March 16, 2009 / 2:21 PM / 10 years ago

UPDATE 3-Astellas pulls plug on $1 bln CV Therapeutics bid

* Astellas bows to Gilead, ends $1 bln bid for CV

* Astellas says $20/share for CV not good shareholder value

* Investor reaction to Astellas decision seen positive

* Uncertainty clouds longer-term outlook for Astellas

By Yumiko Nishitani

TOKYO, March 16 (Reuters) - Astellas Pharma Inc (4503.T), Japan’s second-largest drugmaker, withdrew a $1 billion hostile bid for CV Therapeutics CVTX.O on Monday after the U.S. biotechnology firm reached a deal with a “white knight”.

Astellas ended its four-month pursuit of CV without sweetening its offer despite repeated rejections by CV and the Japanese firm’s wish to make up for setbacks in its drug pipeline with products such as CV’s cardiovascular drugs.

Gilead Sciences (GILD.O), whose market capitalisation is nearly triple that of Astellas, won acceptance from CV last Thursday for an offer of $20 per share, topping Astellas’s bid at $16 per share, due to expire on March 27.

Astellas said in a statement that trying to match Gilead’s bid would hurt its shareholders.

“Astellas is probably better off withdrawing its bid as chances had become slim for it to make the deal work,” said Kumi Miyauchi, an analyst at Daiwa Institute of Research.

Astellas had ruled out a hostile takeover but adopted an unprecedented hostile approach for a Japanese firm, filing a lawsuit against a reluctant CV and threatening to dismiss CV executives, before Gilead came along with a higher offer.

The Japanese drugmaker’s shares rose on Friday, underscoring investor speculation that it would shy away from a costly bidding war over CV [ID:nT152524]. They closed flat at 2,935 yen on Monday ahead of the announcement.

Shares of CV, which closed up 1 percent at $20.67 Friday, suggesting the market was expecting a counter bid, fell as much as 5 percent to $19.68 Monday morning on Nasdaq.


Although investors may have preferred no deal to the risk of paying an excessive premium for CV, Astellas is left with a need for new income sources as it faces expiring patents on key drugs.

Astellas’s best-selling transplant drug, Prograf, lost U.S. patent protection in April, while its No.2 drug, Flomax, for prostate problems, will lose U.S. protection in October.

The firm recently gave up the idea of introducing a successor to Prograf in the United States and a new antibiotic drug in Europe, and halted development of a potential schizophrenia drug.

The company’s recurring profit is set to drop amid competition from generic drugmakers in some areas, including transplant drugs, as early as its financial year starting in April, analysts say.

“It still needs some kind of a strategic investment, rather than just buying back its own shares to enhance shareholder returns. But it remains unclear what exactly the company can do to improve its outlook,” Daiwa’s Miyauchi said. (Additional reporting by Esha Dey in Bangalore; Editing by Michael Watson, Anil D’Silva)

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