TOKYO (AP) — Japanese drugmaker Eisai Co. said Monday it will buy U.S. biopharmaceutical company MGI Pharma Inc. for $3.9 billion in cash in a move aimed at boosting its cancer drug business and sustain sales growth.
MGI Pharma's board unanimously approved the deal after examining a number of strategic options. Eisai expects to complete the deal in the first quarter of 2008.
The Bloomington, Minn.-based drugmaker spoke with ''many of the leading companies in the phamaceutical and biotechnology industry'' before agreeing to the Eisai buyout, MGI Chief Executive Lonnie Moulder said in a statement.
''Eisai has enormous respect for MGI Pharma's products, pipeline and people,'' the statement quoted Eisai President and CEO Haruo Naito as saying.
''We expect this transaction to allow Eisai to significantly strengthen its oncology business and increase the likelihood of achieving our current strategic plan targets and our future revenue and earnings growth,'' he said.
Eisai agreed to pay $41.00 in cash for each of MGI Pharma's shares, the companies said. That is a 22.6 percent premium over Friday's close and a 38.7 percent premium over MGI Pharma's closing price of $29.55 on Nov. 28, the last business day prior to its announcement that it was exploring strategic alternatives, the statement said.
MGI Pharma shares rose $6.80, or 20.3 percent, to $40.25 in premarket trading Monday.
Faced with the expiration of its U.S. patent on its best-selling Aricept Alzheimer's disease treatment in 2010, Eisai has been keen to expand its product lineup and research in cancer treatment.
MGI Pharma makes Aloxi, an injection for cancer patients to help prevent post-chemotherapy nausea and vomiting. It also sells injectable Dacogen for the treatment of bone marrow disease myelodysplastic syndrome, the Gliadel Wafer for brain cancer, and Hexalen, a chemotherapy treatment for ovarian cancer.
The company reported 2006 sales of $342.8 million.
Eisai's purchase of MGI would be its third major acquisition in the oncology area in recent years. Eisai bought Morphotek Inc. of the U.S. in April and four cancer drugs from Ligand Pharmaceuticals Inc. last year.
Drugmakers have been on the hunt for acquisitions, particularly companies with strong antibody and biopharmaceutical technologies, as they try to cushion the impact of expiring patents in the coming years.
Other deals this year include Celgene Corp.'s $2.9 billion bid for Pharmion last month and AstraZeneca PLC's $15.6 billion purchase of MedImmune this summer.
The deal was announced after the close of trade on the Tokyo Stock Exchange, where Eisai shares rose 2.1 percent to finish Monday at 4,840 yen ($43.35).