Takeda to buy Millennium Pharma for $8.8 billion

Takeda to buy Millennium Pharma for $8.8 billion

TOKYO (Reuters) - Takeda Pharmaceutical Co Ltd agreed to buy U.S. firm Millennium Pharmaceuticals Inc for $8.8 billion to boost its cancer drug business, in the biggest overseas acquisition by a Japanese drugmaker.


The friendly cash offer announced on Thursday of $25 per share -- 53 percent above Millennium's closing share price on Wednesday -- is the latest example of accelerating M&A in the biotech sector as drugmakers scramble to secure promising pipelines and technologies developed by smaller firms.

Takeda, Japan's largest drugmaker, has long been under pressure to use a $10 billion war chest to strengthen its pipeline before a U.S. patent on its top-selling diabetes drug, Actos, expires in 2011.

Developing cancer drug pipelines has also been a top priority for Japanese drugmakers, which have been late to step into the lucrative business.

"I see this as a positive move. Major drug companies, including Takeda, need to develop new drugs before their patents expire," said Kumi Miyauchi, a drug analyst at the Daiwa Institute of Research.

"It is quicker to buy other companies that can develop new drugs rather than developing new products by themselves."

The deal comes on the heels of rival Eisai Co Ltd's $3.9 billion purchase of cancer specialist MGI Pharma Inc.

It also follows Takeda's agreement with Abbott Laboratories

last month to split their 50-50 joint venture TAP Pharmaceutical Products.

The Millennium acquisition, which adds blood cancer drug Velcade to Takeda's portfolio, was completed in just two months of negotiations and will allow Millennium to operate as a stand-alone business unit.

"I'm just happy that we have managed to come this far," Takeda President Yasuchika Hasegawa told a news conference, adding that he wanted Takeda to become one of world's top three oncology companies by 2020.

All of Millennium's management team have committed to staying on, he added.

VELCADE POTENTIAL

Millennium, established in 1993, is one of the top 10 biotech companies by market value, said its Chief Executive Deborah Dunsire via videoconference.

Millennium 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, which also markets the drug in other countries.

Millennium expects to book between $320 million to $345 million in Velcade sales in 2008, up from $265 million last year.

The company also hopes to expand Velcade's treatments to include first-line treatment of multiple myeloma, a cancer of plasma cells, with approval hoped for in June, as well as non-Hodgkin's lymphoma.

Other measures Takeda has taken to bolster its cancer business include its purchase of Amgen's Japanese unit, and an agreement to become Amgen's worldwide partner for its experimental cancer drug motesanib diphosphate.

It also recently agreed to help develop and market Cell Genesys' prostate cancer therapy which is in late-stage clinical development.

Hasegawa said Takeda's $10 billion warchest was essentially depleted. He did not rule out further acquisitions but added that for the time being he wanted to concentrate on making the Millennium deal work.

Millennium, which had $528 million in revenue last year, also has a potential therapy for inflammatory bowel disease, which is expected to enter late-stage clinical trials in late 2008 or early 2009.

The deal was conditional on majority acceptance of the offer by Millennium shareholders. The tender offer will start within five operating days from April 10 for 20 operating days although that may be extended until October 31.

UBS Investment Bank was advising Takeda, while Goldman Sachs

was advising 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..

($1=101.24 Yen)

REUTERS