(RTTNews) - Thursday, Millennium Pharmaceuticals, Inc.
(MLNM) announced the signing of a definitive agreement to be acquired by Japan's Takeda Pharmaceutical Co. Ltd. (TKPHY.PK, TKPHF.PK) for about $8.8 billion through a cash tender offer of $25 per share. The transaction is expected to close in the second-quarter of 2008. The deal is projected to accelerate Takeda's vision of becoming a global leader in oncology. Separately, Millennium said its first-quarter US net sales of its flagship product VELCADE surged 42%, significantly above Wall Street analysts' consensus estimate.
Takeda's per share bid price represents 52.9% premium on $16.35, Millennium's closing share price on Wednesday.
Millennium, the Cambridge, Massachusetts-based biopharmaceutical company, noted that the transaction is structured as an all-cash tender offer for all of Millennium common stock, followed by a merger in which remaining shares of Millennium would be converted into the right to receive the same US$25 cash per share price paid in the tender offer. There is no financing condition to the tender offer or second step merger.
Takeda's wholly-owned unit Takeda America Holdings, Inc. has established Mahogany Acquisition Corp. to effect the transaction. In the merger that follows completion of the tender offer, Mahogany Acquisition will be merged into Millennium, and the surviving entity will be an indirect wholly-owned subsidiary of Takeda, the largest pharmaceutical company in Japan.
The deal is subject to the tender of a majority of Millennium common stock and other customary closing conditions, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the antitrust laws of applicable foreign jurisdictions, the company said.
The Board of Directors of both companies unanimously approved the transaction.
Upon the deal closure, Millennium will become a wholly-owned subsidiary of Takeda Pharmaceutical, and will continue operations in Cambridge, Massachusetts, as a standalone business unit.
Commenting on the deal, Yasuchika Hasegawa, President of Takeda Pharmaceutical stated, 'Millennium greatly strengthens Takeda's global oncology portfolio, led by the flagship product VELCADE, and further enhances its pipeline with clinically differentiated, high-quality product candidates. Takeda is committed to becoming a global leader in oncology by delivering novel therapies that improve the standards of care for patients. Millennium has strong discovery, development and commercial capabilities led by a well-established management team.'
Millennium's flagship product is VELCADE, used for the treatment of patients with relapsed multiple myeloma, approved in more than 85 countries, and is co-developed with Johnson & Johnson Pharmaceutical Research & Development,
L.L.C. Millennium is responsible for commercialization of VELCADE in the U.S. and Janssen-Cilag is responsible in Europe and the rest of the world, while Janssen Pharmaceutical K.K. markets the product in Japan. For a limited period of time, Millennium and Ortho Biotech Inc. are co-promoting VELCADE in the U.S.
The company has a pipeline of novel product candidates in oncology and inflammation, including a potential therapy for inflammatory bowel disease, or IBD, which is expected to enter Phase III clinical trials in late 2008/early 2009. Millennium reported total revenues of about $528 million for 2007.
Dr. Deborah Dunsire, Millennium President and Chief Executive Officer, and the current management team will continue with the company after sale.
Takeda will finance the acquisition through cash on hand, and expects that the acquisition will enhance its earnings starting in the fiscal year 2010 before transaction-related amortization. The addition of Millennium will enhance Takeda's growth profile immediately.
According to Millennium, the deal is expected to speed up Takeda's vision of becoming a global leader in oncology in the areas of oncology discovery, development, regulatory affairs and commercialization. With their combined research, development and commercialization capabilities, they will have the potential to create a powerful new drug development engine and accelerate the potential of an emerging drug pipeline.
With the acquisition, Takeda expects to get access to a fully-integrated oncology discovery, development and commercial platform, add VELCADE with near- term worldwide blockbuster potential, and supply access to Millennium world-class drug discovery organization, including expertise in the novel research area of protein homeostasis. Takeda also plans to expand its global pipeline in GI, adding a novel anti-alpha4beta7 antibody and an oral CCR9 inhibitor for the treatment of IBD.
In the transaction, UBS Investment Bank is the financial advisor and Edwards Angell Palmer & Dodge LLP is the legal advisor to Takeda. Goldman, Sachs & Co. is acting as exclusive financial advisor and WilmerHale is acting as legal advisor to Millennium.
In a separate deal, on March 19, Takeda said it agreed to conclude its 50/50 U.S. joint venture, TAP Pharmaceutical Products Inc, with drugmaker Abbott Laboratories
(ABT) by buying the 50% stake of Abbott. Half of the stake of the Illinois-based joint venture, created in 1977, was reportedly estimated to be worth between 300-500 billion yen. Following the completion, Takeda said it plans to integrate TAP into two of its wholly-owned U.S. subsidiaries, Takeda Pharmaceuticals North America, Inc. and Takeda Global Research and Development Center, Inc.
In 2007, TAP had revenues of $3.1 billion from its two currently marketed products, Prevacid, a peptic ulcer treatment, and Lupron, a treatment for prostate cancer and endometriosis. Additionally, TAP has two new drug applications under review at the U.S. Food and Drug Administration, or FDA. Under the deal, Abbott would receive rights to Lupron, including the commercial organization supporting that franchise, and will receive payments based on TAP's other current and certain future products, while Takeda would receive the rights to the product Prevacid, all the remaining TAP commercial and support organizations, and the rights to TAP's pipeline.
According to earlier reports, the conversion of the JV into a unit would lift Takeda's worldwide sales to 1.7 trillion yen, with a global rank of 14, higher than current 17, and half of Takeda's total sales would be from the U.S, where the company aims to launch a series of new products to boost sales. The company was also aiming for mergers and acquisitions inside and outside Japan, putting its cash reserves of 1 trillion yen or so to use.
The U.S. drug market, roughly worth 28 trillion yen, has been growing around 10% a year, and it's easier to develop and test new drugs in the U.S. than in Japan, where the market has been stagnant.
Takeda earlier noted that it expects sales and cost synergies from the restructuring in the US operations.
Millennium's peer Celgene Corp.
(CELG) on March 7 said it completed the $2.9 billion acquisition of Pharmion Corp., which is expected to generate multiple global revenue streams. The combined company is expected to maximize the clinical, regulatory and commercial potential of the three approved therapies for hematology/oncology, which have been brought together. The company noted that the deal furthers its strategy of becoming a global leader in hematology/oncology field.