OSI Can’t Stay Indpendent Forever (OSIP)
OSI Pharmaceuticals Inc. (NASDAQ: OSIP) is holding up yet again, despite the notion that Astellas Pharma, Inc. of Japan wants to acquire the company. OSI decided to formally reject the $52.00 per share tender offer and is recommending that its shareholders reject the offer while it contacts other parties. Today we have a counter-response from Astellas. The profitable maker of Tarceva either wants to remain independent regardless of its notion that it will contact outside parties, or it wants to fetch a much higher price. Based upon a $52.00 deal offer and a current price of about $58.00 after the fact, take a guess what the market is thinking.
Astellas has said that it is pleased that OSI’s board of directors has finally instructed its management to explore a transaction for the Company. But it also noted that the Astellas offer gives OSI Pharma shareholders the opportunity to get a full and fair value immediately in cash. The market is paying $58.00, not $52.00, at least as of this afternoon.
But what Astellas did note was that its offer is not subject to any financing conditions nor to due diligence. The deal only contains customary conditions to close, as per its own words.
Astellas decided that its best route is to take its offer directly to shareholders of OSI Pharma. Astellas said that it will also nominate a full slate of directors for OSI’s upcoming shareholder meeting, although it is not likely to get a warm reception. The company further noted that the $52.00 per share cash offer was a 40% premium from the last trading day before Astellas made its offer public. It further said the deal is a 53% premium to the 3-month average and a 31% premium to the 52-week high.
The problem is wider than today’s share price. OSI has been public long enough that it is one of the oldest in its class. For a brief period in 2000 to 2001 its shares hit $80 a share. Then it even more briefly went up to almost $100.00 per share in 2006 and spent several months north of $60.00 on its own.
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