Astellas' hostile bid to acquire OSI Pharmaceuticals--along with its stake in the cancer blockbuster Tarceva and a pipeline of experimental therapies--is turning into a bruising brawl. Astellas filed suit against OSI Pharmaceuticals on Monday, claiming that the company's decision to reject its $3.5 billion offer wasn't in its shareholders' interest.
OSI shareholders, meanwhile, saw that their interests were well tended to--at least for one day--after the biopharma company's share price gyrated up 52 percent to $56 as a number of analysts gathered round and speculated on a possible counter offer from another big player like Roche. But not everybody on the street is buying that.
"We do not believe any counter-offer, whether from Roche or another party, will come in substantially above current trading levels or will come at all," notes Canaccord Adams analyst George Farmer. "We highly recommend that investors lock in profits and lighten OSIP positions."
Jim Birchenough, a biotechnology analyst with Barclays Capital, tells investors that no matter what, he believes Astellas will have to pay more if it intends to close the deal. "With recent reacceleration of Tarceva trends and option value to potential approval in maintenance therapy we believe that a higher bid will be required," Birchenough wrote.