Japan's Eisai to Acquire MGI Pharma for $3.9B

Eisai Co., Ltd. (ESALY.PK) of Japan has entered a merger agreement to wholly acquire MGI Pharma, Inc. (MOGN) for $41.00/share or approximately $3.9 billion, in an all cash transaction, representing a 23% premium to its Friday close of $33.45. The merger has been unanimously approved by MGI Pharma's Board and follows a late November press release from the company saying the Board had "authorized management to evaluate possible strategic alternatives." MGI Pharma said it retained the services of Lehman Brothers, which served as its exclusive financial advisor. The transaction is expected to close during Q1-2008, pending customary closing conditions and regulatory approvals. Eisai said it plans to acquire MGI Pharma shares via tender offer followed by a cash merger.

Commenting on the threat drugmakers face to patent expiry -- Eisai's leading Alzheimer's drug accounted for around 38% of its Q3 sales, but its patent expires in 2010 -- an asset manager at Mizuho said, "There is a higher possibility that we'll see more mergers." MGI Pharma was last trading at $40.00 as of 07:45 in pre-market activity. Bear Stearns downgraded MGI's shares to "peer-perform" from "outperform," since the takeover price is in-line with its estimate and few rival bidders are expected due to the all-cash transaction. Ordinary shares of Eisai gained 2.1% to close at ¥4,840. Pink sheet ADRs of Eisai closed at $42.34 on Friday.

Sources: Press release I, II, Bloomberg, MarketWatch, Wall Street Journal

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.