas reported a 12 percent fall in quarterly profit due to higher development costs and a stronger yen.

Regardless of how CV Therapeutics will respond to this latest bid, some analysts speculate that strong yen appreciation may spur other Japanese companies to pursue business opportunities outside of the country, Toshiro Yanagiya, Tokyo-based general manager of securities business division at Aozora Bank Ltd., told Bloomberg News. Last year, Japanese firms spent $9.2 billion to buy U.S.-based pharmaceutical and biotech companies, Yanagiya said.

"If companies can secure enough funding, the appreciation of the yen gives them a good chance of exploring business opportunities outside Japan," Yanagiya told Bloomberg. "We are likely to see plenty more such deals in the year ahead."

Indeed, merger and acquisition activity along with licensing transactions remain brisk and is central to the bullish outlook for biotechnology, wrote Michael Becker, president and CEO of MD Becker Partners LLC, in his blog, Seeking Alpha.

"The bullish thesis for biotechnology in 2009 remains intact, as evidenced by the sector's defensive characteristics and favorable technical and fundamental attributes. The favorable outlook is further bolstered by the sector's relative outperformance during January 2009," Becker wrote. DDN



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