Eisai is willing to shell out $3.9 billion to buy MGI Pharma. The transaction will significantly pad the company’s oncology business as well as its position in the U.S. market.
Under the all-cash definitive merger agreement, Eisai will pay $41 per MGI share. The price represents a 25.5% premium over MGI’s closing price on Friday, December 7.
Faced with patent expiration of its cash cow, the purchase of MGI Pharma bolsters Japan-based Eisai’s position in the U.S. market. The company’s lead product, Aricept, an Alzheimer’s treatment, is expected to lose patent protection in 2010. MGI brings with it five approved therapies, which together had sales of $283.34 million during the nine-month period ended September 30.
MGI also has an end-stage heavy cancer pipeline. It has one product under regulatory review for the treatment of postoperation nausea and vomiting, five candidates in Phase III trials, one in Phase II, and one in Phase I. The deal thus gives Eisai plenty of R&D potential in the U.S., where it is currently building a 65,000 sq. ft. facility.
In fact, this is the third transaction Eisai has entered to reinforce its pipeline and international foothold. In March, the company paid $325 million to take over Morphotek, thus adding biologics to its pipeline. Last year, Eisai bought four oncology products from Ligand Pharmaceuticals for $205 million.
The acquisition is expected to be completed during the first quarter of 2008. Eisai anticipates that the transaction will then be accretive to its cash EPS in fiscal year 2008 and GAAP EPS in fiscal 2009.