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Japan's Eisai to buy U.S. drug maker MGI Pharma

December 11, 2007|From the Associated Press

TOKYO — Japanese drug maker Eisai Co. said Monday that it would buy U.S. biopharmaceutical company MGI Pharma Inc. for $3.9 billion in cash in a move aimed at boosting its cancer drug business and sustaining sales growth.

MGI, based in Bloomington, Minn., spoke with "many of the leading companies in the pharmaceutical and biotechnology industry" before agreeing to the Eisai buyout, MGI Chief Executive Lonnie Moulder said.

Eisai President and CEO Haruo Naito said the company expected the deal to enable Eisai to significantly strengthen its oncology business and boost revenue and earnings growth.

Eisai agreed to pay $41 in cash for each of MGI Pharma's shares, the companies said. That is a 22.6% premium over Friday's close and a 38.7% premium over MGI Pharma's closing price of $29.55 on Nov. 28, the last business day before its announcement that it was exploring strategic alternatives.

MGI shares rose $6.55, or 19.6%, to close at $40 on Monday.

Faced with the expiration of its U.S. patent on its bestselling Alzheimer's disease treatment Aricept in 2010, Eisai has been keen to expand its product lineup and cancer drug research.

Among other drugs, MGI makes Aloxi, an injection to help prevent post-chemotherapy nausea and vomiting, and the Gliadel Wafer for brain cancer.

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