Out to ignite a bidding war, OSI rejects Astellas' bid

The board at OSI Pharmaceuticals clearly isn't interested in snapping up the first $3.5 billion buyout offer to come its way. The biotech company says that it is rejecting Astellas' $52 per share bid and tried to raise the stakes-and launch a bidding war--by announcing that it is engaged in other buyout talks with major pharma companies.

The showdown and the prospect of a possible bidding war left representatives of Japan's Astellas insisting that its offer, a 40 percent premium over OSI's share price ahead of its offer, represents the full and fair value of the company. And it had some praise to offer as well, congratulating the OSI board for its decision to "finally instruct its management to explore [the possibility of] a transaction for the company."

Investors, though, have already factored in the chances of a higher bid, with a number of analysts speculating that Astellas will need to at least sweeten its offer before it closes a deal. OSI shares have been trading at around $56 to $57.

Astellas is following in the footsteps of other Japanese companies that needed a multibillion-dollar acquisition in the U.S. to position themselves for the future. But after months of what the Wall Street Journal describes as tense negotiations with no accord, Astellas may find that they've chosen a hard target.

- here's the story from the Wall Street Journal